Helping daughter buy house

[big ant]

Anyone know legally safest structure or logic to achieve natural security for all parties in following scenario.

Want to gift 500k to help Daughter buy house with boyfriend. He has deposit of say 150k, 350k will be mortgaged by him only. Assume remain unmarried for now. Assume my gift is her inheritance, so leaves my estate, becomes hers assuming I survive next 7 years.

I've lost touch with how that will work, so all parties are secured in event of break-up or worse.

Cheers. Big Ant

[Charlie1986]

My inlaws are doing something similar, but we are both named on the mortgage there for they have asked for a gifting letter.

if your daughter wont be on the mortgage or deeds you could do a deed of trust for the money, or lend the boyfriend the money then have a charge placed on the house for the amount,

Sarnie is the best person to ask

[Rude-boy]

Right, whilst this is a bit of an idea as to the issues you need to discuss with a solicitor, this is not intended to be legal advice, just a pointer in the right direction. You must speak to your own solicitor and discuss all the facts and permutations with them. Given we are also talking about £1/2m here you would be wise to ensure independent legal advice is taken by all three parties as to the equitable interest in the Property.

It will not work if there is a mortgage involved as what the MoCo and what you require are mutually incompatible. Loan not a gift.

Now if you were to make an absolute gift of £500k to daughter (ignoring IHT and any other potential tax issues) and she and BF bought the £1m property with that, his £150k and a £350k mortgage then she might go down the route of a declaration of trust with her getting the first £500k, him the next £150k and then anything on top split equally or in proportion.

BUT the mortgage will not be in his sole name. It will have to be in the names of all registered proprietors of the Property and they will have joint and several liability on the mortgage debt. Yes he might be the one who funds the payments but (and no offence meant) if he had a job where having an interesting financial history is not a major issue and came home one day to find your daughter in bed with his best friend...

Now for one final kicker. If they get married it all changes and as soon as a little bundle of joy arrives all bets are off. Okay so your daughter is likely to be the one in the £1 seats if this did happen in the normal run of things but if she is a career lady and daddy stays at home and looks after the baby...

[big ant]

Thanks for your pointers. Am I right in thinking, that at the marriage stage, a 'prenup' would then be required, to reset the numbers ?

Deed of Trust sounds logic....and thanks for heads-up re the mortgage in joint names...maybe it will be easier if I am banker here, and I gift 500k, and lend the 350k. Nothing is easy in life.

BA

[Rude-boy]

big ant said:

Thanks for your pointers. Am I right in thinking, that at the marriage stage, a 'prenup' would then be required, to reset the numbers ?

Deed of Trust sounds logic....and thanks for heads-up re the mortgage in joint names...maybe it will be easier if I am banker here, and I gift 500k, and lend the 350k. Nothing is easy in life.

BA

Prenups are not yet binding in the UK IIRC - Highly persuasive after recent case law but not enough to tie the hands of the court if it doesn't like it.

Okay so if you are fortunate enough to be able to stand the loan of the whole amount then it gets so much easier, but then you also have to think about tax on the income from the interest that you will need to declare/pay (assuming that any is charged).

[big ant]

Thanks again Rude-Boy. HSBC meeting on Friday for the boyfriend, depending how that goes, I may look at the 100% settlement myself. Prenup - thanks for the warning. Have setup meeting with solicitors to get the Decl. of Trust understood and prepared...as the kids are pourinng over Zoopla !

[Rude-boy]

Yep, good move now is to spend a little to get the basic understanding of the points you need to make sure are covered off. If I were acting for your daughter and the BF I would also be suggesting that if you are going to make the gift and loan he MUST get his own independent legal advice on this. With the figures in play it needs to be done ultra cautiously and with all checks and balances in place to ensure that, if the worst were to happen, there can be absolutely no come back or inkling of 'undue influence'.

Also you need to consider wills. they will need them if they are to have a DoT as they will hold the Property as Tenants in Common meaning that if one of them fell under a bus their interest in the property will pass in accordance with a Will or under the intestacy rules (how do you get on with BF's parents )

You will also need to think about the provisions of your own Will, especially if there are other children and you want to ensure equal billing, so everything is set in place for when you start the underground gardening if it is far sooner than any would wish for!