Helping my mum

Mojisola

Pay_Da_Gals wrote: »

With regards selling the 2nd flat my mum needs the money from the rent on top of what I can give her. And if she sells her flat it will not give her enough money for the long term if she hopes to live 25years it would work out at less than £400 a month as a fixed rate – which isn’t enough for her to live on now or in the future….

On top of her pension.

If she needs the money from the rent for her living expenses, how is she going to fund repairs and maintenance in the rental property?

BigAunty

Pay_Da_Gals wrote: »

With regards selling the 2nd flat my mum needs the money from the rent on top of what I can give her. And if she sells her flat it will not give her enough money for the long term if she hopes to live 25years it would work out at less than £400 a month as a fixed rate – which isn’t enough for her to live on now or in the future….

So you aren't planning to live there yourself as you already own a property but continue to let out her current property yourself? Meaning that not only do you reduce the cost of purchasing the property directly by avoiding standard mortgage interest, the bulk of the repayments will be met by a tenant?

Or are you hoping to reduce the risk of repossession or financial difficulties that come with a freelance career and investment property by selling one of these properties to reduce expense and risk?

Is this £400 a month income based on purchasing an annuity or simply by spending the lump sum gradually over x period of time? Has she seen a Pension specialist, an IFA qualified one?

Does she own both the properties outright or do they have an outstanding mortgage?

You still haven't addressed how you can prevent her experiencing hardship if your work dries up, you become sick or disabled, if you are simply going to drip feed her money over the next 25 years. It would be a very lucky person indeed who experiences no sudden drop in income over the remainder of their working life...

She will get a state pension in a few years time (not sure if its 3 or 5 years but she can check). Won't her pension, the income from her rental property and the top-up that you provide be sufficient for her to live on? Wouldn't she get something in the region of £140 state pension, perhaps £100 - 150 per week rental income and wouldn't this be enough to live on as long as she wasn't saddled with big mortgages?

Mojisola

Pay_Da_Gals wrote: »

Basically I want to give my mum money each month as she needs it (I already give her money each month to support her income) and in return I’d own her flat

Why not draw up a loan agreement with your mother to cover the money you are giving her? Keep updating it as the debt increases. Transfer the money in a way that leaves a recorded trail rather than fistfuls of cash.

She could keep ownership of both flats but her debt to you would be repaid by the sale of the flat when she dies. That saves problems with you owning her home and reduces the risks to her if anything should change in your life.

As she has mobility problems, has she looked into claiming PIP? Has she done a pension forecast to see when her pension will start and how much she will get?

Pay_Da_Gals

@ BigAunty, you are absolutely right there is a chance that i shall be out of work in the future and none of us have a crystal ball.
I would run a shareable spreadsheet so my mum and siblings can see what I have paid for - so there is full transparency.
However she needs money now and for the foreseeable future i can help. And then we have a record of what i have paid and should I not pay everything off by the time my mum dies the rest of the flat can be shared equally. I am going to cash in my handful of ISAs to ensure she has enough money so she is sorted for at least a couple of years. And on top of that pay her as much as I can afford each month.
I am trying to find away so my mum can continue to live where she is, stress-free, but that I am also protected as well.
Her 2nd flat has a small mortgage, but is a very rentable and easy to maintain flat and she has emergency savings set aside for either vacancy and/or any repairs which she does not want to touch.

@Mojisola – I like the idea of a loan. Her state pension will start in 6 years time… she has no other pension as she was a house wife until her children were 13, 11, 9

It would be great if anyone knows the thread where a smiliar plan went wrong it would be great to learn from.

BrassicWoman

your mum is 60 so presumabley not mentally feeble?

I would suggest she post, maybe on the mortgage or renting boards, for advice in her own right.

LannieDuck

Pay_Da_Gals wrote: »

It would be great if anyone knows the thread where a smiliar plan went wrong it would be great to learn from.

Found it: https://forums.moneysavingexpert.com/discussion/4859484

Laurajo_2

You will need to take a specialist advice to avoid gift with reservation of benefit issues - I suspect that, although you are ostentatiously 'buying' the house from her, paying her on an 'ad-hoc' basis as and when she needs the money might not satisfy hmrc that this isn't a gift and will therefore be subject to a pre-owned asset tax charge.
If they do decide this is a gift with reservation of benefit, your mother would either have to pay you market rent or income tax on the value of market rent.
I suspect this could quite easily be avoided with proper documentation and a scheduled loan agreement, but it is another pitfall.

If you can afford to give the money anyway, why not do that and keep a record of the debt so that you get a larger share of any inheritance when she passes to reflect the financial help?

We're in a similar position with my mum, in that she's lost her job at 58 and is struggling finding another one, it sucks.

theoretica

If you are determined to buy one of her properties, I think it would make more sense to buy the rented out one so her home would not be endangered if anything went wrong.

securityguy

LannieDuck wrote: »

Found it: https://forums.moneysavingexpert.com/discussion/4859484

Christ, reading that is an education, isn't it?

BigAunty

securityguy wrote: »

Christ, reading that is an education, isn't it?

There are other equally scary ones, though not fully relevant to the OPs thread.

For example, a guy whose mother forced him to buy a flat in his name to conceal her capital from the benefits authority, whose dad trashed it, didn't pay rent and refused to leave and whose family tried to intimidate him into handing over the equity upon its sale. Or the sister who refused to leave her late mother's property which was put up for sale as part of probate and tried to set her dog on her sister.

Mixing family and business, which is what the sale or rent of property is between relatives, can have terrible repurcussions for the relationship if the money-side goes wrong.