Renting flat to family while in care home

TrixA

I'm not sure if this is the right board for this, let me know if there is a better one.

My father-in-law, who lives in Scotland, has recently moved into a care home, leaving his flat vacant. The Council is subsidising the care home costs and he's paying the rest from cash assets. Once that money runs out he would ultimately need to sell the flat in order to fund the ongoing care costs, but this is probably a couple of years down the track.

My sister-in-law lives nearby and is in some financial difficulty. She was originally against the move to the care home due to concerns about the high cost. She has now decided that the best thing is for her to either sell or rent out her own flat, and move into F-I-L's smaller flat. She had assumed that this could be rented to her at a below market rate on an informal basis (no rental contract etc), although we have tried to explain that this is not likely to be consistent with the Council's rules given they are subsidising care costs.

Any advice or pitfalls we should be aware of in this situation?

Pixie5740

Does your father-in-law want to be a landlord with all that entails? Rent would be paid in exchange for your sister-in-law living in the property and without proper documentation such as an AT5 form that would give her an Assured Tenancy which would make it difficult to evict her if that ever became necessary.

Furthermore, your FIL would have to register with the council as a landlord or it would be a CRIMINAL offence for him to let the property. Then there are all the other landlord responsibilities and laws he would have to comply with. It sounds like a ball-ache he doesn't need. It might be best for him just to sell now.

marksoton

Sounds to me like the SIL is a selfish bint only concerned about her own circumstance.

missbiggles1

Pixie5740 wrote: »

Does your father-in-law want to be a landlord with all that entails? Rent would be paid in exchange for your sister-in-law living in the property and without proper documentation such as an AT5 form that would give her an Assured Tenancy which would make it difficult to evict her if that ever became necessary.

Furthermore, your FIL would have to register with the council as a landlord or it would be a CRIMINAL offence for him to let the property. Then there are all the other landlord responsibilities and laws he would have to comply with. It sounds like a ball-ache he doesn't need. It might be best for him just to sell now.

Is this a new rule I've missed?

missbiggles1

TrixA wrote: »

I'm not sure if this is the right board for this, let me know if there is a better one.

My father-in-law, who lives in Scotland, has recently moved into a care home, leaving his flat vacant. The Council is subsidising the care home costs and he's paying the rest from cash assets. Once that money runs out he would ultimately need to sell the flat in order to fund the ongoing care costs, but this is probably a couple of years down the track.

My sister-in-law lives nearby and is in some financial difficulty. She was originally against the move to the care home due to concerns about the high cost. She has now decided that the best thing is for her to either sell or rent out her own flat, and move into F-I-L's smaller flat. She had assumed that this could be rented to her at a below market rate on an informal basis (no rental contract etc), although we have tried to explain that this is not likely to be consistent with the Council's rules given they are subsidising care costs.

Any advice or pitfalls we should be aware of in this situation?

He might have to pay tax on the rental income and will need to be responsible for gas/electricity checks.

What will he do if she doesn't pay the rent, will he evict her?

Mrs_justjohn

missbiggles1 wrote: »

Is this a new rule I've missed?

Not a new rule....been in force for nearly 10 years!
https://www.landlordregistrationscotland.gov.uk/Pages/Process.aspx?Command=ShowHelpWhenToRegister

In addition to registering, any deposit taken has to be paid into a holding account (that you won't have access to) in case of any landlord/tenant dispute..think it's called the deposit protection scheme (or similar)

Pixie5740

missbiggles1 wrote: »

Is this a new rule I've missed?

This has been the law in Scotland for a while now.

theartfullodger

It might make sense for FiL to rent to someone unconnected at normal commercial rates, handled by someone who knows what they are doing & everything done correctly: (The consequences of getting it wrong are painful: Not effectively being able to evict {missing AT5}, up to £50k fine {not being registered landlord}, etc etc etc..).

SiL should sort her life out separately and maybe rent from someone unconnected to her & FiL. If SiL rents from FiL well, I can forsee the future, I have second sight: She won;t pay the rent (total or part), it will all go wrong, huge family rows...

missbiggles1

Mrs_justjohn wrote: »

Not a new rule....been in force for nearly 10 years!
https://www.landlordregistrationscotland.gov.uk/Pages/Process.aspx?Command=ShowHelpWhenToRegister

In addition to registering, any deposit taken has to be paid into a holding account (that you won't have access to) in case of any landlord/tenant dispute..think it's called the deposit protection scheme (or similar)

Apologies, missed the fact that we were talking about Scotland.

xylophone

Do you or your wife have Power of Attorney for your Father -in-law?

Or does your sister-in-law?

Either way, any action taken regarding your father-in-law's assets must be in his best interests and if his flat is rented out, he is entitled to a commercial rent.

He will need to pay tax on this income and surely this will be taken into account in the subsidy paid by the council?

It seems pointless to leave his flat empty - how does it happens that his care costs are being subsidised by the council if he owns a property and that property is unoccupied?

http://www.careinfoscotland.scot/topics/care-homes/paying-care-home-fees/treatment-of-your-home/

If the flat is let out on a commercial basis, who is going to take on the landlord's responsibilities?

AdrianC

xylophone wrote: »

Do you or your wife have Power of Attorney for your Father -in-law?

Or does your sister-in-law?

Either way, any action taken regarding your father-in-law's assets must be in his best interests and if his flat is rented out, he is entitled to a commercial rent.

^ THIS...

If you do not hold PoA, you CANNOT rent his house out - you have no authority to do so.

If you do hold PoA, then the ONLY person whose interests you can think of in making the decision is your FiL. It he rents the property out at below an open market rent, there may well be deprivation of assets considerations if/when he becomes unable to fund his care.