Buying a property for DC & his GF - implications

[dollybird]

So, our DS is 20, and has known his GF for almost a year, although they didn't get together straight away, so not been together that long. She is a couple of years older than him, really lovely girl, and they seem a good match. A couple of weeks ago he told us that she is pregnant and they want to keep the baby. Obviously not ideal, and unplanned as they are both young, but it is what it is.

Now, DS is self employed, has been for about 18 months, but it has been a slow start, as he had some MH problems early on so wasn't working much, but that has picked up in the last year, but he hasn't been earning what I would call a full time wage until very recently. The work is seasonal too, so much less opportunity to earn in the winter months. He mostly works with DH (also SE), and has use of his machines etc, so hasn't till now had to invest in his own machinery - he's mostly supplying his labour. He is now throwing himself into fully committing to this work, take on new work etc with a baby on the way.

His GF is working although mw zero hours type work, so not a big income, and unreliable number of hours etc.

So, they are in a bit of a sticky situation, as not really earning enough to rent or pay a mortgage and couldn't get a mortgage anyway due to their incomes and DS SE status. DS has savings from MIL which could be a large deposit on a property, but getting a mortgage still an issue. We have offered to buy them a flat with DS using his savings and us paying the rest, so that they and our grandchild have somewhere decent to live. Now, if it wasn't for the baby, we would be saying that they should buy as tenants in common, as 100% of the cost is being paid by DS/us (it is a gift to DS, we don't expect him to pay us back). But I don't know if this is best given that there is a baby involved and if they were to split up, he would need to provide for him/her. It's all a bit of a minefield, and we want to do our best to help them out, but trying to think of the potential pitfalls further down the line.

They would probably get a rental and maybe you could pay 50 percent of the rent each month and him the rest with his wage or savings? That way they can move to something bigger if they need to quite easily, there's no scary contracts and you don't risk trapping the GF in any way.

Thanks everyone for your comments. It seems the more we think about it, the more complicated it gets. I think we need to get some legal advice before proceeding any further.

As per a PP, I don't disagree that this isn't the best time for them to be having a baby, and if I were in their situation I wouldn't be proceeding with the pregnancy. But it's not up to me to make that decision for them, and I'm not willing to be seen as pushing them to make that decision either.

Re helping them pay for rent, we've never rented, so don't want to start paying someone else's mortgage now. At least with what we're doing there's an asset at the end of it. Just need to be careful how it is set up, and who owns what.

My parents bought a house for me and my then boyfriend (now DH). They bought the house and charged us rent based on the interest they would earn if the money had gone into a savings account instead. So it was a very low rent, given how poor interest rates are. This meant they didn't profit from buying the house and renting it to us, but they also weren't out of pocket either. After about 5 years living there, we had 2 DC and were married and we moved to a bigger house that we bought with a mortgage. My parents still own the house and now rent it out to tenants via a management company. Maybe an arrangement like this could work?

That does sound like a possibility. We would have to get a small mortgage if we were to buy the flat 100% in our names, as DS's money is about a third of the the cost. But this way he would keep his savings which could later be used as a deposit. Food for thought, thanks.

This sounds like a disaster waiting to happen.

What are they going to do for childcare when the baby arrives? How will they pay for this?

If the girlfriend chooser to not go back to work, how will you feel?

If baby no. 2 is announced in a year’s time, how will you feel about the use of the flat you’ve bought?

They’re able-bodied adults. It sounds like he has substantial savings which can be used to pay rent.

If they don’t like renting and seeing savings depleting, maybe it’ll encourage them to save, get more secure work/increase hours etc. and buy a starter home for themselves.

You sound like a lovely mum, but you’re being very naive. They haven’t been together long, and with a baby in the mix the odds are stacked against them so you might find that the relationship doesn’t last. Having an asset (shared or in your son’s name) actually causes more issues down the line.

Give them love and support, maybe a nice cash gift to go towards a rental deposit or baby equipment, and let them live their own lives.

They’ve decided to have a baby, now they need to decide how it house it.

Yes that sounds preferable or some legal agreement that in x years he becomes the legal owner.

If he wouldn't get a mortgage, then having him named on the deeds is problematic as I understand it.

Fwiw, I think that you're being sensible protecting this asset, baby or not. If they split baby will need a home when with your son. His girlfriend most likely would be resident parent and this get benefits etc if eligible that would be gateway benefits, so great levels due to claiming the child benefit. So as hard as it is, longer term post breakups, resident parents do often fair better if the couple were not wealthy.

I agree with @Whadda although I feel
like I'm being harsh...but I think they need to stand on their own two (four) feet. They are young and naive. They want to keep the baby despite their personal, emotional and financial circumstances. If that is their decision then they need to work out how they're going to do it. You sound lovely, of course you want to help but you're also enabling a level of helplessness in them. Great for them if they want to keep the baby but as adults it's their decision and their responsibility.

I know that's not what you're asking as you want to help but most options seem fraught with issues and I'd personally be stepping back and letting them step up.

Buy the house in your name and rent it to them at market rent. They will be entitled to UC, do the calcs.

If you want to help them, either buy a property for them in your name only or
agree to act as guarantors on a rented property for the next year or so.

The relationship is new. A two year age difference at 20 is a big difference and a new baby puts a strain on any couple. There is no guarantee that this relationship will survive.

Renting can seem like an unecessary expense when you can buy but when you look at the costs of buying, solicitors stamp duty etc. renting for a year or so can work out cheaper.

I world get a small mortgage on the place, and use his rent to cover it (and the costs of buying/stamp duty etc)
Keep it really simple.

Let them rent themselves and help furnish. You are being lovely, but if you factored the girlfriend in and in a years time she turns out to be hell on wheels you will regret it. They've chosen to keep the baby, they need to stand on their own two feet on the basics - housing and bills. Let them do this and help out in other ways where you can.
If you had the money yourself to buy a house and rent it out to them then that would be one thing although i'd still recommend being cautious - a friend of mine is currently locked in to a nightmare having done exactly this. Bought a house for son & gf to rent when baby was announced after they had only been together a few months. Couple of years later they split up, he moved back in with my friend to give the ex breathing space, discussion had between my friend and the ex that she could stay for as long as she needed to save up to move out whether that was to another rental or a deposit for a house/flat. Couple months later, ex stopped paying rent. That was 2 years ago.

Who is paying the service charges for the flat? On average, they can be £1500-2k per annum. For some flat owners like myself, we are ok with the cost because that is still cheaper than buying a house and our budgets would always have factored that in; but your son and his girlfriend seem to have precarious incomes..

Your son buys the property in his name only with his and your money. You put a charge on the property so he can’t sell (without your permission) and his gf isn’t entitled to it if they break up. Avoids the SDLT 3% issue too.

You can always rethink the situation at a later date if the relationship works out. This relationship is very new and sounds like a stressful situation. There are ways to not leave the mother of your grandchild ‘high and dry’ without unintentionally gifting her most of your life savings.