Help: Can I help stop my father-in-law losing his house?

iain999

Hi,

I'm really hoping some informative person can help me understand if my father-in-law is able to claim any help/benefits to stop him losing his house. Thanks in advance for reading.

Trying to cut a long story short, here are the key points:

• Bought his council house in late 90s.
• Reaches retirement age September 2012.
• £28,000 left to pay on mortgage.
• Only paying interest on mortgage at the moment.
• Currently has Prostate Cancer and recovering from Stroke which happened over a year ago.
• Working reduced hours for a while now due to stroke and can only afford to pay interest only on mortgage.
• Currently receiving pension from previous employment (i.e. took it early) as he couldn't afford not to.
• I think he has credit card debts as well but no idea if they are substantial or not. Possibly they are.

As he has no realistic way of working the hours required over the next 5-10 years to pay of £23,000, he has a massive problem to face.

Possible options I can think of:

1. Give house back to Council and start paying rent again.
2. Sell house for something between £60k/£75k and possibly move into a Council house.
3. Sell house to one of the dodgy companies that promise to let you stay in your house until you die.
4. Find a way to try and pay off his £28k debt.

Firstly, are these options valid and secondly are there any others???

For option 1, he is basically throwing away the equity in his house and paying rent again. I'm not even sure if he can afford this when he retires, however possibly other benefits are available to him at this time???

For option 2, downside is that he needs to move out of the home he has stayed in for all those years however at least he has money in the bank to help him with his retirement.

For option 3, I can see this a horror story in the making.

For option 4, I have no idea how to make this a realistic option unless he is entitled to help/benefits.

Thanks again for taking the time to read this.

Notmyrealname

1) Can't give the house back to the council. He will have to sell the house.
2) Even if he does sell his house, he is not guaranteed a council house. In my area the waiting list is a decade. Because of the money he'll have, he will have to pay rent, council tax.
3) The govt have stopped that.
4) That or sell the house and go into private rent.

He will be eligible for some pension credit and State Pension when he reaches retirement age which should also qualify him for council tax benefit.

If he lives alone is he claiming the 25% single adult rebate on his council tax?

kingfisherblue

I can't help you as I don't have the knowledge. However, for your 'dodgy horror story' in option 3, I can comment. A friend of my mum sold her home to one of these companies. This was about thrity years ago, before her husband died. It was his idea, as they didn't have any family to leave the house to and it would provide additional income. He died soon afterwards. His wife, mum's friend, died last year at the age of 83, having enjoyed quite a reasonable income from the sale thirty years previously.

BigAunty

For his credit card debts, go to the Debt Free wanabee board and the members there will come up with a strategy for him to manage them.

You really need to know his full income and expenses, including debts to sort him out in full, anything hidden could derail your solution, you must uncover it all, no point in saving the house by chatting to the lender only to find he has secured loans on it, for example.

Download the MSE budget planner and see the Direct Gov website for good info on how to manage debts. He needs to be candid about his debts in full.

The Shelter website has excellent info for struggling property owners on how to avoid repossession and the various government schemes designed to prevent their homelessness.

Option 1 - Councils don't routinely buy properties off struggling homeowners and then let them stay there. However, there is a scheme detailed on the Shelter website where a social landlord operates this for certain groups of vulnerable people.

Option 2 - Councils who regard their homelessness applicants as having caused their homelessness deem this as 'intentional homelessness' and refuse to house them. This includes leaving property when they do not have to. You need to read up on the Shelter website homelessness section and understand whether or not the council will regard him as a priority at all (because of his health issues), or will only regard him as priority if the property is repossessed, or could take action sooner.

Why not apply for social housing anyway? As an owner-occupier, he has low priority but his health issues and likely future repossession may be taken into account.

Other options include him selling the property and renting privately. To understand his benefit entitlements, you can use the Turn2us online benefit calculator.

If he sells, note that those with capital over 6k (may be 10k for pensioners, I'm not sure) have reduced eligibility for means tested benefits while over 16k rules it out. Means tested benefits includes things like council tax, housing benefit.

zzzLazyDaisy

That was before ASTs were introduced. Nowadays, once the initial 6 or 12 month term has expired the company can evict the former homeowner with impunity. I did read that the govt was going to make these 'sell and rent back' schemes illegal, but I don't know if that actually happened.

EDIT - this was a reply to kingfisher's post (should have quoted, sorry)

dodger1

Sell the house and rent privately with the proceeds. Once the savings are reduced to a certain limit (others will tell you the limit) he will be able to get LHA. The amount will increase as the savings decrease.

kingfisherblue

Daisy, what are ASTs?

BigAunty

If the illnesses have left your FiL with mobility or care needs, look at the Direct Gov website to determine if he is eligible for Disability Living Allowance. It is not means tested and is an 'in work' benefit, meaning many people in employment can receive it. If he is eligible make sure someone from a disability or elderly charity helps you with completing the application as they'll know best how to describe his care/mobility needs.

xylophone

Is there any chance he could take a lodger under the 'rent a room' scheme
and use the rent to start paying off the mortgage?

http://www.nidirect.gov.uk/the-rent-a-room-scheme

iain999

Thanks for all the responses so far. I'm surprised (and grateful) how quickly people are to respond :-)

Sounds like lots of reading to try and understand all the options available.

BigAunty

kingfisherblue wrote: »

Daisy, what are ASTs?

Assured Shorthold Tenancy agreements - the current ones in use for private tenancies.

Although for the buy and rent back schemes, you'd think that there would be other legal contracts in place to give the ex homeowner (now tenant) security of tenure for the rest of their natural life.