Renting flat to family while in care home

TrixA

Thanks everyone who had responded. It does seem like a potential minefield, which is rather what I expected. FIL does not particularly want to become a landlord but is susceptible to the influence of SIL, who he's accustomed to helping out financially. Under the Council's rules there are quite strict restrictions on cash gifts so I think he sees this as helping in a different way.

TrixA

AdrianC wrote: »

^ 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.

To be clear, we don't hold POA and we're not planning to rent the house out on his behalf. It would be his decision, but I'm worried about him making a bad decision.

TrixA

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.

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?

My understanding is that any income he gets from renting out the flat would be offset against the Council subsidy, so it would make no difference to his financial situation either way, the benefit is solely to my sister-in-law (and conceivably the taxpayer). I don't fully understand the details of the arrangement with the Council but he has to pick up a percentage of the care home costs; at a certain point they'll require him to sell the flat but not immediately.

xylophone

My understanding is that any income he gets from renting out the flat would be offset against the Council subsidy,

He will have to pay tax on the income received and must take on a landlord's responsibilities if he lets out the flat.

If he proceeds with the plan to let the flat to his daughter on a low or subsidised rent, I assume he will have to advise the council of a change in circumstances - the council may well regard this as a gift.

It seems to me that he will need to check all the rules etc before he proceeds.

Mojisola

TrixA wrote: »

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.

Are you sure this will go for years - could he not just be benefiting at the moment from the '12 week disregard' of the value of his property?

TrixA

Mojisola wrote: »

Are you sure this will go for years - could he not just be benefiting at the moment from the '12 week disregard' of the value of his property?

I haven't been involved in all the financial discussions and don't fully understand it, but my understanding is that the Council did a financial assessment to work out what level of care FIL was entitled to, and the value of the property was already taken into account as part of that assessment. FIL was already receiving visiting carers from the Council before he moved into the home. He is now paying about half of the care home costs from his own pocket, the Council is picking up the rest. My husband wanted him to go to this particular home because it's a really good fit and we think they'll look after him properly, his sister would have preferred a different (i.e. cheaper) one as she is concerned about implications for her inheritance.

xylophone

I haven't been involved in all the financial discussions and don't fully understand it,

See post 15 above.

It would be best if no action were taken until the full implications had been discussed and clearly understood by all parties.

agrinnall

Disregarding the SiL issue, which I think is a red herring, is it at all likely that your FiL will ever reoccupy the flat? If he won't then perhaps it would be better to consider selling it now, after taking into account xylophone's advice of course.

TrixA

xylophone wrote: »

See post 15 above.

It would be best if no action were taken until the full implications had been discussed and clearly understood by all parties.

My husband, who is the blood relative here, is well across these details. I didn't ask for advice on the issue of the Council contribution to the care home costs, simply on the implications of the renting to family issue.

TrixA

agrinnall wrote: »

Disregarding the SiL issue, which I think is a red herring, is it at all likely that your FiL will ever reoccupy the flat? If he won't then perhaps it would be better to consider selling it now, after taking into account xylophone's advice of course.

He's not likely to live there again, he's 89 and now too frail to be living alone. The main reason for not selling immediately was that the Council and the care home recommends a three month stand down period in case the individual changes their mind. We have also been advised that it's not a good time to sell in terms of the property market, but I suspect that's not going to change in a hurry.