The Finance Thread

[Carbomb]

You should definitely check on the tax. I forget the exact figure but in probate there's a number of years prior to death (seven years I think) in which it's checked if large sums have been passed to a relative to avoid inheritance tax.

 

How they check is another matter of course.

 

Yeah, it's seven years. My family had to check this out, as my parents are now having to consider signing over the house to me and my sisters; because of the sheer insanity of the London property market, the house they bought for quite cheap back in 1980 is now worth something absolutely ridiculous, and as such, if they leave it to us in their wills, we could be hit with a tax bill that forces us to sell our family home.

[Mr.E]

 

You should definitely check on the tax. I forget the exact figure but in probate there's a number of years prior to death (seven years I think) in which it's checked if large sums have been passed to a relative to avoid inheritance tax.

 

How they check is another matter of course.

 

Yeah, it's seven years. My family had to check this out, as my parents are now having to consider signing over the house to me and my sisters; because of the sheer insanity of the London property market, the house they bought for quite cheap back in 1980 is now worth something absolutely ridiculous, and as such, if they leave it to us in their wills, we could be hit with a tax bill that forces us to sell our family home.

 

That is legitimately nuts, I never knew the tax would be that high. Is it due to the value of the house or does something else factor into it?

 

If it keeps going on like this, then money/houses/whatever else will start being handed over prior to people passing away, to save people money, as you are doing Carbomb. It's not a new idea, but I know of a few people who had have their "inheritance" early, because of something similar to this.

 

On this subject, my parents aren't anywhere near that age (I'm 29 this year, my dad is 47 this year), but he out right told me recently he's written a will and left it all to me [i'm his only child], which has highly scrambled my brain. Like it's flattering that he trusts me with his stuff (house/whatever else) when he passes on, but its also saying "I'm going to die at some point" which isn't something I'd come anywhere near thinking of about my parents.

[Carbomb]

It's down purely to the value of the house. We don't have anything else anywhere near the value of it. Can't emphasise enough just how ridiculous and obscene the London market is.

 

Put it this way: a house a few streets away from me, two floors, 2/3-beds, terraced, back garden, recently went for £948,000. Seriously.

[Mr.E]

Holy shat, that is NUTS. I dare say you could get a bloody mansion up my way for that amount.

 

Tell them to sell up and move. I know for 400K less than that, you can a 5 bedroom house in my town, including massive garden and everything. Crikey.

[Carbomb]

It wouldn't be a bad idea, except my parents don't want to leave London, especially my mum - she still works (she won't ever retire, she loves her job too much), and she loves London life, like the theatres, the museums, the galleries, etc., plus most of her friends are here. Plus my youngest sister and I still live with them; neither of us can afford to buy anywhere in London unless we get ridiculously good salaries, and renting in London isn't just pissing away money, it's haemorrhaging it. I've looked for jobs in other cities, but I've not had much luck; the vast majority of professions I can apply for with my skillset are based in London.

[Mr.E]

Fair enough then, I know its not always as easier as you might think, but honestly that amount of money for a house that size has seriously shocked me. I knew it was more expensive in London, but bloody hell.

[Carbomb]

Here's another one for you. Another house in my area, four floors, 5-bed, front and back garden - but near-derelict, hole in roof, water damage, basically needs gutting and re-wiring, plumbing, the works. I found out only last week it went for auction at £1.47 million.

 

The insanity of it is that a property developer or a landlord will easily make their money back or be able to charge stupid rent if they do it up, so it's worth the expenditure.

[Mr.E]

Possibly a stupid question, does it cost more to build in London? With that sort of money you could build a couple of decent houses and makes your money back easily enough. That being said I suppose it's not exactly brimming with the space to do it.

[FLips]

I took PPI out with one of my credit cards a fair few years back but am unsure whether I was actually eligible for it at the time of getting it. I was working 15 hours a week at the time, though this would eventually increase to 25 and then full time.

 

I'm scraping the barrel here and don't expect anything, but is there any case for being mis-sold? Does anyone have any experience in claiming it back?

Actually, PM me.

Edited February 27, 2017 by FelatioLips

[chokeout]

Possibly a stupid question, does it cost more to build in London? With that sort of money you could build a couple of decent houses and makes your money back easily enough. That being said I suppose it's not exactly brimming with the space to do it.

 

The square footage for land is now silly, Its what bought on the fashion of digging under houses in London to add basements, depending on the area you live in you can spend £500,000-£1,000,000 adding a basement under the house and garden and add a few million to the value (obviously thats on the extreme end) 

 

Its also whats led to a chicken and egg situation with affordable housing in London. There isn't any. The government want to force people to build more and charge at fixed market values but they still need the land to do it on, which is being sold at stupid money.

 

Part of the National Housing Federations campaign during the last election was a life size picture of a rug with how much that square footage would cost to buy in central London (£36,000) /housing bore

 

Back to buying a parents house, it's actually something I'm looking at doing at the minute. They were screwed over on a mortgage years ago when they bought a house for £60,000. It should have been paid off long ago but they had to go onto interest only so the balance is still £50,000 (but the house is worth about £300,000). I've spoken to different advisors and everyone seems to have a different opinion on the best way of transferring it but it all seems a bit murky and it'll have to be purchased at market value. Any else got any experience in it?

[Carbomb]

Yeah, the London situation has been brought about by a number of factors, but mainly a succession of governments, both Labour and Tory, failing to build any affordable housing, and then that utter shit Boris Johnson over-riding borough councils trying to get social/affordable housing built. He just kept waving through luxury apartment builder contracts. And fucking moronic Londoners voted that corrupt cunt in twice, just because "he's a laugh, ain't he?" and because Livingstone didn't have a sparkling personality.

[Van Dammer]

I started working in London around 6 years ago and originally had the idea of commuting from Surrey for a few years before buying a place. I quickly realised that it was going to cost me atleast double for a smaller property, in a much worse area than what was around my way (which isnt cheap itself) and the idea was completely nixed. Ive no idea how anyone gets onto the ladder there without a very wealthy family or having an ultra high salary job (which usually comes because of the former).

[PunkStep]

Why would you, makes far more sense to buy a property within the home counties for the fraction of London prices and stomach a short commute every day.

Edited February 27, 2017 by PunkStep

[SpursRiot2012]

I don't know what a better system is but I've always thought it a little unfair that someone's parents, who aren't rich by any means, but that worked hard over many years and did well enough to be able to give their children a home when they're gone face their children having to sell that home because they can't afford the tax.

[Onyx2]

Back to buying a parents house, it's actually something I'm looking at doing at the minute. They were screwed over on a mortgage years ago when they bought a house for £60,000. It should have been paid off long ago but they had to go onto interest only so the balance is still £50,000 (but the house is worth about £300,000). I've spoken to different advisors and everyone seems to have a different opinion on the best way of transferring it but it all seems a bit murky and it'll have to be purchased at market value. Any else got any experience in it?

The loan-to-value ratio is key here. How much equity do they have versus how much the house is worth?

 

In other words, if they have paid £10k towards a £300k house they need a 96%+ mortgage, which is very rare these days. A kindly vendor might offer them a 95% rate with good credit / guarantor on their side.

 

It's an unfortunate side effect of the mid-2000s mortgage boom that lots of people such as your folks are now being killed over.

 

EDIT: I've just re-read your post. Sounds like they own £250k / £300k house = they only need to borrow 17% of the value of the house. This is nothing in mortgage terms. If they're out of a fixed period they can get a mortgage from anyone.

Edited February 28, 2017 by Onyx2