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.

I used to be a dialysis nurse. I don’t recommend moving house at all. The stress alone could greatly impact her health.

I think you need to speak to your brother, he might allay some of your fears. Your parents are vulnerable and selling and buying houses is stressful , I can see why they would like this option.

It's the first thing I said to them.

I think they just think this is the easy way out and they won't have to do anything. As he'll do it it all for them.

The reason they bought the house in the first place is my dad cashed out his private pension early and opted to take a larger sum of money to buy the house to be mortgage free and leaving them with a smaller monthly income.

I think your brother is trying to maximise his inheritance.

If parents sell house and downsize then the bungalow may have a lower value than their current house and the profit may be spent on home decor, carpets, new furnishings etc which to your brother will be dead money.

The only income that my parents have at the minute as a small private pension. Dad took earlier retirement and opted to take the larger initial sum of money so that he could buy the house 1) to leave something for us 2) to be mortgage/rent free.

So in essence just getting by, my mum will get no state pension because she was mostly a stay at home parent and they didn't think to plan for the future and take steps to rectify this.

Once his state pension comes in yes he'll have a bit more but not enough to cover a full mortgage.

They've never been good with money/planning for the future.

They might be entitled to pension credit if their income is low enough.

I think the best thing you can do is get them to talk to a solicitor to help them see sense, as clearly they aren't listening to you.

I honestly worry about people who can't see the problem here. Please don't make any major financial decisions unaided.

Current situation:
DPs = own one house outright, no mortgage/rent costs
DB = stands to inherit half the house
OP = stands to inherit half the house

If DPs do as the DB suggests
DPs = own nothing and are paying DB for the privilege of living in their own home
DB = owns 2 houses
OP= stands to inherit nothing

Can you still not see the problem?

Now, assuming the DB pays his parents a fair price for their current house, he isn't necessarily ripping them off, but he is turning them from mortgage-free home owners into tenants. And he is depriving the OP of any inheritance as, when the parents die, they no longer have a house to bequeath.

@Dizzy1984 , you need to ask your parents what will happen if something happened to your brother , they could be left with no home

If they have to go into care they'll have to sell their home and all money will get used in the care home anyway.

This way the brother gets inheritance rather than potentially nothing

And the OP gets nothing! There is no benefit to anyone but DB in this scenario

As PPs have pointed out, this would be deprivation of assets and the LA will come after the brother - this type of dodge is common and LAs are well aware of them.

And, even if the LA doesn't catch up with the DB, how does it benefit either the parents or the OP? The parents will be far less secure as tenants than they are now: if the DB cannot keep up mortgage payments, they will lose their home. And the OP inherits nothing.

Could cause a problem if they need residential care. Had this with SIL trying to get her hands on things.

Well I guess that's ok then isn't it!

As long as my brother gets everything that they own and has a great set up for the rest of his life.

All of their money will be gone or close to gone paying his mortgage. Which as others have pointed out could affect them in the future. The way this plan goes there won't be enough to pay for funerals etc.

So what he gets everything they own and I? Get to to foot half the bill for funeral costs having been left nothing?

Well that's great for my brother isn't it.

I think he just sees it as an easy way to get some properties.. apparently his wife is desperate to own some properties.

I wouldn't have dreamed of doing something that would potentially cost him his share. But he obviously has no care of the outcome as long as him and his wife get what benefits them.

Another thing to investigate is if they could stay in their home with adaptions. Local Authorities sometimes have grant schemes to pay for adaptions to help people stay in their own homes.

Your brothers focus should be on what is best for your mum at this very difficult time for her and your dad, not getting his sweaty mitts on their house.

@Dizzy1984 Also, your DB will need to pay tax on the rental income. You can’t offset any mortgage payments as an expense. That may push him/your SIL over the 40% tax bracket (depending on their current salaries obv). So it isn’t always the money spinner people assume when you are a landlord.

Your brother is not "buying" anything if its his parents paying the mortgage. Unless you mean he is putting down a deposit, but even then he isn't buying the house, he's merely a part owner per his deposit share.

Your parents are relatively young, still not of pensionable age. They could run out of money. It's a great idea for your brother but terrible for everyone else. Do your parents understand the pitfalls? Maybe talk to a solicitor and take them with you to explain it. Do they realise that you will be disinherited? They are giving up their security. They need to buy a bungalow and be done.

That's a good idea. Get an assessment from your occupational therapist. Speak to their GP about their issues.

@Dizzy1984 @MissLucyEyelesbarrow @Theeyeballsinthesky

Why are you all attacking me? I absolutely never said I agreed with what the brother was doing!

I was just pointing out what he might be thinking

We've been looking at downsizing. Around here, 2 bed bungalows requiring a bit of work, i.e. money spent on them, are going for as much or more than a 3 bed home that's in ready to go condition. Once we add in selling costs, stamp duty, new furniture and the rest of the moving costs we can't afford it.
Is this the same for your parents? Could it be that your parents need your brother/you to subsidise a mortgage free (for them) move?

I suppose the issue with that is that if they need specialist care they will possibly need to see their house to pay for it, which could leave your brother in a tricky position. It's such a messy solution anyway. They should sell up and get a bungalow themselves.

So brother is going to get a mortgage to buy a bungalow. And then get another mortgage to buy your parents' house? Or is he expecting it to be signed over to him? Or can he afford to have 2 mortgages?

You don't need to agree or disagree. Just make sure that your parents do anything through a solicitor and ensure that it's not the same one your brother uses.

your brother and parents should have discussed this with you involved. Decisions like this shouldn’t be made excluding you.
your brother is being manipulative with your parents