Renting to pay Care Home fees

mar<

Very sadly my Mum has been assessed and found to be needing immediate residential care by local Social Services.

My Mum has assets in the region of £350k including her house @ roughly £130k. She has several investments and 2 pensions that she has been living off.

We have Power of Attorney sorted out and are just in the process of activating it.

We thought it may be possible to rent her house, and possibly buy other properties and rent those out too to cover the care home fees of about £550 per week.

We wondered if anyone could give advice on this, or suggest better ways to proceed.

Many thanks in advance.

TBeckett100

sent you a PM

foreign_correspondent

Hi,
I am wondering the same thing - it looks like my gran may soon have to go into residential care, and we are wondering whether it wold be be possible to rent her house out, rather than sell it, to go towards the fees...

any advice appreciated!

Fire_Fox

"What are my duties as an Attorney? The Mental Capacity Act 2005 imposes some specific duties. When acting under an LPA you have a duty:

• to act in accordance with the Act’s principles;
  • in particular to act or make decisions in the donor’s best interests;
• to have regard to the guidance in the Code of Practice;
• to act only within the scope of your authority as attorney.

When agreeing to act as attorney under a Lasting Power of Attorney you are taking on a role that carries a great deal of power which you must use carefully and responsibly.
Other duties and obligations are set out in chapter 7 of the Code of Practice. They include:

• A duty of due care when making decisions on behalf of the donor
• To carry out instructions as required by the LPA
• A duty not to delegate the powers given to you under the LPA unless you have been authorised to do so
• Not to benefit yourself but to benefit the donor - this means avoiding conflicts of interest and in particular not profiting or acquiring personal benefit from your position
• A duty of good faith, which means to act with honesty, and integrity
• A duty of confidentiality - to keep the donor’s affairs confidential unless the donor has consented otherwise
• To comply with the directions of the Court of Protection
• Not to give up the role without telling the donor and the Court.

And specifically in relation to Property and Financial Affairs LPAs:

• To keep the donor’s money and property separate from your own
• To keep accurate accounts of your dealings as attorney.

These duties are described in greater detail in the Code of Practice which you should read if you are deciding whether to take on the role of attorney. If you become an attorney you will have a legal duty to have regard to the contents of the Code.
If you do not perform your duties properly, you may be ordered to compensate the donor for any losses they have suffered as a result. Anyone ill-treating or wilfully neglecting someone they have care of who lacks capacity, or to whom an LPA appointment relates, can be found guilty of a criminal offence. The penalty for such an offence is a fine and/or a sentence of imprisonment of up to five years."

http://www.publicguardian.gov.uk/dec...s-attorney.htm

G_M

Firefox, to be fair to the OP I don't think he's planning to use the rental income himself, but to fund the care home costs. This would be a valid alternative to selling the property and using the equity released for the care home.

As long as his mum's assets are being used for her benefit, and it is a financially sound way to do so, there would be no lack of honesty or integrity.

I assume he is looking at using the investments/pension to fund the new house purchases, again to provide rental income for his mum.

The question to me is: is this a safe and wise way to fund the care costs or would using the existing investments/pensions income be wiser?

foreign_correspondent

There is no intention to "ill treat or willfully neglect" anyone, (in fact, just the opposite) so I don't think that last bit applies...!

Just considering all the options for paying for her care... she would be very reluctant to let the house go completely to be honest, and wants to go back home, but it is looking less and less likely, due to recent events, sadly. I also wonder whether it would be faster to get a tenant in, than it would be to sell in the current climate?

mar<

That's exactly our position too FC

Fire_Fox

G_M wrote: »

Firefox, to be fair to the OP I don't think he's planning to use the rental income himself, but to fund the care home costs. This would be a valid alternative to selling the property and using the equity released for the care home.

As long as his mum's assets are being used for her benefit, and it is a financially sound way to do so, there would be no lack of honesty or integrity.

I assume he is looking at using the investments/pension to fund the new house purchases, again to provide rental income for his mum.

The question to me is: is this a safe and wise way to fund the care costs or would using the existing investments/pensions income be wiser?

I don't see how buying property in such an uncertain market could ever be deemed to be for the benefit of the person in care, that is blatently to preserve the inheritance which is in contravention of the duties of a PoA. :mad:

Mum doesn't need rental income she has liquid assets. She doesn't need the hassle of being a professional landlord, if she had wanted that she would have started her own property empire! She has sufficient assets to last twelve years of care, even
if no interest is accrued which would be substantial on £350K.

foreign_correspondent wrote: »

There is no intention to "ill treat or willfully neglect" anyone, (in fact, just the opposite) so I don't think that last bit applies...!

Just considering all the options for paying for her care... she would be very reluctant to let the house go completely to be honest, and wants to go back home, but it is looking less and less likely, due to recent events, sadly. I also wonder whether it would be faster to get a tenant in, than it would be to sell in the current climate?

Apologies I didn't notice the date on the original post, so the above post was not aimed at you other than for information. Please exercise great caution FC, it is frighteningly easy to inadvertently breach the duties of a PoA.

I have PoA for my parents as they travel extensively; the PoA is used only for one savings account which is there in case of any major family emergency. We moved the money two years ago to get a better interest rate to Tesco Personal Finance. I was advised by a junior manager that the account should be in joint names with my mother in order to effect the PoA ... had this gone ahead I would have 'stolen' half the money in that account. :eek:

foreign_correspondent

It's a minefield - and it looks like we will have to sort something out quite quickly - my gran has been in hospital, then respite care for two weeks, then came home yesterday - only to have another fall early this morning, she was discovered by the home help on the floor, then my mum went over, and she fell again, with my mum there... my mum cannot care for her full time, she could not pick her up off the floor this morning, and my gran is adamant she wants to go home again ASAP...

I think everyone but her realises this is no longer realistic, or safe, but there is so much to try and sort out, from people's emotions, to finances...

It is very early days, and we will have to wait to see what social services say, but I am just trying to think of how we could manage things, if she can be persuaded to stay..

mar<

Fire_Fox wrote: »

I don't see how buying property in such an uncertain market could ever be deemed to be for the benefit of the person in care, that is blatently to preserve the inheritance which is in contravention of the duties of a PoA. :mad:

Mum doesn't need rental income she has liquid assets. She doesn't need the hassle of being a professional landlord, if she had wanted that she would have started her own property empire! She has sufficient assets to last twelve years of care, even
if no interest is accrued which would be substantial on £350K.

I'm not talking about buying, but 'not selling' and using rent rather than the proceeds of the sale to fund care.

I realise the fragility of our position and will probably just sell. PoA is just coming through and decisions need to be made soon.

Thanks for your input.

Fire_Fox

mar< wrote: »

I'm not talking about buying, but 'not selling' and using rent rather than the proceeds of the sale to fund care.

I realise the fragility of our position and will probably just sell. PoA is just coming through and decisions need to be made soon.

Thanks for your input.

Which part of the following did I misunderstand?

mar< wrote: »

Very sadly my Mum has been assessed and found to be needing immediate residential care by local Social Services.

My Mum has assets in the region of £350k including her house @ roughly £130k. She has several investments and 2 pensions that she has been living off.

We have Power of Attorney sorted out and are just in the process of activating it.

We thought it may be possible to rent her house, and possibly buy other properties and rent those out too to cover the care home fees of about £550 per week.