Renting elderly Mothers house

chriswen

My Mother is 88 and has a 2 bedroom house. We were thinking of renting her house and my husband and I selling out house and getting a mortgage to buy a house with a Granny Annex. My Mother would then pay the mortgage with the rent she gets from her house. We do not have room to build an annex onto our exsisting house.

This all sounds ok, but we have reservations
....what if she eventaully has to go into a Home, we are then stuck with the mortgage which we would not be able to pay. We would then have to sell her house to pay for the Care Home fees, so therefore would not get the money from the renters, to continue paying the mortgage.

Also would be be liable for Unearned Income from the rent she pays us.

Yorkie1

Can I just clarify whether you intend to rent her house from her, or for it to be rented out to other tenants? Your post is a little ambiguous.

I think you are right to have reservations, particularly if the house is to be rented out to other people. For a start, your mother would become a LL with all the legal responsibilities that that entails - gas safety inspection, repairing, inspection, tenants' expectations, deposit etc. Not to be taken lightly.

Second, getting the mortgage, I am not an expert but I suspect that a lender would not lend you money on the basis of income from your mother from rental income. If your income is not sufficient to obtain the mortgage, I suspect that it is a non-starter. Although, as I say, I am not an expert.

Even assuming that the mortgage is arranged on the basis you suggest, it sounds from your post as though there is little money available for contingencies. In addition to the points you raise, what if the tenants trashed the place and lots of money was needed to repair, redecorate etc? What if you had a void period of several months? Or the tenants failed to pay rent; it will take months to evict them - with no income coming in.

If you had to sell the house, bear in mind it will have sitting tenants in it. You would either have to sell it as a going concern with the tenant in situ - therefore reducing the amount you'll get for it, or wait until a notice of intention to end the tenancy (a s.21 notice) takes effect and the tenant in fact does leave. This could delay the sale considerably, with the risk either of of void periods after the tenant has left, or of losing your buyer if your tenants refuse to act on the s.21 notice.

chriswen

Thank you for all the information, you have mentioned points that I had not thought of.
I think the best idea would be for her to sell her house and buy a warden controlled flat near as possible to us, so that we can see her on a daily basis.