Brother wants to buy parents a bungalow

[Dizzy1984]

Hi

So my mum is ill with kidney failure and is struggling to navigate up the stairs.

My brother suggested that he buys a bungalow for them in his name and they pay the mortgage for him.

My dad then said my brother wants to buy their house from them and rent it out. So in effect the money they get given from him for their house purchase will then be spent on paying my brother's mortgage on the bungalow he purchases.

My dad doesn't understand why I'm annoyed by this. Am I out of order and looking at this wrong. My dad always said that the reason he bought the house was for me and my brother so we both have something.

It just looks to me like my brother is the only one winning in this situation. He's effectively buying the house with money that is going to go straight back to him anyway.

I know they don't have to leave us anything but I can't help but feel annoyed.

If your parents are struggling on a low income then your brother is doing them a favour by buying the house which will reduce selling costs so they have more cash from the sale. They can then increase their income or use some of the cash to improve their living standards, yes this may reduce your inheritance but it will also reduce your brothers inheritance. Don't forget your brother is not getting something for nothing here, he has to pay out to buy 2 properties from money which he could invest elsewhere for a potentially higher return.

It’s also potentially mortgage fraud.

I'm not sure that a care home could cope with someone on dialysis. I've worked in care homes for years and we've never had someone in with that level of care.

How

No but people in care homes still can go to hospital for treatment unless it's home dialysis which is very basic to set up because it's designed for people to do themselves at home.

The problem with this is that your parents are now paying rent instead of living rent-free. Money that would otherwise be used by your patents for other things, or be inherited by OP.

They may not have realised that they are in effect leaving everything to your brother, OP. I would raise it, or it will destroy the relationship between you and your brother.

If they were getting treatment in hospital then why would they need to go into a care home? I KNOW that sounds obnoxious lol but I really really mean it

My mum is 59 no dementia diagnosis my dad's health is fine.

So he buys the house, and they rent it, releasing the equity in their current house completely for them, but they then use that equity to pay your brother 'rent' for the mortgage. And the house is entirely your brothers when what? They go into care or pass away? And then they have no assets at all, juts whatever is left from the sale of the house? Yes, it's a bollocks deal that only benefits your brother and he's a bit of a dick.

Because dialysis may just take 3-4 hours for 3 days a week. they wouldn't keep someone in hospital 24/7 for that would they ? But if the person needed care all the time, that could be provided in a care home with hospital treatment on a daycare basis as required. people needing dialysis for a few hours a week aren't kept in hospital full time.

But they would be going from being rent free to paying rent. I can't see that they would better off, unless the rent is stupidly low.

And there is no limits on the length of time that local authorities can go back to see where assets have gone.

This is a good point and may mean that it would be better for your parents to buy the bungalow themselves but I still wouldn't see a problem with your brother buying their old house to rent out.

However as a PP stated if your Mum needed care whilst on dialysis this would be quite a high level of care and it is possible she would qualify for NHS funding anyway.

They would have cash in the bank from the sale of the house earning enough interest to pay the new rent which would likely be below market rate if it was only enough to cover the mortgage.

Where is the deprivation of assets in this scenario.

It may not be clear cut but they are essentially selling an asset to then use considerable amounts of money each month to rent it ( or another home ) back. They will have a large sum of money in the bank, thus meaning they won't qualify for any means tested benefit help that they might otherwise qualify for like pension credit or council tax reduction if they just bought another property outright. There are just so many disadvantages to the whole idea I can't see who it benefits?

I think your brother should buy the house at market value, then the parents should buy the bungalow themselves to cut out the middleman.

@Dizzy1984 I think @Babyroobs has made some good points here which you need to discuss with your brother regarding the disadvantages of holding a cash asset rather than a property asset and access to future benefits. He may not have though about these issues and may be open to helping your parents downsize to a bungalow they buy themselves for these reasons.

However on the face of it he is not taking away your inheritance or doing anything which is otherwise unfair to you or your parents. It is not a deprivation of assets or mortgage fraud provided he has a proper documented arrangement with your parents and the mortgage company know he is not living in it himself.

The fairness of the arrangement will depend on the relative values of the house sold vs the bungalow purchased, the amount of deposit and the amount of the mortgage. Unless there are other issues in the background or a history of dodgy dealings which you haven't disclosed I would not assume that he is trying to pull a fast one.

Even if she qualified for NHS funding this would only cover the nursing element. The room and board ‘hotel’ costs of a care home, which comprise the majority of costs in most cases, would not be covered by the NHS.

Your brother would be hard put to obtain a mortgage to buy your parent’s house - theres such a things as financial assessments to be done! How’s he going to get past that? Do they have funds to pay £1000+ a month mortgage? They’d be basically giving away all their assets.

This is an important point to make to your parents OP. Also about means tested benefits if that applies to them. They need to really look into all the possible effects of doing this.

Thanks everyone

Some of you have given me some really good points to look at and speak to them about.

No they don't have the money to be paying a high mortgage. I don't understand how they think this would help.

Their income is low at the moment and been mortgage free helps. The money got for the sale of their house could potentially run out before the end of their life having to pay a mortgage depending on the cost of it.

I just don't think they've thought it through and are not thinking of what happens if it gets to that point.

Your parents currently have no mortgage or rent to pay.

With your brother's idea, your parents will be paying reducing their capital i.e. paying rent out of the sales proceeds of their house.

Your parents should buy the bungalow themselves, which assuming they are downsizing, would mean they:

• remain mortgage free
• have no rent to pay
• have some cash in the bank

So why can’t they sell their house and use the money to downsize to a bungalow without your brother being involved? Has that been suggested to them?