Renting property with Power of Attorney

PocketVenus_2

Hellooo, its my first post here

My mum is about to move into sheltered accommodation. My bro & I have joint Power of Attorney (EPA) & would like to refurbish her property, using some of her savings, & rent it out to provide additional income for her, & keep her house in good nick in case we need to sell it if she eventually needs a care home.

Can we do this? Are there any legal pitfalls we should be aware of? Who would be the landlord, us or my mum?

Any advice welcome - ta muchly x

googler

PoA demands that you act in the best interests of the Donor (your Mum) at all times.

It may be debatable whether or not acting as first-time landlords (I assume you don't have other rental properties) qualifies as 'best interests'

Although you have the PoA at the moment, and your Mum was of sound mind when she gave you the PoA over her affairs, is she still of sound enough mind to decide whether or not you do this or not? If she is, you shouldn't really be invoking the PoA, I feel......

You should research legislation on 'deprivation of assets' with regard to family members being taken into care homes under local authority control.....

PocketVenus_2

Thanks. No, she has dementia, so its down to us to do what we think is best. We'd rather rent it out for her whilst house prices are so low, thus preserving it for the future when we may need to sell it to pay for extra care. We have no experience in this though, which was why I was asking for advice Right at the very beginning of the process - we may yet change our minds depending on what we find out.

clutton_2

suggest you contact a good letting agent who is a member of ARLA - ask them to accompany you round the property, get their opinion as to what work needs doing, now much rent you will get and if there is a demand for it....

do you know any local builders who could quote for the work ? ask for 2-3 quotes...

As a LL tho, it seems to me that instead of paying letting agents' fees for possib ly years, you might be better off selling and putting the money into bonds....

BitterAndTwisted

A detached observer (me) thinks this looks highly speculative and may not be in your mother's best interests. Becoming a professional landlord is not a route to guaranteed wealth in the short-to-medium term and as your mother has dementia the funds from the house-sale may be needed sooner than you think. You DO NOT want to have tenants with a six month lease who you cannot legally evict right at the very moment when the funds are needed.

sequence

Why bother renovating it first ? You could leave it as is unless it has major structural problems. The state of the house won't have a huge impact on it's rent value, unless it's a complete state, and you could spend thousands doing it up.

PocketVenus_2

Thanks for the replies. She is moving into 'extra care' sheltered which can cope with dementia, so she should be ok for a while. Yes, the house is a state - couldn't let it out as it is, & even if all this were to fall through & she was to stay there, would need work.

My view is, better to have a regular income coming in for her to offset her rental costs, than sell it at rock bottom price. If she ends up in a nursing home you don't have to sell the property immediately anyway so no probs getting shut of tenants.

It was purely the legalities of doing this as an attorney I was concerned about, as obviously I want to keep on the right side of the law.

zfrl

We are doing this. The landlord is your mum for legal & tax purposes. This is not a problem as you have POA. We are doing it for the same reason. Nursing home not needed now & house prices are low. If a nursing home is needed then the money from the rent which we have banked will be used until the property can be sold.

PocketVenus_2

Thanks, that's encouraging. Given that the house needs improvement before letting, is it legal/moral to use some of her substantial savings to do this? We are screwed if we can't, because we can't afford to do it up for her, & no one would rent it as it is.

zfrl

We used savings to do the roof etc. It is a decision only you can make. As others have said you must act in her best interest. You will need to look at all the figures before making the decision. Ours was about 10% of the value to do up & so we thought it was worth it. We can recoup this in about 18 months with the rent.

tbs624

zfrl wrote: »

We are doing this. The landlord is your mum for legal & tax purposes. This is not a problem as you have POA. We are doing it for the same reason. Nursing home not needed now & house prices are low. If a nursing home is needed then the money from the rent which we have banked will be used until the property can be sold.

That's fine until you have a T who does not actually pay rent. You also have to bear in mind house prices aren't likely to rise much any time soon.

Don't forget that you will need

• an Energy Performance Certificate
• LL insurance
• annual gas safety checks and certification
• a working fund for repairs/maintenance
• letting agency fees

and so on.

You'll need to fully acquaint yourself with your legal obligations as a LL, on things like tenancy deposit regulations etc, because even if you do use an LA, ultimately the buck stops with you.

You may want to read up on LLzone, LLlaw, RLA, NLA and Shelter websites before you go ahead, plus HMRCs Property Income Manual.