Hello. It isn’t a chat service. Replies come by email so there may be a delay inevitably. I have had a client and hence the delay getting back to you. I am just formulating my response.
As you appreciate, your father now has (his estate has) to lots of inheritance tax exemption, £650,000 and hence, it makes sense to try to reduce the balance of the estate so that it becomes below £650,000.
As you are probably also aware, if your father makes a lifetime gift, before it is completely exempt from inheritance tax, it must’ve been transferred for 7 years and just as importantly, your father must not retain an interest in the property. He does, then it becomes a gift with reservation which is treated as though it never happened.
Your father therefore must either give away the cash or the house(s) and retain no interest although he can retain a little control of its property.
It doesn’t really matter whether your father buys houses and puts them into the grandchildren’s names or he gives them cash to spend as they wish (or on houses), the end result is the same although obviously, if he buys houses for them he is in more control because he can then put a restriction on the property which prevents it being sold or remortgaged except under a set set of circumstances.
I cannot see any point in charging a nominal rent to the grandchildren and he can tell me what you’re thinking was in this respect, I can expand my answer or explain further.
What would be problematical is if he bought houses but kept them in his own name