Advice on eviction

The_Negotiator

Rocky99 wrote: »

Hi everyone

I have been reading through your posts and thank you all for you input.

I have to say I'm struggling to understand a lot of these elements up for discussion.

I just wanted to clarify figures

Purchase price of property £250000, parents 'gifted' £100000 as a deposit as this was the ONLY way the mortgage company would entertain this mortgage.

Parents took £100000, we took £50000 and paid all fees.
Hoping to use the leftover to plunge into a family house for us. This did not happen so over time was used for mortgage payments and we did purchase a car, which we have no sold and downsized to release some money.

The mortgage payment has been an average of £700 per month. We signed this 'contract' three months after the completion. The tenancy agreement was signed around a year ago. I'm struggling to find this agreement at this moment. I really want to push that although the tenancy agreement was arranged the council officer was informed of everything, we did not pretend any rent was being paid or going to be paid, my parents would have never agreed to that.

The house at the time was given a very generous valuation compared to other houses. Right now the house it is joined to sold 2 months ago for £185000, my parents house is slightly bigger.

If you really get down to it we're possible 5000/8000 'infront' when taking off mortgage payments and fees. But adding up the costs we've incurred moving around etc because we are struggling and have been for sometime we might even break even.

When I signed that contact as a naive 24 yr old I looked up to my dad thinking a parents job was protection. I did not ever consider my father would nail me to the wall in this way...

So:

You got a house worth £250,000 for £150,000 and walked away with £50,000 cash. I.e. you paid £100,000 for a £250,000 house?
Your parents sold you their £250,000 house for £100,000.
They live there rent free.


It probably looked like a good purchase at the time for you.

ScorpiondeRooftrouser

Rocky99 wrote: »

Hi everyone

I have been reading through your posts and thank you all for you input.

I have to say I'm struggling to understand a lot of these elements up for discussion.

I just wanted to clarify figures

Purchase price of property £250000, parents 'gifted' £100000 as a deposit as this was the ONLY way the mortgage company would entertain this mortgage.

Parents took £100000, we took £50000 and paid all fees.
Hoping to use the leftover to plunge into a family house for us. This did not happen so over time was used for mortgage payments and we did purchase a car, which we have no sold and downsized to release some money.

The mortgage payment has been an average of £700 per month. We signed this 'contract' three months after the completion. The tenancy agreement was signed around a year ago. I'm struggling to find this agreement at this moment. I really want to push that although the tenancy agreement was arranged the council officer was informed of everything, we did not pretend any rent was being paid or going to be paid, my parents would have never agreed to that.

The house at the time was given a very generous valuation compared to other houses. Right now the house it is joined to sold 2 months ago for £185000, my parents house is slightly bigger.

If you really get down to it we're possible 5000/8000 'infront' when taking off mortgage payments and fees. But adding up the costs we've incurred moving around etc because we are struggling and have been for sometime we might even break even.

When I signed that contact as a naive 24 yr old I looked up to my dad thinking a parents job was protection. I did not ever consider my father would nail me to the wall in this way...

So as I read it, you took out a 150,000 mortgage, then you paid your parents 100,000, and they transferred an asset worth 250K (at the time) to you.

So you were effectively 150K up on the deal. Any subsequent depreciation of the asset is your problem, not theirs.

It was also your decision to take that additional 50K loan from the bank, you could have borrowed 100K only and paid the full sum over, thereby limiting your immediate outgoings, as you knew that the asset would not be realisable for some time. This was madness in the situation, and nothing to do with your parents.

The 150K seems a not unreasonable compensation for them to remain rent free in the house until their deaths, as was agreed at the time.

Unless I have something wrong, this was not a one-sided or bad deal at the time, from your parents point of view. The problem was that you could not then, and certainly cannot now, afford to tie up all this money for the length of time you chose to so are struggling in the short term. However, that was something you should have been aware of, not them.

The long term benefits of the deal to you are still there if you can wait for them. If you can't, you should be looking maybe to find someone to take the house off your hands with a similar deal to the one you originally had with your parents.

Granariesgirl

BigAunty wrote: »

I myself have recommended putting in writing the agreements, their options,the expenditure incurred by the OP, etc, but I suppose this could be equally seen as risky, putting things down in black and white that they are later held to account for so perhaps the OP should get legal advice on the communication strategy and content of any such letter that doesn't expose them to a greater chance of litigation/compensation claim further down the path.

Fair point, BigAunty.:cool:

BigAunty

The_Negotiator wrote: »

So:

You got a house worth £250,000 for £150,000 and walked away with £50,000 cash. I.e. you paid £100,000 for a £250,000 house?
Your parents sold you their £250,000 house for £100,000.
They live there rent free.


It probably looked like a good purchase at the time for you.

What is missing is how the OP thought she could afford to pay £700 a month to subsidise their accommodation for the next 25 years (if that's the mortgage term) or why she thought she could afford a second property when her income was maxed out on that one so that a lender wouldn't touch her?

Then again, how the elder parents thought that their daughter could achieve this feat, too....

Both had unrealistic expectations and didn't consider the risks.

Assuming the couple are on state pensions, I can't see how they could cover anywhere near £700 a month, that would be most of their disposable income so unless her parents have a generous occupational pension, asking for rent was always going to backfire.


Local Housing Allowance for a 1 bedroom property (as that's all the OPs parents would get) is set at the bottom third of market rents. My guess would be that it will be significantly less than the mortgage, though I could be wrong, and so HB might alleviate some of the financial pressures (remains dubious if they could get HB), it still might not fully mitigate it and the OP will still struggle to get a lender to give her a second mortgage for her own property dreams. OP should check the LHA rate for a 1 bed.

ScorpiondeRooftrouser

BigAunty wrote: »

What is missing is how the OP thought she could afford to pay £700 a month to subsidise their accommodation for the next 25 years (if that's the mortgage term) or why she thought she could afford a second property when her income was maxed out on that one so that a lender wouldn't touch her?

Then again, how the elder parents thought that their daughter could achieve this feat, too....

Both had unrealistic expectations and didn't consider the risks.

Assuming the couple are on state pensions, I can't see how they could cover anywhere near £700 a month, that would be most of their disposable income so unless her parents have a generous occupational pension, asking for rent was always going to backfire.


Local Housing Allowance for a 1 bedroom property (as that's all the OPs parents would get) is set at the bottom third of market rents. My guess would be that it will be significantly less than the mortgage, though I could be wrong, and so HB might alleviate some of the financial pressures (remains dubious if they could get HB), it still might not fully mitigate it and the OP will still struggle to get a lender to give her a second mortgage for her own property dreams. OP should check the LHA rate for a 1 bed.

It's not a matter of asking for rent backfiring, or whether they can afford it, she has no right to ask for rent as she bought the property for a hugely reduced price on the grounds that no rent would be paid.

The_Negotiator

BigAunty wrote: »

What is missing is how the OP thought she could afford to pay £700 a month to subsidise their accommodation for the next 25 years (if that's the mortgage term) or why she thought she could afford a second property when her income was maxed out on that one so that a lender wouldn't touch her?

Then again, how the elder parents thought that their daughter could achieve this feat, too....

Both had unrealistic expectations and didn't consider the risks.

Assuming the couple are on state pensions, I can't see how they could cover anywhere near £700 a month, that would be most of their disposable income so unless her parents have a generous occupational pension, asking for rent was always going to backfire.


Local Housing Allowance for a 1 bedroom property (as that's all the OPs parents would get) is set at the bottom third of market rents. My guess would be that it will be significantly less than the mortgage, though I could be wrong, and so HB might alleviate some of the financial pressures (remains dubious if they could get HB), it still might not fully mitigate it and the OP will still struggle to get a lender to give her a second mortgage for her own property dreams. OP should check the LHA rate for a 1 bed.

If the parents were in their 80s then the OP could have been quids in (they are still coming out on top as it is).

BigAunty

ScorpiondeRooftrouser wrote: »

If you can't, you should be looking maybe to find someone to take the house off your hands with a similar deal to the one you originally had with your parents.

Actually, that's a great suggestion that the OP should explore - can she sell the property to a professional landlord with her parents in situ and have the new landlord take them on as tenants?

There's no way a professional landlord would take on tenants for the rest of their natural life who won't pay a penny so they'd either have to evict them or get them to sign up for a standard AST.

That would create a liability for rent under the new ownership, and therefore perhaps they could get HB (if they aren't held to deprivation of capital by the local council over that 150k hit on the house).

The OP might not be able to sell it at market rates to a professional landlord as generally they will be seeking a good mark up between mortgage costs and rental. I wonder if the OP could tempt a professional landlord to take the risk of having obstructive tenants that they have to evict by offering the 190k value house at a discount, enough to cover the mortgage and selling fees?

Not sure many landlords would be tempted by the scenario that the OP outlines of tenants that feel they shouldn't have to pay rent. I imagine most landlords would prefer vacant possession but if they did have the appetite to secure a £190k property for around £155k for the loss of few months rent during the eviction process, then perhaps that's possible.

That way she passes on the hassle to another landlord and it is them that evict her parents if they won't pay.

There are also 'we buy your house for cash' merchants. They are notorious, however, for offering a pittance and then dropping the price even more at the 11th hour because they know the sellers are desperate. This could result in negative equity for the OP but the debt might be manageable. Again, the sticking point might be that they require vacant possession.

The Shelter website details a 'mortgage rescue' scheme but I assume its only for owner occupiers but it might be worth the OP contacting the relevant scheme reps to check this. This is where a social housing landlord buys a property and lets the owner live there as a tenant but there are lots of conditions and I'd be surprised if this operates on a buy to let scenario.

Rocky99

With high insight and everything we have been through it goes without saying this would have NEVER happened.
Call it being simple, naive or stupid my dad who I thought the world of was trying to kill himself. I wanted to help him and as we were about to purchase our own house prior to to suicide attempt I thought buying his house would kill two birds with one stone, not allow one bird to fly off allowing the other to sacrifice themselves for the others poor life choices.

The way I see it, they were going to lose the house, they took advantage of us and secured there life in that house while I bimbled along thinking my parents were wonderful. Now we are in trouble they couldn't careless and we are only in trouble because of THEIR debts, this would have never happened if it wasn't for the debt in the first place.

BigAunty

ScorpiondeRooftrouser wrote: »

It's not a matter of asking for rent backfiring, or whether they can afford it, she has no right to ask for rent as she bought the property for a hugely reduced price on the grounds that no rent would be paid.

She very well may not have the right. She may very well be morally obligated, if not emotionally compelled to honour their agreement. The agreement may be legally binding (the solicitor thinks so).

But if she can't afford to and they won't contribute, then its homelessness for the parents and debt for the daughter, agreement or no agreement. The agreement isn't worth the paper its written on if the OP cannot find £700 per month for the next 20 or so years.

The reality is that the 50k released to the OP with the expectation that it would be a deposit for her next property has largely been completely spent back on her parents. At best, she got use of a decent car for a bit before deciding she couldn't afford to run it and then sold it for a smaller motor.

She does potentially get some financial return if she manages to service the mortgage and both her parents die but there's equally the risk that the responsibility literally bankrupts her.

ScorpiondeRooftrouser

BigAunty wrote: »

Actually, that's a great suggestion that the OP should explore - can she sell the property to a professional landlord with her parents in situ and have the new landlord take them on as tenants?

There's no way a professional landlord would take on tenants for the rest of their natural life who won't pay a penny so they'd either have to evict them or get them to sign up for a standard AST.

That would create a liability for rent under the new ownership, and therefore perhaps they could get HB (if they aren't held to deprivation of capital by the local council over that 150k hit on the house).

The OP might not be able to sell it at market rates to a professional landlord as generally they will be seeking a good mark up between mortgage costs and rental. I wonder if the OP could tempt a professional landlord to take the risk of having obstructive tenants that they have to evict by offering the 190k value house at a discount, enough to cover the mortgage and selling fees?

Not sure many landlords would be tempted by the scenario that the OP outlines of tenants that feel they shouldn't have to pay rent. I imagine most landlords would prefer vacant possession but if they did have the appetite to secure a £190k property for around £155k for the loss of few months rent during the eviction process, then perhaps that's possible.

That way she passes on the hassle to another landlord and it is them that evict her parents if they won't pay.

There are also 'we buy your house for cash' merchants. They are notorious, however, for offering a pittance and then dropping the price even more at the 11th hour because they know the sellers are desperate. This could result in negative equity for the OP but the debt might be manageable. Again, the sticking point might be that they require vacant possession.

The Shelter website details a 'mortgage rescue' scheme but I assume its only for owner occupiers but it might be worth the OP contacting the relevant scheme reps to check this. This is where a social housing landlord buys a property and lets the owner live there as a tenant but there are lots of conditions and I'd be surprised if this operates on a buy to let scenario.

I hope you accept that if the OP breaks the deal she had with her parents by selling on the asset at full price to someone who will evict them, she would have a moral, and possibly legal, obligation to pay her parents the full market value of the house as it was when they sold it to her, and consequently would owe them 150K? That (nominal) 150K in equity they gave her as part of the deal was a payment to avoid them having to pay rent for the rest of their lives, as she herself attests, and she is going back oi that now.

I am struggling to see how the parents have been so wrong here.