Cash for keys

FreshFruit

Closed thanks

Grumpy_chap

I am confused.  OP, who are you in all of this?  

• You begin with "We have a tenant" so I took that to mean that you are the LL?
• The you refer to the Council / Social Services doing an eviction.  Is it a Council property, so the Council are the LL?
• Then that the Council say the property is not fit to live in.  If you are not the LL and not the tenant, why would the Council tell you this?  (GDPR)  Who did the Council tell?
• Then the tenant dislikes the LL (3rd person - not you) quickly followed by "we" sent a gas engineer on the order of the Council.  So are you the LL or not?
• Next, the Council threatened to serve the LL with a notice to improve - so you are not the Council and nor are you the LL?
• You explained (to whom?) that the tenant doesn't allow you access.  Why would the tenant allow you access?
• Now, you've offered the tenant a "cash-4-keys" deal.  The tenant asked for more than you offered.  So you must be the LL?
• Now, you have some options.  You being the LL?
• Then you finish with the LL (3rd person) is tempted to auction the property.  So, you are not the LL?  Who are you in all of this?

If you can clarify who is who it will make understanding the above a lot easier.

In the mean-time, I think I summarise as follows:

• Tenant is neglecting the property
• Council want the property made habitable
• LL wants the tenant out.

The LL is considering the following ways out of the situation:

1. Eviction
2. "Cash-4-Keys"
3. Sell with sitting tenant

Of these three options, "Cash-4-Keys" at the £5k the tenant has indicated they'll accept seems the best choice for the LL to pursue.  Drawbacks with the other options:
1 - Will take a long time and cost fare more than £5k.  As an absolute minimum S21 notice is 4 months.  Then the court back-log.  Could be well over a year before the LL recovers the property.
2 - This property with a sitting "nuisance" tenant is virtually worthless - any prospective purchaser will want at least a reference from current LL and with the tale of woe above, who in their right mind would buy the property?

FreshFruit

@Grumpy_chap
Apologies for the confusion, it's in a portfolio which was part of inheritance, it has multiple beneficiaries and hasn't been split up yet.

The landlord is technically one person (on the tenancy agreement) yet multiple people are involved, confusing I know... I also try to keep things vague as I am paranoid about posting too much information online.

Thanks for the advice, I understand why you'd say the best option would be to pay the tenant to leave - £5k is a lot of money, perhaps we could go higher than £1k - I'd have to calculate the true cost of eviction and try offer under that. 

AdrianC

FreshFruit said:

Apologies for the confusion, it's in a portfolio which was part of inheritance, it has multiple beneficiaries and hasn't been split up yet. 

So "the landlord" is still the deceased's estate, administered by the executor. Nobody else.

When the bequests get disbursed, then the landlord will change to whoever becomes the owner(s) of this property.

Yes, the property could be shoved in an auction. One thing's for sure, it'll take a big hit on the sale price...
What proportion of the value is the £4k difference between what's been offered to the tenant and what the tenant is asking for?

I suspect that in months or years to come, you risk looking back at that £4k and thinking "That would have been cheap". Do not underestimate the value of your blood pressure.

Grumpy_chap

All this surreptitious cloak-and-dagger stuff really makes understanding your position difficult.

What is the relationship of the deceased to you?
Are you the Executor?
Are you one of the beneficiaries?
How many beneficiaries are there in total?
I assume the LL is deceased and the multiple people involved are all joint Executors and / or beneficiaries.  How many people?

If someone has passed on leaving a property portfolio, then this is a substantial Estate.  Against that £5k is peanuts.  The £5k gets paid by the Estate before distribution. 
Though, there is an argument for IHT that valuing the Estate with this property having virtually NIL value (troublesome tenant that cannot be evicted) may be the most tax-efficient.  Ask on the deaths, funerals, probate board.
Given it is a complex Estate, it may be beneficial if the Executors engage the services of a professional (i.e. Solicitor) to assist in the administration of everything - especially as a Solicitor will need to be involved is the sale / transfer of property is being considered.

In the context, the final comment is an odd one:

FreshFruit said:

£5k is a lot of money, perhaps we could go higher than £1k - I'd have to calculate the true cost of eviction and try offer under that. 

The cost of eviction will be much much more than £5k. 
It will also take a very long time and may prevent the Estate from being settled in the mean-time.
Do not look at the £5k as a cost to yourself, but as a small part from the value of the substantial Estate (and I understand will be paid by the Estate, thus reducing the residual value subject to IHT so nett cost to the Estate is lower). 
Even if this was not a probate issue, the £5k is likely money well-spent as it will turn the property from unsellable virtually NIL value to sellable asset (though that then increases the IHT for the Estate).

Out of interest, is the tenant currently and continuing to pay rent?
If you have not been involved with the property portfolio previously, how do you know the tenant was good for years and now only recently became troublesome.

Really, if you want good advice, you need to set out the position clearly and unambiguously - expecting people to fill in the gaps is just very difficult and will not get you the best advice for the situation.

Grumpy_chap

Is this to do with the property portfolio that was split 60 - 20 - 20 and did not have the correct IHT paid?
https://forums.moneysavingexpert.com/discussion/6174788/inheritance-tax-wasnt-divided-between-beneficiaries-correctly/p1

OR, is this to do with the property portfolio from 10-years ago split (but only partly taken) 15 - 15 - 20 - 25 - 25?
https://forums.moneysavingexpert.com/discussion/6229148/how-to-split-inheritance-years-after-the-death#latest

OR, is this an entirely different property portfolio that you have inherited?

Given the frequency with which you inherit property portfolios, or part thereof, you should be expert by now.
Also, having inherited so many property portfolios, it is odd that you refer to the £5k to recover possession of this property as "a lot of money".

People here will try to help, but really can only do so if the full and correct details are provided.

FreshFruit

@Grumpy_chap
I wanted to frame the post as, here's the situation and how would somebody approach this, I appreciate it does make it confusing. 

The value of the estate is large(ish) but out of principal we never waste a penny. So the best option would be the most financially sound one. 

IH tax is already paid, so there isn't much of a tax break if the property sold cheap, besides the capital gains tax over ~8/9yrs of appreciation. 

Tenant gets rent paid directly to us from the council, property is only worth £80-90k tops. 

I value the advice on how long the eviction will take, but as we won't be losing rental income it should only cost about £2k.

Also I would disagree that the property value is NIL with a problem tenant. The council would still pay the rent to the new landlord whilst they chose if they want to evict them themselves or deal with the tenant. 

It's not much hassle, just pay the solicitor £2k and collect rent till it's over, then u have a vacant property for maybe 10% under market value. Which is a win win.

Grumpy_chap

So, is the property still in the Estate, or is the Estate all wound-up?  It should be after so many years.

My advice, and Adrian's advice, was to pay the £5k to get the tenant out and then move forward.
You are free to disagree and do something else if you truly feel the cost of eviction will only be £2k. 
What value do you put on your time and stress in following that process?

We disagree on the property value with the sitting problem tenant.  BUT:

• property £90k
• pending improvement notice from the Council, or £30k fine
• costs to evict the sitting tenant
• cost to make rectification to property deficiencies, which cannot be assessed as the tenant will not allow access
• legal costs of acquisition

Very hard to see how much residual value there is in that property as of today.

I applaud the principal to never waste a penny. So the best option would be the most financially sound one.   Very MSE.  You can only follow the most financially sound option if you know the costs, risks and stresses of all options - not all costs are financial.  

Anyway, I am starting to get a sinking feeling like when you run across the sweet sands on the beach and the tide rinses then from beneath your toes..

sammyjammy

FreshFruit said:

@Grumpy_chap
I wanted to frame the post as, here's the situation and how would somebody approach this, I appreciate it does make it confusing. 

The value of the estate is large(ish) but out of principal we never waste a penny. So the best option would be the most financially sound one. 

IH tax is already paid, so there isn't much of a tax break if the property sold cheap, besides the capital gains tax over ~8/9yrs of appreciation. 

Tenant gets rent paid directly to us from the council, property is only worth £80-90k tops. 

I value the advice on how long the eviction will take, but as we won't be losing rental income it should only cost about £2k.

Also I would disagree that the property value is NIL with a problem tenant. The council would still pay the rent to the new landlord whilst they chose if they want to evict them themselves or deal with the tenant. 

It's not much hassle, just pay the solicitor £2k and collect rent till it's over, then u have a vacant property for maybe 10% under market value. Which is a win win.

If you have all the answers why ask the questions?

Norman_Castle

FreshFruit said:

Ive got a situation on my hands. We have a tenant who has been with us for years but unfortunately their mental health has took a turn for the worst and we have had the following issues; 

We got the relevant social services to help the situation (all council), initially they said that they would do an eviction and foreclose the property [seize it and offer it for sale?] (due to antisocial behaviour). They never followed up on this and instead we have had the council tell us that the property is not suitable to live in. . 

The council (who I thought were on our side) has threatened to serve the landlord with a notice to rectify the property or face a £30,000 fine.

We're in a cache [catch] 22 and the council aren't helping, the landlord is tempted to auction the property and just get rid, not sure if anyone has any advice as we could sure use some.

Who is "we"? Are you a letting agent? If so you seem very unprofessional needing to ask advice on a money saving site targetting the general public.
If the property is uninhabitable ask the council to rehouse the tenant. Would being uninhabitable with a landlord unwilling or unable to fund the repairs make eviction easier or cheaper?

moneysavinghero

Also I would disagree that the property value is NIL with a problem tenant. The council would still pay the rent to the new landlord whilst they chose if they want to evict them themselves or deal with the tenant. 
It's not much hassle, just pay the solicitor £2k and collect rent till it's over, then u have a vacant property for maybe 10% under market value. Which is a win win.

If it's not much hassle why do you want to sell it?