Retired parents renting their house from me and cannot afford to pay

urbanhim

Hi, i'm hoping I can get some advice...

5 years ago my parents sold their house to me at the cost of what they still owed the bank on their mortgage. So lets say the house was worth £150k, I had to get a mortgage for £75k as that is what they still owed. They still live in the house, and I live with my wife and children in my own home which I also have a mortgage for. I have two mortgages which is pretty tough, but didnt have much of a choice as didnt want to see my parents on the street as the bank threatened to take their home which they've lived in all their life.

So currently my parents pay me a couple of hundred each month to help with the mortgage on their house which i'm paying. However, as they both retired they are struggling to find the money to pay me monthly therefore leaving me with the whole of their mortgage to pay as well as my own.

My question is, is there anyway in which as I could become a landlord (which I effectively am) and then maybe the council can pay their rent. I dont want to make any money from this as a landlord, the rental valie is £1000 a month, I merely want help paying the part that were giving me which is around £200 a month.

Hope this makes sense, any advice would be greatly received. I dont want to sell the house and kick them out somewhere else, but at the same time i'm struggling to pay two mortgage and my wife and children are suffering because of it.

Thanks in advance

AnotherJoe

You are not "effectively" a landlord, you are a landlord.

So can it be assumed you've not been complying with any of the legislation such as safety certificates, making tax returns and the like? That could make it tough to persuade a council to pay them housing benefit, hwoever, having said that, have they applied for housing benefit? I believe its generally frowned upon though to pay that to a relative (just from comments on here)

Other alternatives-
- you rent the house out and use the rental money to cover rental on a smaller place, say a 1 bed flat.
- you sell it and give them money to top up any housing benefit they may get.

Alice_Walker

Not going to happen for several reasons:

* This is not a commercial tenancy.
* The parents previously owned the property.
* The parents seemingly gave you £75K in equity - this would be deprivation of capital for benefit purposes.

Have they looked at where they can reduce their outgoings, or are they able to take on any work?

lincroft1710

What are they spending their money on, that they can't afford £200 pcm rent?

urbanhim

Thanks for quick responses. Correct, 75k was gifted to me in equity. And yes i'm not officially a landlord in terms of safety checks etc, although I do of course have to get landlords building and contents insurance.

They are both in their 70's, my mother is a cleaner but struggling due to age, my father is not healthy enough to work. From the outside in, "What are they spending their money on, that they can't afford £200 pcm rent?" seems like a legitimate question but £200 is a helluva lot of money to them each month, after bills and food they have very little left from their government pensions.

It seems its me who will have to make sacrifices and pay the £200 for them, again, from the outside in this may seem like very little, but to my wife and and my two young daughters this is a considerable amount on top of my own mortgage.

Thanks once again for your kind replies.

hazyjo

urbanhim wrote: »

Thanks for quick responses. Correct, 75k was gifted to me in equity. And yes i'm not officially a landlord in terms of safety checks etc, although I do of course have to get landlords building and contents insurance.

Really? First I've heard of an 'unofficial landlord'. As far as I know, yes you are legally responsible for all of those things.


tbh, I'm surprised the lender gave you a mortgage knowing you would be renting to your parents...


Jx

Pixie5740

You can dress it up however you like you are, in the eyes of the law, the landlord. You receive rent therefore even if there isn't a written agreement and there has never been a written agreement your parents have a Contractual Periodic Tenancy.

No good deed goes unpunished. Your parents could no longer afford the mortgage but they could have sold, pocketed the £75k equity and then rented somewhere. Then once they ran out of money they could probably have claimed Local Housing Allowance and maybe some other benefits too. I wonder if that's still an option, you sell and then give them back their equity (after repaying the mortgage) and they can go rent somewhere else.

suki1964

But you are a landlord no ifs or buts about it. You by law have to do the gas safety checks etc. You can't pick and choose what bits of being a landlord you do

The first thing is have you checked that they are claiming all the benefits they are entitled to?

The next thing is, be prepared to be forced to sell the house if they need care Councils come down hard in cases of deprivation of assets


As for you making sacrifices, you have benefitted greatly by a 75k gift

bod1467

suki1964 wrote: »

As for you making sacrifices, you have benefitted greatly by a 75k gift

Well obviously not ........ YET.

suki1964

bod1467 wrote: »

Well obviously not ........ YET.

Ok, so once he sells

which looks like to be his only options

One does wonder if this was one of those deprivation of assets workarounds that's crumbling at the seams already

bod1467

That's what first crossed my mind.

My M-I-L went through a solicitor to set up a trust arrangement to try and protect her property (inheritance for my wife and her brother) should she ever need to go into care. This was a few years ago now so I think the trust is now effective and the Council couldn't force the sale of the property to pay/contribute to care costs. (Until or unless the law is changed, I guess. Edit: this is in Scotland, for clarity - rUK may have different rules).