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

Chrysalis

seven-day-weekend wrote: »

They will not b able to claim Housing Benefit as it is a contrived tenancy.

The facts are, neither you nor they can afford for them to live in this house, therefore the best thing to do is sell it, as others have said.

The council may decide that but it is not a automatic decision that family landlords are contrived tenancies.

Yes the tenancy agreement would be drawn up for the purpose of satisfying council rules, but they were already paying him rent, so he hasnt just started charging rent for the aim of profiting of the housing benefit system. It would need explaining to the council if they dont reward the payments then his parents will be kicked out for failing to pay rent.

With all this said I do agree that selling and returning the 75k to parents is a better bet.

hennerz

Sell the house, return the £75k, parents move into a smaller rental property that meets their needs.

Either way the parents should look to get advice from the CAB with regards to their debt.

nkkingston

Reading this thread, it appears that dad has:
- taken an interest only mortgage with no way of paying it off
- claimed benefits and failed to keep them updated when the situation changed
- started a business and failed to issue proper contracts, resulting in the business failing

All of which has resulted in son taking on a second mortgage he can't afford. I suspect he's inherited dad's "tomorrow will look after itself" attitude, but has had the crows home to roost even quicker. I'm curious as to how the OP got the second mortgage if affordability was so tight, unless his situation has changed dramatically recently. It's a family of 'pantsers' rather than 'planners'*, and you have to be extremely lucky to live that way with no consequences, or have very obliging children who'll protect you from the consequences.

OP, it's time for you to have a good, hard look at your own attitude to money and break away from your upbringing in that respect. What are your financial plans for the next five years? What would happen if you lost your job? What can you do to prepare for financial shocks like that?

How is your wife with money? Often pantsers marry planners. If she's good with money, get her input. People who like budgeting like doing other people's too! You may not want to hear what she has to say regarding your parents' house, but she's your partner, and you need to trust her advice. If neither of you are good with money, it's time to learn so one day your kids aren't in financial distress defending you from the results of your mistakes.


*writing slang for plotting novels, but works for budgeting too!

likelyfran

nkkingston wrote: »

Reading this thread, it appears that dad has:
- taken an interest only mortgage with no way of paying it off
- claimed benefits and failed to keep them updated when the situation changed
- started a business and failed to issue proper contracts, resulting in the business failing

All of which has resulted in son taking on a second mortgage he can't afford. I suspect he's inherited dad's "tomorrow will look after itself" attitude, but has had the crows home to roost even quicker. I'm curious as to how the OP got the second mortgage if affordability was so tight, unless his situation has changed dramatically recently. It's a family of 'pantsers' rather than 'planners'*, and you have to be extremely lucky to live that way with no consequences, or have very obliging children who'll protect you from the consequences.

OP, it's time for you to have a good, hard look at your own attitude to money and break away from your upbringing in that respect. What are your financial plans for the next five years? What would happen if you lost your job? What can you do to prepare for financial shocks like that?

How is your wife with money? Often pantsers marry planners. If she's good with money, get her input. People who like budgeting like doing other people's too! You may not want to hear what she has to say regarding your parents' house, but she's your partner, and you need to trust her advice. If neither of you are good with money, it's time to learn so one day your kids aren't in financial distress defending you from the results of your mistakes.


*writing slang for plotting novels, but works for budgeting too!

...the thread was started 5 years ago ..

EDIT: Sorry, sorry, my mistake! I misread.

I'm sure this sounds really really familiar though .. :think:

Marvel1

Personally I think it's best to just sell the house.

Tammykitty wrote: »

How many people on here complaining have been had parents help the with deposits for houses, have had parents pay for their wedding etc - should all these be counted as deprivation of capital in the future - even if its 40 years later?

I wouldn't even let my parents buy me anything for the house e.g. a fridge freezer or a washing machine.

lazer wrote: »

£700 mortgage repayment for £75k mortgage seems very high!

I can only think 10 years or less.

booksurr

Tammykitty wrote: »

No it isn't as there is no income - as the mortgage interest will reduce the "profit" to below zero.


It may actually be beneficial to declare it though, as in future years if the property starts making a profit, he will be able to claim relief against previous years losses


http://www.taxassist.co.uk/resources/show-article/id/48


Reporting to HMRC

When you start renting out property, you must tell HMRC and you may have to pay tax. If you don’t, you could be charged a penalty. You must report income from property rental if you receive:

• £2,500 or more from property after deducting allowable expenses
• £10,000 or more from property before deducting allowable expenses

If your property income does not meet either of these thresholds, you must still call HMRC and possibly the Tax Credits Office, to advise them of your new income.


If you make a loss on renting, you’re unlikely to meet these thresholds. But you may want to register for a tax return voluntarily. That way you can document your losses and carry them forward to offset against future profits.

I was wondering how long it would take before someone showed that they had read and totally failed to understand one of the worst bits of writing on the entire .Gov website

Tax law requires you to notify HMRC of any untaxed INCOME you get. Note the word is income, not profit. If you receive £1 of rent and owe £1,000 of mortgage payments you are still required to notify HMRC that you are in receipt of rental income.

the bullet points in the extract refer to the thresholds at which it is mandatory to complete a self assessment tax return. That and that alone is all those relate to. Below those thresholds the bit i have highlighted in red tells you what to do - you talk to HMRC and they will decide how to tackle it, typically either through getting you to send a letter with your figures on each year or taking a verbal update each year and adjusting your tax code to collect any tax due

Obviously you pay tax on the profit. So if there is no profit there is no tax payable. As mentioned, registering a loss can be useful for future years, but also as mentioned if the rent is non-commercial to start with the there is no allowable loss as it is not genuine

[Deleted User]

My father is much the same, lives in the now. He had an interest only mortgage, took out an equity release loan to pay that off. Now he's 82, with parkinsons and needs to move from an upstairs flat with very steep stairs. His flat has at least doubled in value but he won't see a penny of this increase. And he desperately needs to move. But can't. Didn't talk to me at the time he took out the Equity Release scheme of course. Won't tell me the details now, except that it exists. So sad.

I am glad that you are trying to help your father.., but I'm sorry, he needs to help himself as well (not with an equity release scheme obviously). You can't afford to have him drag you down with him. It doesn't really sound like he's learned, but of course, you can judge that better than us.

xylophone

And he desperately needs to move. But can't.

In view of his age and disability, is there a possibility of his either being able to rent some form of sheltered housing or go into care?

The property could then be sold.

Are you sure that he would receive nothing from the sale of the flat?