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

TBagpuss

urbanhim wrote: »

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.

Does your dad have an IVA? If he can't afford afford the debt repayments then it may be that the best way forward would be to look at that end of things, to see whether he could renegotiate the level of repayments. Has he (or you) spoken with Stepchange or another debt advisor? How long ago was the property transferred to you? Is bakruptcy an option?

The only other thing I could think of would be whether the property could be transferred back to your parents, and for them then to get an equity release mortgage to pay back the exisiting mortgage and possibly to free up some additional capital to reduce or clear debts.

marliepanda

Tigsteroonie wrote: »

That's academic - they don't pay rent. They make a gift of £200/month to their son. No rent, no benefit to help with rent.

I know, but thats why I quoted the post suggesting they draw up a tenancy agreement and claim the £200 as rent.

Even if they did that, and it wasn't considered contrived for the 100 other reasons it could be, the fact the parents owned the home previously will put the kibosh on it.

dancingfairy

It sounds like from what you've written your dad incorrectly claimed benefits/ didn't notify them of certain things and now the money is being reclaimed?
This now is putting the roof over their head as they cant afford to pay the rent?
75k of equity that belonged to them was gifted to you 5 years ago?
To be honest this all sounds quite a mess.
Can you remortgage to get the 75k equity out to return it to your parents? They then should be paying rent fom that 75k. You can then set it up properly as a rental agreement and hopefully it should then be clear how much they have and what they are entitled to claim (or not).
Df

AdrianC

marliepanda wrote: »

I know, but thats why I quoted the post suggesting they draw up a tenancy agreement and claim the £200 as rent.

It would make no difference. Legally, they are on an implied tenancy.

Detroit

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.

They won't get any HB as they previously owned the property.

It is not possible to sell your house to a family members at 50% of the value, then to not only continue to live there rent and mortgage free, but to claim benefits to give to the family member to pay their mortgage.

Given this would result in the family member ending up with a 'free' house, half gifted by parents who can't fund themselves without help from benefits, and half paid for from benefits, with any care needs required by the parents also funded from benefits; some might say this is just as well.

The advice to sell the house, repay the mortgage and repay the parents is sound.

suki1964

Hate to say that seeing as the BOE just cut base rate again, remortgaging is going to be tough

As the banks say, they have a lot of property on their books, they want cash

[Deleted User]

Your parents may be 70.., but they are still adults. Why can't/couldn't they move to a smaller place after selling where they are living? Yes I hear you saying they love their house.., but moving to a smaller place has advantages as well as disadvantages. They are your parents, not your children, and are not your responsibility. If your father messed up, then as a grown up he should have dealt with it. If that includes moving to a flat, then that's the way it is. What is right about him living off his son - rent free? I know you are being a dutiful son, which is wonderful, but you also owe a duty of care to your wife and family. Why should your wife or children pay for the mistakes your father made?

You are also a grown up. So I'm sorry to be rude.., but grow up. Decide what your priorities are. They may be in the wrong place at the moment and I don't think you can see that.

Why are you like this with your parents? I think that is the most important question here. I sense there is a lot more to the story than is being revealed on here. This is a rhetorical question..,questions you need to ask yourself and perhaps speak to someone about. I am not expecting you to talk about things it might not be good to talk about on this forum. But please think the reasons why you are doing this through. And decide who you actually should owe primary loyalties to, your parents or your own family.

If you wanted to be super generous, you could work out how much you've paid out in mortgage payments, take that off the selling price and give your parents half the remainder or a percentage.

Just tell your parents, "You have had x extra years living here, but I just can't afford to keep paying the mortgage so I now have to sell. I'm sorry, but I have no choice". There are housing options for maturer people (where you buy a lifetime lease for a property rather than buy it outright).

basil92

I do believe the OP was trying to help his parents..

I think it is a shame that the focus has shifted to his Landlord status.

IMHO the house should be sold, the parents are given back their £75K and the OP no longer has the burden of 2 mortgages (not only will this please the wife but will also reduce the financial burden on him).

Depending on where the parents are in the country, they could use the £75K to buy a retirement flat or look to rent privately.

If the OP wishes, he can still help them financially but only to the extent he can afford..

mumps

Bluebirdman_of_Alcathays wrote: »

I'll give you some legal advice for free - the money you are receiving is rent. HMRC will not look at it any other way. I think there is a way out of this mess, but it will help everyone if you remove the wool from over your eyes!


In your shoes I would sell the house and get the folks into suitable rented accommodation, paid for by the proceeds of sale. There is around £100k of equity that could be raised by selling? Give it to them and let them handle their own affairs.

He wouldn't need to pay tax anyway, I'm pretty sure if he claims for the interest on the mortgage there wouldn't be a tax liability so no reason not to declare it.

Fish&Chips

I do agree with the replies on this thread where it would be better to sell the house your parents are residing in.

I've just had a thought though.....would they take a lodger in? The rent paid by a lodger may take the pressure off you and they may be able to stay in the house.