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

urbanhim

Ok, I have a resulution which I will put into place. I will get an extension on the mortgage to bring the cost down from £700 a month to £500. My parents will continue to live there rent free until they die or move into a carehome, at which I will sell the property, pay any capital gains tax that needs paying and also use any money I make from the house to pay for any care they may need.

Its not an deal situation as although its lessoning the burden its dragging it out longer, but this is the only legitimate option I can think off. When the monthly payments are lowered it should help out greatly.

Thank you

Tammykitty

G_M wrote: »

Your parents have gifted their equity away - this is "Deprivation of Assets" ie giving away savings, investments, property etc in order to get below the maximum threshold for claiming various benefits/care home costs etc.

If the reason for the house sale is as the OP has posted, then it will not be counted as deprivation assets, as the equity was not given away with he intention of avoiding care home fees or claiming benefits, it was given away to allow them to continue to live the house.


For deprivation of assets to apply, the intention has to be to avoid fees/claim benefits.


If his parents were both in reasonable health, and there was no foreseeable need for a care home in the future - this should not count as deprivation of assets

AnotherJoe wrote: »

Doesn't matter. No one says you are. But even if you make a loss you still need to declare income (the £200 you were getting) to HMRC.

No you do not have to declare the income, you have to declare the profit from the rental,


Income less expenses (Including mortgage interest - and I am guessing the mortgage interest is greater than the £200 a month)


Although he rules around this are changing - https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords.


However, if his Dad is no longer giving him the £200, it won't matter, as there is no income!


Now onto your parents - Pension credit for a couple is £237.55 a week, so this is the minimum income your parents should be receiving, this is £1000 a month, so even after giving you £200, they should be left with £800 would should be sufficient for all their needs unless there is debt?

Chrysalis

Yes, draw up a tenancy agreement, you and your parents sign it. Then they show it the council when applying for local housing allowance.

There is no guarantee you will get the full £200 of the council, but that does indeed seem a very low figure so it is likely you will get it, the money will actually go to your parents then they pay you from it.

Bluebirdman_of_Alcathays

urbanhim wrote: »

Ok, I have a resulution which I will put into place. I will get an extension on the mortgage to bring the cost down from £700 a month to £500. My parents will continue to live there rent free until they die or move into a carehome, at which I will sell the property, pay any capital gains tax that needs paying and also use any money I make from the house to pay for any care they may need.

Its not an deal situation as although its lessoning the burden its dragging it out longer, but this is the only legitimate option I can think off. When the monthly payments are lowered it should help out greatly.

Thank you

So you have to put even more debt onto the ledger, while your parents trouser £1k a month? What is actually going on here?


Actually, I think it's just a WUM. I'm out.

urbanhim

Tammykitty wrote: »

If the reason for the house sale is as the OP has posted, then it will not be counted as deprivation assets, as the equity was not given away with he intention of avoiding care home fees or claiming benefits, it was given away to allow them to continue to live the house.


For deprivation of assets to apply, the intention has to be to avoid fees/claim benefits.


If his parents were both in reasonable health, and there was no foreseeable need for a care home in the future - this should not count as deprivation of assets








No you do not have to declare the income, you have to declare the profit from the rental,


Income less expenses (Including mortgage interest - and I am guessing the mortgage interest is greater than the £200 a month)


Although he rules around this are changing - https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords.


However, if his Dad is no longer giving him the £200, it won't matter, as there is no income!


Now onto your parents - Pension credit for a couple is £237.55 a week, so this is the minimum income your parents should be receiving, this is £1000 a month, so even after giving you £200, they should be left with £800 would should be sufficient for all their needs unless there is debt?

Thank you so much, this is really helpful. The reason the £200 a month is difficult for them is that that they do have debts they are having to pay, as well as the fact my dad was incorrectly paid more than he should of as he didnt declare certain things (although he did not know to declare them). Common theme here is that my dad, as much as I love him, has destroyed our family in some respects. So they are taking a huge chunk of his pension to pay for what he now owes them.

I will indeed get a family meeting set up to work out what they are doing with their finances, but both in their mid 70's and they can be quite difficult at times. I'm going to reduce the monthly mortgage cost by extending it, this will make it easier for me to pay. When tI sell the house, i'll pay back the mortgage that I owe, pay any taxes etc and use whatever is left to pay their debts and their funeral / or care home fees etc.

I must not make the same mistake as my father though I do not want my children to have these worries when they are older. I must also remember to include my wife on the decision to increase the mortgage length.

Thanks once again for your kind reply.

urbanhim

Chrysalis wrote: »

Yes, draw up a tenancy agreement, you and your parents sign it. Then they show it the council when applying for local housing allowance.

There is no guarantee you will get the full £200 of the council, but that does indeed seem a very low figure so it is likely you will get it, the money will actually go to your parents then they pay you from it.

Thank you, this was the purpose of my post to see if this is an option, it would appear from others that it is not though. Maybe i'll contact the council and see what they say.

AdrianC

urbanhim wrote: »

Ok, I have a resulution which I will put into place. I will get an extension on the mortgage to bring the cost down from £700 a month to £500.

This is assuming, of course, that your lender are willing to do that.

If they decide that they won't, and you get into arrears, you may well find that the choice is no longer in your hands. If they decide that they were not fully aware of the situation, and you cannot provide documentary evidence that they were, then it's possible that they could require you to repay the mortgage. You will find it very difficult, in the current lending environment, to remortgage in your situation.

TBH, I'm quite surprised that you could five years ago - if you'd said pre-2008, I'd have found it much less surprising.

Thrugelmir

urbanhim wrote: »

Thank you, firstly, I dont declare the income as its not rent that they pay me, I pay £700 mortgage on the property and my dad gives me £200 to help.

However you wish to dress it up the money is income in your hands. The fact there is no paperwork or legal agreement has no relevance. The nature of the whole arrangement makes the situation transparent and common sense then applies.

FBaby

You don't seem to appreciate that as a landlord, which you are, whether you are receiving rent or not, and as such you have legal duties.

A dreadful scenario, but if your parents were to die as a result of monoxide poisoning from a faulty boiler, it's not a case of no-one in the family suing you for compensation but a a criminal case for neglecting to conduct your legal requirements of carrying out an annual gas certificate.

It makes no difference that you are renting to parents, you are still a landlord with all the crap that comes with it.

urbanhim

AdrianC wrote: »

This is assuming, of course, that your lender are willing to do that.

If they decide that they won't, and you get into arrears, you may well find that the choice is no longer in your hands. If they decide that they were not fully aware of the situation, and you cannot provide documentary evidence that they were, then it's possible that they could require you to repay the mortgage. You will find it very difficult, in the current lending environment, to remortgage in your situation.

TBH, I'm quite surprised that you could five years ago - if you'd said pre-2008, I'd have found it much less surprising.

You are right of course, especially as I have two mortgages... My own home and my parents. The bank do fully know the situation, ie, that I own the home (or rather I have the mortgage as I dont own it yet) and my parents live there.

Given that the house is worth more than what the loan is for they would not have a problem with extending it, as long as this was sitll the case. The house would be re-valued by the bank to make sure,and of course if I cannot pay it, my parents will be evicted and the bank will take the house. That is the agreement myself and my parents had to sign to get the mortgage in the first place.