Buying a house short term....let me explain

I would also want to help in this sad case, and your idea sounds like the right way to go, but I would strongly suggest going to a solicitor or some other professional advice service to see if the other ideas promoted here would be a better option. Good luck.

bytheway

A very interesting thread and I feel for you as you agreed to an arrangement in a spirit of pity, which with a little more foresight you probably should not have done. It was always going to be hard for you while for your husband its his own DD.

Two months isnt actually very long to sell the house. What are the reports back, is she on the estate agents backs making sure there are plenty of viewings? Is the house displayed to best advantage? If not could you go down with her and give the house a makeover (as per TV programs), declutter arrange for any repairs, cut the grass, clean the windows, maybe even a little redecorating?
Is the house realistically priced?

I think this could also be done in a context of telling her that when she was invited to stay it wasnt intended to be completely open ended, and suggesting that if there is no buyer in the next month then rented might be a better option (for all of you).

I wonder if perhaps she prefers living with you to being alone (understandable in the circumstances) and isnt in any hurry to sell her old house.

I think posters are trying to help in a practical way and pointing out the pitfalls which could cause more stress on top of the stress of bereavement and all living together.

I don't think it would be a good idea to buy a house for the short-term or for the DSD to rent her own house if she wants to let it - people may be put off buying if they think there is a tenant.

Sometimes when everyone is upset (as obviously they all are) then it is a good idea to ask advice from people who are not emotionally involved and may have a clearer picture of the best way forward.

I find it hard to understand the number of people on here who are more concerned about the OP losing money than her SD losing her husband and the children losing their father.I feel as if I'm landed on some strange planet where money is king.Nobody I know would even think about it twice in this situation,mind you ,most of my freinds would be happy to keep the bereaved wee family under their own roof as would I.Surely at a time like this she needs as much support as possible ,however inconvenient extra people in the house are .I think its time I bowed out of this Gransnet page,it has been a bit of an eye opener though reading about others first world problems that cause such distress,eg .parking, but a bit low on compassion where its really needed.I wish you all well in your daily struggles

There are a million things that can go wrong. Money and family/friends just doesn't mix - unless it's a gift.

I don't like it, too much can go wrong even if you have a legally binding agreement. Can she not rent, surely in her position she may be entitled to some benefits.

There are a number of problems here, most of them legal.

A solution is possible but you need to be fully protected in the event of some change in any of your circumstances. The better option I believe would be for you to offer a mortgage so she can purchase the new property in her own name.

At the same time you should take a second mortgage on the property to be sold to ensure you get your money back. You must have clear advice on the possibility of a sale and the asking price so that you can be reasonably sure a sale can be achieved. Do not overlook all the costs involved.

What no one has mentioned is that if this person buys this second house, then there will be considerable Capital Gains Tax payable on the second house, whenever it is sold. One can only have ONE residence without Capital Gains Tax on a second, or subsequent property. Do take specialist financial advice!

Farnorth your post really surprised me.
A few years ago DD1 was going through a bad time. Mum and I discussed buying a flat for her and the DGCs but were told in no uncertain terms that DD would not get HB as that would be to the advantage of family members. I thought that was perfectly reasonable.
I know of a family claiming HB on a flat owned by his sister. The sister transferred ownership to her partner thus avoiding the fact that flat was owned by a family member. They married recently so I don't know the current situation.

The scheme you propose has many problems. If the value of the house goes down by the time SD is ready to buy it, will she still pay the cost price? If the price goes up, there can be problems selling it below market value as the tax man thinks you are trying to avoid Capital Gains Tax. In any case, you are going to lose out if she only pays back the money you paid for the house. As well as the purchase costs, there's the cost of the mortgage. Can you afford to lose this money? Does SD actually want to give up her old life and home permanently? What about her children? You don't say how old they are, but do they miss their old friends, the familiarity of the house which holds so many memories of their Dad? Maybe the best thing you can do for her is encourage her to go home and take up her old job, until she can think clearly about what's best for her and her children's future. This isn't the right time to do that, so close to her husband's death.

Two possible solutions come to mind which wouldn't involve you in any financial dealings.

There are companies (and the names escape me for now) who guarantee to buy your home - like webuyanycar.com, but for houses - although it is less than market value, but you are guaranteed a sale and they pay the expenses. That might be worth considering just to get things moving and take away all the worry.

Second - has she considered a new build property? There are some developers who will take your existing home as "part exchange" for a new house. Again, I suspect it will be at less than top market value, but takes away the uncertainty.

Lots of new home builders are offering to buy your house from you if you purchase new from them - is there such a scheme where you are living? I have moved from Dover Kent to Telford Shropshire and have spent a year getting a buyer for my house in Dover so two months is no time at all. We had to rent here because we needed the equity from my house to purchase again - it's dead money as you get nothing back for your investment if you are renting. Do you have a large garden? If so you may be able to purchase something along the lines of a Tiny Home (subject to planning) or a residential caravan that your step-daughter could live in whilst living with you - when she finally moves into her own home you could either sell this on again or look into doing B&B or holiday lets (if you are somewhere where there is a demand for this).

x posts Solitaire

M0nica, the OP said the SD 'is mortgaged to the hilt and cannot afford any further rent or mortgage at the moment'.

Also, not all insurance policies will pay out in the circumstances of her husband's death.

MOnica, no insurance cover as OP said her stepdaughter's husband very sadly took his own life.

Rent somewhere for 6 months. This will not leave you with any tax implications and may well be only the same as stamp duty on a purchase.

The road to hell is paved with good intentions, I know I am a frequent traveller.

To protect yourselves you must have something in writing which lays out exactly what the understanding is between all parties.
Of course the other alternative is that you buy the house and she rents it from you - but again have a contract and take out landlords insurance ...its great that you are willing to help her and your GC in very difficult circumstances

I had just posted the above post when an idea occurred to me.

If the parents want to help her get the house she really wants, instead of buying it for her they should LEND her the money so she can make the purchase, with the loan secured on the house that is being sold. That way there are only one set of solicitor's expenses, stamp duty etc and they know that when the previous house is sold, and all houses sell eventually, their capital will be returned to them directly by the solicitor on the day the sale goes through. All it will cost them is the interest lost during the loan period, assuming the loan is interest free.

It is by far the simplest solution.

Organise the loan through the solicitor, no informal undocumented family agreements because you love and trust each other, these usually go disastrously wrong.

Ana, Most people have life insurance as part of their mortgage, I think some lenders insist on it, so when this unfortunate lady's husband died, the mortgage would have been paid off, so she would now own the house outright with no mortgage payments to make.

Having said that, I,too, would think it would be better to pay for her to rent a house locally rather than buy one for her. I know this means she may lose the house she has found and likes, which is difficult in the situation she is in, but better that than her parents mortgaging their financial future on her house moves.

In the recent past I have rented a cottage to my DC who claimed Housing Benefit. It was all fine with the DWP, as it was not my home. You would need to check the current rules, though.
I suspect that owning her current house might disqualify her from Housing Benefit, although she should get Jobseekers A!lowance for at least 6 months, if she lost her job.

If it were me, I'd consult a mortgage advisor to find out the likely costs of your husband's plan, and also of doing things as buy-to-let. If you both feel you can afford the extra costs to you, then go ahead.

Also suggest to your stepdaughter to reduce her house's asking price to get rid quicker.

This is a very distressing situation for everyone and I hope there is some stability for you all, very soon.

bytheway there are really good cheap mortgage rates available on buy to let ,so the outlay on the monthly payments wouldn't be massive and would give her the chance to get some independence while being close to family,even if you pay the mortgage payments at first and she pays you back once she sorts herself out .My heart goes out to her,she must be in a terrible state of mind ,my neighbours daughter committed suicide leaving two over five kids and a baby ( she had severe post natal depression) her husband struggled for a long time ,

Oh I see Welshwife has just raised this point, while I was deliberating....

Can you claim housing benefit to cover a mortgage on your own house? I didn't think that was allowed, but am prepared to be corrected on this!

bytheway the deposit on a buy to let would be around 25% so you wouldn't be tying up all your cash and if she decided she preffered another house you can either rent to someone else,giving you an income or resell it

Just a point about housing benefit - I think you will find it is only available for rent and not mortgage payments. After 3 or 6 months - not sure which - they pay just the interest on the mortgage. If the house was yours and she was renting it from you she would get nothing - you are expected to help out - same if they live with you. She might be better renting for a while and see how things go - although rent is often more than a mortgage cost.