Q I have a property which I bought with an equity loan under the help-to-buy scheme. This means that if I sell my property I will pay back a proportion of the significant value growth to the help-to-buy agency.
Can my father’s property company purchase my property at lower than market value – thus reducing the proportion of profit transferred to the help-to-buy agency – and then my parents give me the balance between sale price and market value to assist in purchasing a new home?
UP
A No, is the short answer. When you bought your home, you agreed that Homes England (which hands out equity loans under the help-to-buy scheme) could secure a legal charge over your property. This means that it can only be sold if the equity loan is repaid in full. It also means that if you try to sell your property for less than market value, Homes England will block the sale by refusing to release its charge over the property.
For any sale to go ahead, a property must be sold on the open market at a market value determined by an independent valuer. Homes England gets back the percentage of that figure that its equity loan represents so benefits from any increase in the value of the property. So if you initially had an equity loan of 20%, Homes England is repaid 20% of the market value or the sale price if that is higher.
As to whether your parents can give you money towards your next property purchase, that’s entirely up to them.
