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Should we give our flat to the inlaws?

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  • Should we give our flat to the inlaws?


    Any advice on the following dilemma would be much appreciated

    My wife and I are in a dilemma as we plan to buy a new home and are
    trying to decide if it is a good idea to gift our current flat to her
    parents for free to give them a more secure, settled retirement, or
    would it make better economical sense for us to retain ownership and
    rent it to them? There are implications for SDLT for us in the short
    term and their claiming housing and care support in the long term.

    We are in our 30s and live in Manchester and own our flat outright. We
    bought it for £120,000 6 years ago and have just paid off the mortgage
    last month. We are now planning to move to a house which will cost us
    £430,000. We want to keep it but can’t decide the most sensible and
    economical way to keep it. The key factor is my wife’s parents. We are
    worried about how they will finance their retirement.

    Keeping the flat more than doubles the SDLT we would pay on our new
    home (£25k rather than £11k if we dispose of it). But gifting them the
    property means they would potentially forfeit access to helpful
    benefits in their retirement and could see us lose it completely in
    the long run if they need to sell it for care costs.

    They have savings but no assets. They are both 64, they work full
    time, they live nearby and rent a flat for £800 pcm. Ideally we would
    like them to be winding down so they can enjoy retirement, spend more
    time with us as a family and also be around to help out with child
    care. We get on well and see them frequently.

    We believe the flat is a good investment worth holding onto. It is in
    a popular building in the city centre, worth about £160,000 now to buy
    and £900pcm to rent. In all of this, my wife is quite determined to
    keep the flat. She likes it a lot. She also earns a lot more than me -
    about £100k a year, while I’m on £30k. Our options as we see it:


    We gift them the flat for nothing. They now have the security of
    knowing they have a home for as long as they like. Could they give us
    an informal rent or gift of money every month? This offsets us giving
    up the full potential £900 rent pcm. Potential problems with this
    scenario.

    They can’t claim any housing support if they own a house so they will
    miss out on that money in retirement.

    Again, if they need any support with care when they are older they
    will have to sell the flat to afford it as care is means tested

    We are effectively subsidising them. If they give us £500 a month,
    this is £400 short of the full rent it is worth so we are losing £400
    a month.

    The other option is, we keep the flat and rent it to them. We suffer
    the double SDLT now but in the long term, they will be entitled to
    housing benefit support and care support. We can still offer them a
    reduced rent.

    Any advice much appreciated

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