Property Investment Opportunity With No Protection

[Nvp]

My mother in law has the opportunity to purchase her rented property at a considerable discount from the local authority under what is known as the Right To Buy Scheme. As far as I know she has to continue to live in the property and/or not sell it for a period of 5 years.

She doesn't actually have the money to purchase it so I would be happy to provide her with the funds to cover the whole purchase price.

I do not get on well with this woman but it presents an opportunity for my own family. How do I protect myself by preserving my interest in this property? As there is a significant profit to be made due to the difference in the purchase price and the current market value, my wife has told her mother we could give her a small sum of money on top of the purchase price she needs to pay. After 5 year resell restriction has lapsed can she simply transfer ownership on Land Registry to me?

I am happy for my mother in law to live in the property until she passes away, I wouldn't really be looking to cash in on the property. I just don't want her to sell the property behind our backs and go and blow the cash in Tenerife on Moroccan pool boys.

Her leaving it in her will to my wife might be an issue if me and my wife get divorced and my wife has a whole house I paid for. I'm obviously not planning getting a divorce but I try to not be naive when it comes to these matters.

Full disclosure, this property is located in the north of England, can be purchased for mid 5 figures and current market value is low 6 figures so not a multi million pound property in London.

If anyone has experience with this type of UK property issue I would greatly appreciate your input.

 

[JohnnyDoe]

Put the money and effort into a better investment. Btw, how can you know what will be the profit in 5 years?

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[Nvp]

JohnnyDoe said:
Put the money and effort into a better investment. Btw, how can you know what will be the profit in 5 years?
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The property prices in this area have been stable for a really long time. There is little to no likelihood of an appreciation in market value so even if in 5 years it sells for the market value today it represents a considerable profit from the discounted purchase price. The discounted purchase price of the property is approximately 45% less current market value.

 

[JohnnyDoe]

Nvp said:
The property prices in this area have been stable for a really long time. There is little to no likelihood of an appreciation in market value so even if in 5 years it sells for the market value today it represents a considerable profit from the discounted purchase price. The discounted purchase price of the property is approximately 45% less current market value.
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This is the kind of bias that destroys fortunes”¦
Too many things can go wrong with this deal.

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[NicolasMaduro]

Easy money unless your wife divorces you before hand ;-)

Nvp said:
Her leaving it in her will to my wife might be an issue if me and my wife get divorced and my wife has a whole house I paid for. I'm obviously not planning getting a divorce but I try to not be naive when it comes to these matters.
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Check the divorce rate and do the math. 5 years is a long time.

Nvp said:
I just don't want her to sell the property behind our backs and go and blow the cash in Tenerife on Moroccan pool boys.
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Surely your mother in law is not gonna f**k over her own daughter

 

[JohnnyDoe]

To rely on a mother in law and a wife to make a profit is pure gambling. Buy instead some bitcoin and check again in 5 years.

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[Nvp]

NicolasMaduro said:
Easy money unless your wife divorces you before hand ;-)



Check the divorce rate and do the math. 5 years is a long time.



Surely your mother in law is not gonna f**k over her own daughter
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This is precisely why I have a desire to find a way to protect myself legally.

JohnnyDoe said:
To rely on a mother in law and a wife to make a profit is pure gambling. Buy instead some bitcoin and check again in 5 years.
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I get what you are saying but surely if there is a way I can protect myself legally by way of a trust or some other legal instrument it would make total sense. I would be willing to assess the risk and make an appropriate decision.

 

[pipona]

give your mother in a law a mortgage, secured by the property, at an interest rate that makes it worthwhile to you.

 

[bubbledouble]

JohnnyDoe said:
To rely on a mother in law and a wife to make a profit is pure gambling. Buy instead some bitcoin and check again in 5 years.
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so very true. You can't trust your wave and put your own lifestyle in her hand unless she may be a slave you bought on the Philippines or Chinese market.

 

[Golden Fleece]

pipona said:
give your mother in a law a mortgage, secured by the property, at an interest rate that makes it worthwhile to you.
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Exactly. Just take a mortgage to the property for the amount of the loan. Then she has no right to sell the property without paying off that loan. That solves the issue of your losing any money.

The remaining problem is that she could still sell the property, pay off your loan, and pocket the remaining equity in the property. You will need to contact a real estate attorney in the UK to solve that issue. There is likely a contractual arrangement that can solve this problem.

 

[bubbledouble]

Golden Fleece said:
Exactly. Just take a mortgage to the property for the amount of the loan. Then she has no right to sell the property without paying off that loan. That solves the issue of your losing any money.
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it could work, but if this ends in a court you will lose I'm sure, they will look at your marriage.

 

[Golden Fleece]

bubbledouble said:
it could work, but if this ends in a court you will lose I'm sure, they will look at your marriage.
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She is the real owner of the property. He is simply lending her the money to buy it, just as a bank would. That is not a problem at all -- at least, based on U.S. law. The problem issue is the equity above the loan amount. That depends on UK law and requires hiring a real estate lawyer as counsel.