Care Home costs and property remains unsold

Susan1942

Wonder if anyone can help. A friend went in to a care home last July 2017. She had some savings and a flat to sell which is worth around £200,000. To date the flat remains unsold price drop to £190,000 2 months ago. Her savings are now almost depleted.
I have been asked for advice as to whether they should rent the flat but leave it on the market for sale.
This is an over 55's property and according to the terms lease on the sale of a property 1% of the sale price has to be paid into the sinking fund. Likewise each time a new tenant moves into a flat 1% has to be paid I am not sure what advice to give other than explain the facts.
I don't know if there is any help that she can have until such times as the flat is sold. Advice would be helpful This lady has only got one Step Daughter and I have been involved with the lady for almost 20 years. Many thanks Sue

martindow

I would doubt if rental income would go anywhere near covering the care home fees and having a tenant is going to put off a lot of buyers.

It is not necessarily straightforward sub-letting as you propose. It may be prohibited by the lease or require expensive permission fees. And are you going to be comfortable evicting an elderly tenant if you sold it?

I think your only realistic option is to sell and anything sells if the price is right. Are you sure it is priced correctly? There has been some publicity recently where the resale prices of retirement properties are far lower than the new purchase price. McCarthy & Stone are frequently mentioned as in this article

https://www.ft.com/content/8c94dd38-768d-11e6-bf48-b372cdb1043a


Here's a thread from last year


https://forums.moneysavingexpert.com/discussion/5708117/retirement-homes-sell-at-a-loss

lisyloo

I have been asked for advice as to whether they should rent the flat but leave it on the market for sale.

No.
A) the rental income won't cover the care fees
it can be difficult to get rid of tenants
c) it could hamper a sale if you have a tenant. Tenants have rights such as a minimum 2 months notice, but if they refused to leave (authorities would not allow them to make themselves intentionally homeless so would tell them to stay), then it's court action to get rid of them which could take months,

I don't know if there is any help that she can have until such times as the flat is sold.

I think she/you need to get in touch with the local authority.
My MIL is in a similar situation (slightly different in that the LA are already paying her fees as she didn't have the savings).
The LA should pay the fees and get them back when the flat is sold. If it might take a while they might want to put a charge on the flat.

Her savings are now almost depleted.

That's not a good plan as she may need to pay the service charges. ground rent and her other personal expenses e.g. clothes.
This needs to be sorted before she runs out of cash.


If it's been on the market a long time then I'd question if it's priced correctly.
What has the estate agent said?
What's the feedback from viewings?


I'm selling similar near Bristol and there does seem to be a demand.


BTW - does she have a lasting power of attorney (I'm currently going through getting deputyship as my MIL has lost capacity and it's expensive and might hold up the sale of the flat).

PasturesNew

Just continue with selling it. Renting any property is a major commitment - and with such terms/conditions you're just creating a larger future headache for yourself than the one you're currently suffering.

Just trust ... it'll all work out in the end and you will be pleased you stuck with selling.

Over 55s/similar housing are notoriously difficult to sell; you've started... so finish.

Anybody "owed money", such as the management, or the care home, will wait for their money - they're used to it sometimes going like this.

G_M

For all the reasons explained, don't rent. Sell.


These properties can be harder to sell because of the related restrictions and costs, so pricing right is hard.


But basically any property will sell when the price is lowered to what someone is prepared to pay. 14 months on the market suggests strongly the price is above what any buyer is prepared to pay!


In that time, how many viewings have there been?
What feedback from those viewing?
How good is the marketing? Where/how is the EA advertising?
Has the seller changed EA at all during that time?
Have other EAs been asked for their opinion as to price if the contract was switched to them?

pmlindyloo

Have a read of this:

https://www.independentage.org/sites/default/files/factsheets/2018-04/Factsheet-Care-home-fees-and-your-property.pdf

There are options available in this situation.

You can contact this organisation for some advice or contact AgeUK.

AnotherJoe

lisyloo wrote: »

No.
A) the rental income won't cover the care fees
it can be difficult to get rid of tenants
c) it could hamper a sale if you have a tenant.

d) the price with a tenant in will likely be lower than if you'd just lowered the price to start with.



I dont think its just about money with these type of flats anyway, even if appropriately priced there is a limited market and you need the right person whose circumstances match, even if you lowered it to £150k if theres no one who wants to move into a retirement flat in that specific area at this time it wont make any difference unlike say a 3 bed semi where theres always people looking and someone will snag a bargain or come into the right price range



In my mothers place it was not at all uncommon for them to be on the market for a year or so before selling, she died and its now up for sale and has been for 6 months had a few viewings but the issue with prospective buyers was all personal circumstances not price.

Basically too many people leave it to late to decide to move into a residential place and then it becomes overwhelming. Out of 4 viewers so far 3 were the children trying to get mum to move. All changed their mind. (The other one, the parking was not good enough which wasnt a price issue)

Rambosmum

Who placed your friend in the care home? Was it done through SS/ the LA or did they admit themselves?

Susan1942

Thank you all for the information.
It is not my responsibility but the Stepdaughter has asked my opinion.
Told her renting is not going to solve the problem. She is paying £850 a month us any extras like hair chiropodist clothes etc. The rent for next door flat is £795 so only one week. The maintaince charges are high.
I don't think the flat is overpriced Similar one sold got £240,000 but another one where the lady has died exactly same is on at £189,950
I had advised her to speak to the Manager in the home who can probably advise her. I looked at several homes prior to her moving in. The first question we were asked was "is she self funding"
Will speak to the Step Daughter again
Thank you all for your wisdom. Sue

Flugelhorn

I think the answer is to discuss with the LA re them paying and there being charge on the house - gives the SD much more time to deal with this.

lisyloo

She is paying £850 a month

If you are talking care fees I'm pretty certain that's £850 per week.

The first question we were asked was "is she self funding"

local authorities push the price down and as a "wholesale" buyer have the power to do so.
Often self-funders pay more and subsidise the LA, so the home would be very keen to have self-funders as they pay more.
Totally wrong, but it's the reality.


Note the local authority would only be making a loan, but it does beg several questions
a) will they be willing to loan the self-funders rate.
b) will they be wiling to loan at all if her decision was elective i.e. LA think she should be at home (perhaps with carer visiting))