DOUBTS ABOUT BUYING HOUSE WITH DAUGHTER
DEAR JENNIFER: I live alone with my 25-year-old daughter. We currently live in the house that my family grew up in but, as all my other children have left home and moved on, it’s just too big for the two of us. I have been thinking for some time about selling it, buying a smaller house, and creating some extra capital.
When I mentioned this to my daughter, she surprised me by suggesting that we buy the new house together.
She has a secure, well-paid job and this would mean I could free up even more capital to do the things I’d like to do in retirement.
I am currently 62 and plan to stop working next year. It would also mean that she gets a foot on the property ladder.
Money issues aside, I like the idea of having her around. We get on well together and I think it would work, providing we can give each other our own space in the new house and respect that.
In truth, I am struggling to see a downside in all this so why do I still have doubts?
JENNIFER SAYS: You’re right, there any many positives to this idea. However, you’re also right to have some doubts because there are some potential pitfalls. Most of these are legal or financial and some are a bit morbid!
You’ll need to have a detailed talk about ownership and wills, so I strongly advise that you get legal advice from a competent conveyancing or property solicitor before doing anything else. The first decisions you’ll likely need to make are who will own the house, and how?
This will probably be as Tenants in Common (your solicitor can explain this) but it is also a good idea to draw up a Co-living Agreement.
This is a formal document that sets out who owns the property and what should happen if certain circumstances change.
Typically, this might include details of what happens to the house if someone dies. Will it be sold immediately, and the deceased’s estate distributed as per the will? Or can the surviving owner stay in the property?
If it were you to die first in this scenario, this would likely mean your other children having to wait for their inheritance. Would they have a problem with this?
The document is also often used to clarify who pays for what and in what proportions.
This might include details about mortgage payments, household expenses, insurances, repairs or building works, which can help to resolve any disagreement or uncertainty.
It’s a complicated area and it’s important to agree these issues in advance and hopefully avoid any ill-feeling amongst family members. It’s good that you and daughter get along well but what will you do if you fall out for any reason?
Also, what would happen if one of you starts a serious relationship, one that looks like it might lead to marriage?
In which case, what will you do if one of you wants to move out and take your share of the house value with you.
Don’t simply assume that this won’t happen because you just don’t know.
None of these potential issues are insurmountable if you prepare adequately and are both prepared to be flexible if something unforeseen occurs.
Given that, I see no reason why you can’t make such an arrangement work. Good luck.