Adding a name to a house deed = Same as selling a house?

Hi Folks,


All of this is a completely fictional series of events, of course. I'll make it as swift as I can.

Father lives in a council house. Council offer the house for sale to him, at a discount on market rate. Father can't justify the cost as he edges closer to retirement. His son (living elsewhere) sees the opportunity to buy the house so he can ultimately inherit it.

They go through the process, Council are aware that the father is being assisted financially in making the purchase. House is sold, and as part of offering a discount on the market rate, the council apply a charge on the house.

The charge is effectively the equivalent of the discount given, but drops by 2% of market value of the house each year, until 20, 25 or 30 years have passed depending on the discount given (to stop people from buying the house at 'half price' and immediately re-selling it on).

Father makes a will stating house will be left to the son. Everyone is happy.

Son decides, approximately 3-4 years after buying the house (and paying the mortgage on it), that he wants more security than the will, and reckons he is better off actually having his name added to the deed of the house (so if the father dies, siblings can't appear out of nowhere and try to claim it as their own).

Contacts Council to make them aware of this (that he will be added to the deed) and Council say, no, you can't do that. As far as the Council are concerned, adding a name to the deed is the equivalent of selling the house (despite it being an immediate family member being added, and no money changing hands). As the Council view this as a sale of the house, they have a right to claw back the charge/discount on the house.

The son isn't happy with this, as it's his opinion that no reasonable person would perceive a son's name being added to a father's deed, as being the equivalent of an actual house sale.

There is a booklet (or online PDF) with the rules of the scheme that each applicant is given as part of the process of buying. The rules make no mention at all to the prospect of a person adding a name to the deed of the house. It does, state, however, you can't sell, let or sub-let without Council permission (which is fair enough).

The son wants to engage a solicitor to add his name to the deed, and challenge the council. But before he goes down that road, I figured I'd ask here if anyone has any opinion or experience with this.

Any advice or thoughts on this appreciated.

pwurple

Father can't justify the cost as he edges closer to retirement. His son (living elsewhere) sees the opportunity to buy the house so he can ultimately inherit it.

I question the morality of this scenario.

Son trying to inappropriately get a discount from the council (IE the taxpayer) to feather his own nest.

It is also not clear whether the father contributed anything to the council house purchase. If so, son is also trying to disinherit his siblings.

Peregrinus

"Adding a name to the deeds" is the mechanism by which you transfer ownership of a share in the property. Such a transfer must be either a sale or an outright gift. And since the transfer is only being sought, and (if made) will only be made, because Son is discharging part of Father's mortgage payments, I think it looks much more like a sale than a gift; Son is getting a share in the house in exchange for making payments for which Father is liable. So I think the Council is correct here; this would be a sale.

If Son wants more security than he gets from the Will (which, I agree, is very little security at all) there are other avenues he could consider which are less drastic than demanding an immediate part-share in the property. He could take a mortage over the property to secure the amount he advances to Father by way of mortgage repayments; that way, if the house doesn't eventually come to him but goes to someone else, he is entitled to be repaid the amount he paid out (with interest, if so specified) and the house is security for that entitlement.

mickuhaha

It's a transfer of ownership from a single name to joint names and the council would be correct in their position. Also other tax implications , land registry fees and legal costs. It would be different if you were to get married, your original idea would be nearly correct. Talk to a solicitor at get them to outline your options.

previousmass

pwurple wrote: »

I question the morality of this scenario.

Son trying to inappropriately get a discount from the council (IE the taxpayer) to feather his own nest.

It is also not clear whether the father contributed anything to the council house purchase. If so, son is also trying to disinherit his siblings.

I'd kinda question the morality of selling council property at a discounted rate overall tbh.

Seems weird to think something secures your ownership but isn't a sale.
Is the argument that it isn't a sale because no money is exchanged or because he is a relative? If it's the former that sounds like a great argument for saying the son is the one who bought the house from the council which presumably would invalidate the discount.

Gumbo

Council are right.
The son shouldn’t benefit from social housing if he is not entitled to it.

Xterminator

OP are you confusing the process of adding someone to the tenancy of a council house, VS transferring ownership of a property?

if the father owned the house outright the new deeds would still have to be drawn up and any tax liabilities addressed with revenue.

But when there is a mortgage on the property there is another layer of difficulty on top of that. basically the mortage needs to be discharged, ie paid off in full, or the person needs to be added to the mortgage, which needs approval of the lender, and is subject to eligibility according to their rules.

https://www.birdandco.co.uk/site/blog/conveyancing-blog/can-you-transfer-ownership-of-a-house-with-a-mortgage

thats a UK site that discusses the whole idea.

And all that is before you address the claw back clause, and rules associated with that. Because transferring ownership of the house is effectively selling the house - thats how revenue see it.

JohnnyChimpo

mickuhaha wrote: »

It's a transfer of ownership from a single name to joint names and the council would be correct in their position. Also other tax implications , land registry fees and legal costs. It would be different if you were to get married, your original idea would be nearly correct. Talk to a solicitor at get them to outline your options.

Not all of us are willing to take the leap and marry our dads though

mickuhaha

JohnnyChimpo wrote: »

Not all of us are willing to take the leap and marry our dads though

Shame , could have been as really nice day out for us all.

JohnnyChimpo

mickuhaha wrote: »

Shame , could have been as really nice day out for us all.

Could be awfully confusing when it comes to making the speeches later on though

ILoveYourVibes

The council is correct technically its a sale. However you could bring it to court to prove its a 'gift'. However since your son actually did help pay for the house...its going to be very easy for the council to say ..that was a long sale ...and that was what we were trying to prevent.

You need to be careful about these deals where you can't sell the house for a period of time they can often end up costing you money more than you saved.

If you son inherits it in a will also ..he has to pay inheritance tax.

Marcusm

Deleted User wrote: »

Hi Folks,


All of this is a completely fictional series of events, of course. I'll make it as swift as I can.

Father lives in a council house. Council offer the house for sale to him, at a discount on market rate. Father can't justify the cost as he edges closer to retirement. His son (living elsewhere) sees the opportunity to buy the house so he can ultimately inherit it.

They go through the process, Council are aware that the father is being assisted financially in making the purchase. House is sold, and as part of offering a discount on the market rate, the council apply a charge on the house.

The charge is effectively the equivalent of the discount given, but drops by 2% of market value of the house each year, until 20, 25 or 30 years have passed depending on the discount given (to stop people from buying the house at 'half price' and immediately re-selling it on).

Father makes a will stating house will be left to the son. Everyone is happy.

Son decides, approximately 3-4 years after buying the house (and paying the mortgage on it), that he wants more security than the will, and reckons he is better off actually having his name added to the deed of the house (so if the father dies, siblings can't appear out of nowhere and try to claim it as their own).

Contacts Council to make them aware of this (that he will be added to the deed) and Council say, no, you can't do that. As far as the Council are concerned, adding a name to the deed is the equivalent of selling the house (despite it being an immediate family member being added, and no money changing hands). As the Council view this as a sale of the house, they have a right to claw back the charge/discount on the house.

The son isn't happy with this, as it's his opinion that no reasonable person would perceive a son's name being added to a father's deed, as being the equivalent of an actual house sale.

There is a booklet (or online PDF) with the rules of the scheme that each applicant is given as part of the process of buying. The rules make no mention at all to the prospect of a person adding a name to the deed of the house. It does, state, however, you can't sell, let or sub-let without Council permission (which is fair enough).

The son wants to engage a solicitor to add his name to the deed, and challenge the council. But before he goes down that road, I figured I'd ask here if anyone has any opinion or experience with this.

Any advice or thoughts on this appreciated.

The son should have sought advice before entering into this arrangement. The house being included in a will is no real protection. The council is right that it is a part-sale of the house. More sensibly, if the council was to waive the rule, the relevant official should be sacked. The discount is given to the resident and predicated on that person remaining the owner for the specified period. What you describe is effectively the thin end of the wedge of people fronting the buyout of a state asset for commercial purposes.

Just for clarity, I believe the threshold for inheritance tax is 350k? The market value of the house is approx half of that, so inheritance tax is not a concern.

In relation to the comments on buying social housing to begin with, you can look at it several ways but it's generally a good thing and is beneficial to both the council and the area where the house is purchased.



Anyway... from reading here it seems that the council would be correct in saying this would be considered as a sale. Which doesn't necessarily hinder things just provides less security as a whole it would seem. Although contesting a will seems to be fairly difficult.

Peregrinus

Deleted User wrote: »

Just for clarity, I believe the threshold for inheritance tax is 350k? The market value of the house is approx half of that, so inheritance tax is not a concern.

In relation to the comments on buying social housing to begin with, you can look at it several ways but it's generally a good thing and is beneficial to both the council and the area where the house is purchased.

But not so good for the primary beneficiaries of social housing policy, which is those in need of social housing. It reduces the stock of social housing. Plus, it represents a net transfer of value from the taxpayer to the Son, and it's not clear why the taxpayer would think this was such a crash-hot idea.

Deleted User wrote: »

Anyway... from reading here it seems that the council would be correct in saying this would be considered as a sale. Which doesn't necessarily hinder things just provides less security as a whole it would seem. Although contesting a will seems to be fairly difficult.

Well, Son and Dad might fall out, and Dad might change his will. Or, Dad might die survived by a spouse (who might or might not be Son's mother) and the spouse's legal right to a share of the estate would take priority over Son's claim under the will. Or various other things could intervene between now and the date of Dad's death.

Basically, being told that an asset will be left to you in someone's will is very poor security for an advance of money.

scheister

Few different things here that i can see

1. Father is living in council house
2. Council House is offered for sale to father at a discount
3. Father is not interested in buying as close to retirernment

4. Son decided to buy the house but leave the fathers name on the house.
5. Mortagage is given to father to buy house but son is paying it.
6. Father amends will to say son gets the house on his passing
7. Council has an issue with the house deeds being changed now

Questions

1. Is the father being assess for the gift of the son paying the mortgage
2. Depending on value there could be a tax issues when the house passes to the son on the fathers death.
3. Does the council see an issue with the above plan

Peregrinus

Peregrinus wrote: »

But not so good for the primary beneficiaries of social housing policy, which is those in need of social housing. It reduces the stock of social housing. Plus, it represents a net transfer of value from the taxpayer to the Son, and it's not clear why the taxpayer would think this was such a crash-hot idea.

You have an argument, to a degree, but I don't agree with it.

For example, I bought my family home from the council.

Council housing is generational. If my dad lives in a council house and I am his son and I'm living in the same house, when he dies, the house is given to me by default.

If my son lives with me, and I die, he gets the house by default. And his son gets it when he dies. And so forth. You can argue about how right or wrong that is all day, but factually, that's the system that exists.


So by me buying a house off the council at, for argument sake we will say 50% of market value, everyone benefits.

The council no longer have to pay out to maintain the house or provide upgrades to it. Instead of paying out, they actually get money in, in the former of LPT that I now pay (as a council tenant I don't pay property tax).

Also, the council get a lump sum amount of money for the house at the same time as washing their hands of any responsibility for it.

Outside of the council themselves, people who own their own homes are more likely to maintain it and take care of it, and you have to have a job to qualify to buy it, meaning rougher areas tend to settle down and gentrification can (slowly) creep in.

Also, as a home owner, I no longer expect the council to service my boiler, for example, so I'm now out hiring self employed people to carry out maintenance on my house, pushing more money into the hands of small businesses and tradesmen.

The only losers are those that are perceived to be getting screwed out of availing of a council house that, in reality, they would never have been entitled to in the first place.

jam_mac_jam

Deleted User wrote: »

You have an argument, to a degree, but I don't agree with it.

For example, I bought my family home from the council.

Council housing is generational. If my dad lives in a council house and I am his son and I'm living in the same house, when he dies, the house is given to me by default.

If my son lives with me, and I die, he gets the house by default. And his son gets it when he dies. And so forth. You can argue about how right or wrong that is all day, but factually, that's the system that exists.


So by me buying a house off the council at, for argument sake we will say 50% of market value, everyone benefits.

The council no longer have to pay out to maintain the house or provide upgrades to it. Instead of paying out, they actually get money in, in the former of LPT that I now pay (as a council tenant I don't pay property tax).

Also, the council get a lump sum amount of money for the house at the same time as washing their hands of any responsibility for it.

Outside of the council themselves, people who own their own homes are more likely to maintain it and take care of it, and you have to have a job to qualify to buy it, meaning rougher areas tend to settle down and gentrification can (slowly) creep in.

Also, as a home owner, I no longer expect the council to service my boiler, for example, so I'm now out hiring self employed people to carry out maintenance on my house, pushing more money into the hands of small businesses and tradesmen.

The only losers are those that are perceived to be getting screwed out of availing of a council house that, in reality, they would never have been entitled to in the first place.

Not a great deal for the taxpayer though is it? For housing benefits to be transferred to those that may not even need it just so they can make a profit. Which is essentially what is happening.

Also if the son is living there or not I think has a great bearing on this. I can see how you can argue that in that case they have a right to the house. I would see that situation as different to the son buying the house if he didn't live there. That does not seem fair to me.

All I see is the taxpayer getting screwed and losing a house that could go to somebody who needs it. However if the council knows about it and has agreed then I presume all is above board.

surrender monkey

The son really should have gotten legal advice. The scheme that this house was purchased under is called the Incremental Tenant Purchase Scheme. The relevant legislation is the Housing (miscellaneous provisions) Act, 2014. It is set out in the act that you cannot sell, assign or sublet the property without the consent of the Council end of. Also is the son aware that under the scheme the council have the first right of refusal on any sale of the property? If they want the property they will pay market value less the outstanding share owed to the council. In the event of the fathers death prior to the term of years expiring that outstanding charge will be owed to the council as well as the mortgage. It's a complicated scheme. The son would be blowing good money by hiring a solicitor to try and challenge the council as the scheme is set out in statute I.e: the 2014 housing act !

jam_mac_jam

jam_mac_jam wrote: »

Not a great deal for the taxpayer though is it?

I'm not sure if you read any of the post i made? It's beneficial to the tax payer.

surrender monkey

surrender monkey wrote: »

The son really should have gotten legal advice. The scheme that this house was purchased under is called the Incremental Tenant Purchase Scheme. The relevant legislation is the Housing (miscellaneous provisions) Act, 2014. It is set out in the act that you cannot sell, assign or sublet the property without the consent of the Council end of. Also is the son aware that under the scheme the council have the first right of refusal on any sale of the property? If they want the property they will pay market value less the outstanding share owed to the council. In the event of the fathers death prior to the term of years expiring that outstanding charge will be owed to the council as well as the mortgage. It's a complicated scheme. The son would be blowing good money by hiring a solicitor to try and challenge the council as the scheme is set out in statute I.e: the 2014 housing act !

As far as I am aware, the legal advice prior to proceeding with the purchase was to the effect that if the father dies, the debt, and legal charges, die with him.


The house is willed to the son already, and the son will naturally be given the house after the death of the father. Apparently (stressing the word apparently) it's extremely difficult to challenge a will unless you have solid grounds that the person making the will was unsure what they were doing, or that they were forced into it against their will. Neither of which would really apply here, from what I can (father is a nice chap and isn't suffering with dementia or anything like that, that I know of anyway).




Son does live in the house (he was living away, but moved back once the sale was completed and he'd served his notice out at the place he was renting), and the Council were made aware early on that the son was helping the father buy, as the son wouldn't be able to afford to buy a house of his own on the open market (in other words, he was gonna be going looking for a council house of his own had he not gotten the chance to buy this one).

listermint

[Deleted User] wrote: »

I'm not sure if you read any of the post i made? It's beneficial to the tax payer.

It's not beneficial to the tax payer at all.

I'm wholely against the sale of council property. This sort of crack started in the 90s and is part of the problem we have Today. No social housing stock .

Social housing is a lift to give people a leg up. It's not designed to give people like yourself free money. Because let's face it. That's why you bought it. It wasn't for the good of the tax payer.

listermint

listermint wrote: »

It's not beneficial to the tax payer at all.

I'm wholely against the sale of council property. This sort of crack started in the 90s and is part of the problem we have Today. No social housing stock .

Social housing is a lift to give people a leg up. It's not designed to give people like yourself free money. Because let's face it. That's why you bought it. It wasn't for the good of the tax payer.

Can you give me even one example of how it's bad for the tax payer?


As an aside, me buying my house has cost me a fortune, vs if i had let the council maintain ownership. I don't think you know what you're talking about in fairness.

irish_goat

If you are so concerned for the taxpayer surely the best option would be for the council to sell the house on the open market?

surrender monkey

The incremental charge doesn't die with the tenant. In order for the property to be transferred to the son the council would require the payment of the charge outstanding. If the charge has expired then no money will be owed. The son got bad legal advice!. I'm sure that the council would not have the right to first refusal in the event that the tenant dies and wills the property to the son but the outstanding charge would have to be paid there would be no way round that as the charge is registered as a burden on the title to the property.

mickuhaha

I am aware of a person who lived with their son. Passed away and didn't have mortgage protection. Son is now in negotiations with the bank via solicitor to purchase the house off them at market value. Bank win's again.

surrender monkey

mickuhaha wrote: »

I am aware of a person who lived with their son. Passed away and didn't have mortgage protection. Son is now in negotiations with the bank via solicitor to purchase the house off them at market value. Bank win's again.

This is another thing to consider. If the father didn't qualify for mortgage protection due to his age then the outstanding mortgage plus the charge would have to be paid. Hard to tell what will happen here without the full facts. One thing is for sure though the son might not have gotten the bargain he thought he was getting !

Marcusm

Deleted User wrote: »

Can you give me even one example of how it's bad for the tax payer?


As an aside, me buying my house has cost me a fortune, vs if i had let the council maintain ownership. I don't think you know what you're talking about in fairness.

I can see your perspective. However, ...

An asset which has been funded by all taxpayers is capable of being acquired by an individual at a discount which is in essence a gift to that individual.
The son seems unlikely to have qualified for social housing on his own and, most likely, not a property suited to a family unit.
Nothing precludes the son from disposing of the property, pocketing the windfall, throwing it away and then falling back on the state.
The proceeds of sale are not generally used to provide replacement social housing of a similar standard in an equally suitable location.
In countries such as the U.K. where “right to buy” got out of hand, Social houses are often incapable of being replaced (eg in inner city locations) meaning that the once off transfer actually impedes future generations being able to live closer to work opportunities.
Again in the U.K., social housing properties regularly end up, after the recovery period, being sold at high prices and end up being rented back by housing benefit tenants meaning that the local authority directly funds the (now exhorbitant) price of housing stick which they generally sold at a loss to true value.

Social housing is generally a lifetime tenure, ie even when circumstances improve there is no requirement to leave and find the purchase of a private home. As a quid pro quo, I think this means that windfall gains should not be available as they generally come at the expense of future generations for whom the availability of social housing is curtailed.

Marcusm

mickuhaha wrote: »

I am aware of a person who lived with their son. Passed away and didn't have mortgage protection. Son is now in negotiations with the bank via solicitor to purchase the house off them at market value. Bank win's again.

I’m lost; how is the bank winning? The bank cannot benefit from any profit over and above the outstanding balance on the loan. If the son is negotiating to buy it at market value then that would mean he/his father’s estate is not losing out and may be gaining. The lack of mortgage protection hardly affords any benefit to the banks.

Marcusm

Marcusm wrote: »

I can see your perspective. However, ...

An asset which has been funded by all taxpayers is capable of being acquired by an individual at a discount which is in essence a gift to that individual.
The son seems unlikely to have qualified for social housing on his own and, most likely, not a property suited to a family unit.

In this specific instance, the son makes about 25k per year, so would most likely end up in a council house at one point or another. When he moved away from home, he moved in with a friend who had been gifted a house by a deceased relative, so he was paying rent to the friend, but i presume it was a fairly low figure.

I make about 35k and I know that for myself personally, I wouldnt be in a position to buy a house without the assistance of the Council scheme. So if i didnt buy my house off the council, i'd still be living here anyway (or in a different council house, etc. but you get the idea).

Nothing precludes the son from disposing of the property, pocketing the windfall, throwing it away and then falling back on the state.

This is the only thing I can see there being an issue with, but it is effectively stamped out by having the incremental charge. As far as I am aware, despite what was said above, the Council won't look for the charge off a deceased person, but in the event of that being the case and the son got the house with nothing owed on it, and managed to sell it on at full market value, it would require the father to die.

In the meantime the mortgage would still have to be paid. Unless the son murdered the father, i can't see how it's a real argument to put forward.


For what it's worth, though, the older versions of this scheme didn't have the clawback and lots of people in my area bought their house off the council and had it up for sale in no time at all. Many just left the area and moved elsewhere, and rented the house out. So the clawback is a good idea.

The proceeds of sale are not generally used to provide replacement social housing of a similar standard in an equally suitable location.
In countries such as the U.K. where “right to buy” got out of hand, Social houses are often incapable of being replaced (eg in inner city locations) meaning that the once off transfer actually impedes future generations being able to live closer to work opportunities.
Again in the U.K., social housing properties regularly end up, after the recovery period, being sold at high prices and end up being rented back by housing benefit tenants meaning that the local authority directly funds the (now exhorbitant) price of housing stick which they generally sold at a loss to true value.

Social housing is generally a lifetime tenure, ie even when circumstances improve there is no requirement to leave and find the purchase of a private home. As a quid pro quo, I think this means that windfall gains should not be available as they generally come at the expense of future generations for whom the availability of social housing is curtailed.

I can see what you're saying about the housing units not being available to future generations, however, i still think that's not an entirely fair argument as a family (and generations of a family) can keep a single council house indefinitely anyway.

For perspective, in my estate, which is still largely council-owned, there are a family, which consists of a single mother and 5 daughters. Of those 5 daughters, two have had kids. The two that have had kids have both gotten other council houses in this area. So that family now have three houses to their collective name. Only one of the lot of them actually has a job (and still lives at home with the mam).

A different neighbour is nearly 80 and is in ill-health. He has a son who is about mid 30s I think. The son is renting privately, but is also listed on the rent as living at his fathers council house address, so he pays the council the extra rent (it's a nominal fee of €20 or such). So even though he doesnt live in (or near) the house, the house will still be given to him by default once his father dies. So he will have his own house.


The 2nd story (pretending to live there to ensure you get the house) will become a lot more common as rents and house prices go mad and people want to ensure they have somewhere to live forever.

The 1st story indicates how a single family can effectively take ownership of multiple units by playing the waiting game.

Combine them both and the council aren't winning, and neither is the tax payer. The council will forever be maintaining housing for people who will never work. And future generations, whether these houses are owned by the council or the tenants, will never see the inside of them.


I realise the above stories may seem immoral or unfair, but those are the realities of the situation.

One of the girls in the family that moved into her own house in my area, pays approx €25 per week on rent. Her maintenance is covered and she can apply for assistance if a washing machine breaks, etc. from the community welfare officer (exceptional needs payments).

On the other hand, I still owe about €70k on my house, contribute to LPT and have to hire sole traders to carry out maintenance and repairs.

As a result of my life experience, I still can't see how people taking responsibility and taking up the offer of a discounted purchase price is bad for the tax payer.


(this post was a lot longer than i anticipated, sorry!)