Living in a Grandmother House - Legally

rhydkid

Hi,

I've just been given the oppertunity to live in my fiancee's grandmothers house due to the recent death of her grandfather. Her grandmother will be moving to live with my fiancee's parents leaving us to live alone in the house. As the house is mortgage free and her grandmother has very little outgoings she does not want any rent for the property.

Obviously this is great however I'm a little unsure of what the legal implications may be?

The bills at present are all in her name as the house will remains hers. I'm aware that we would need to contact the local council to amend rates (as she will have been paying reduced rates due to her age) although this is all I do know.

Can anyone give me/us pointers as to what we (both parties) need to do, if anything, to make this legal and all above board?

Anyone's help is much appreciated.

bryanb

The answers to this are going to depend on whether you and fiancee are on benefits.
Presumably you are referring to Council tax 25%?

Mini_Bear

Could you not offer her a small amount of rent say £50/week and then have a proper tenancy written up? She can then get the necessary insurances and boiler/gas certification etc?

rhydkid

Neither of us are on benifits, both in full time employment.

Assuming all tax rates are at the correct level, would it be legal for us to live in the house with bills being paid from the house owners bank account & no rent being paid?

Does the house need to be classed as 'leased' or does family living there and no rent changing hands mean it is exempt and can stay as it is?

bryanb

Mini_Bear wrote: »

Could you not offer her a small amount of rent say £50/week and then have a proper tenancy written up? She can then get the necessary insurances and boiler/gas certification etc?

Surely if there is no tenancy or rent then the certs you mention are unnecessary? Insurance would not be a problem as there is no lender involved.

rhydkid

We can offer rent but as you can imagine we want to have as little change as possible and having a rental agreement drawn up seems unnecessary.

I'm worried that things like the house insurance, contents insurance etc will not be valid as the home owner is no longer in residence.

Also is there any other Authority that would need to be informed of the change of occupancy?

bryanb

You should contact the insurers to find out their policy. Aside from that I see no problem, as long as you make satisfactory arrangements with G/mother for bills. Strictly you should change the electoral roll, change address on driving licences, car insurance, car registration, bank accounts.

00ec25

exempt from what?

potentially as your grandmother is no longer living there, since her main home is now with her own children, then it could attract Capital Gains Tax from the date she vacated it. Obviously this only matters when she sells it, however, if a formal rental agreement was in place (even for a peppercorn or zero rent), then she has documentary evidence to support a claim for "lettings relief" against the CGT, it would not be exempt.

potentially if grandmother ends up in care she might be forced to sell her house to pay for it and you would lose your accommodation

you have already identified the council tax issue,

the insurance will have to be confirmed with the current providers who, family member in residence not withstadning, may decide it is no longer a residential policy but must now become a landlords policy

potentially (if they find out!) HMRC may decide that the fact the utility bills are being paid for you means you are receiving a "benefit in kind", ie the bills being paid equates to an extra source of income to you upon which you might be liable for Income Tax

G_M

If no rent changes hands, there is no tenancy.

You would be living there under licence.

You would have none of the rights of (an AST) tenant.

Your (soon-to-be gandma-in-law's) insurance needs checking. It probobly restricts residency to the home-owner and immediate family. You need to check the wording, perhaps get their (written) permission.

Speak to the council re council tax.

Bills can stay in her name, or yours, as long as they are paid!

As no AST tenancy exists, gas certificate etc not required.

For mutual peace of mind, and in case of later dispute, it might be worth drawing up a 'Licence Agreement' outlining who pays which bills, who is responsible for maintenance/repairs (boiler breakdown? tiles blown off roof?), what happens if/when grandma wants to move back, what happens in case of any dispute over finance, moving out etc., what happens if you+fiance fall out (I know - unlikely & horrid to consider, but best to cover all eventualities in advance) etc etc....

rhydkid

Thanks for all of the above replies - I'll be following up on a couple of the suggestions.

Much appreciated.