Shared ownership deferred rent

mal40

I was wondering if a anyone could give me some advice on the following and point me in the right direction for some help.

Around 9 years ago my pension age in-laws bought a 50% share of an apartment on a newly built retirement village.
Since the recent death of Mum in law it has come to the family's attention that they had arranged to have the rent deferred and be paid when they no longer need to live there and the property is sold. The amount of deferred rent now stands at over £30k. 

This is extremely concerning to us as when they purchased the 50% share the amount paid for it was most of the savings they had and took them to having around £15k left. With this figure and their low income from pensions they were actually entitled to pension credit so should have also been entitled to a large proportion of the rent being paid by housing benefit. 

As a family we feel that the not for profit care company has financially exploited a vulnerable elderly couple during the original sales process as Father in law's share has now reduced to around 25%.

Any advice would be much appreciated as immediate family are now having to assist Father in law with all paperwork and phone calls 

wilfred30

mal40 said:

I was wondering if a anyone could give me some advice on the following and point me in the right direction for some help.

Around 9 years ago my pension age in-laws bought a 50% share of an apartment on a newly built retirement village.
Since the recent death of Mum in law it has come to the family's attention that they had arranged to have the rent deferred and be paid when they no longer need to live there and the property is sold. The amount of deferred rent now stands at over £30k. 

This is extremely concerning to us as when they purchased the 50% share the amount paid for it was most of the savings they had and took them to having around £15k left. With this figure and their low income from pensions they were actually entitled to pension credit so should have also been entitled to a large proportion of the rent being paid by housing benefit. 

As a family we feel that the not for profit care company has financially exploited a vulnerable elderly couple during the original sales process as Father in law's share has now reduced to around 25%.

Any advice would be much appreciated as immediate family are now having to assist Father in law with all paperwork and phone calls 

When you say "when they no longer need to live there", do you mean when they both either pass away or go into a care home? 

mal40

Thanks for your message.
I suppose so yes but Father in law could also decide to move somewhere closer to family as he needs help with more things nowadays.

Bookgal88

mal40 said:

I was wondering if a anyone could give me some advice on the following and point me in the right direction for some help.

Around 9 years ago my pension age in-laws bought a 50% share of an apartment on a newly built retirement village.
Since the recent death of Mum in law it has come to the family's attention that they had arranged to have the rent deferred and be paid when they no longer need to live there and the property is sold. The amount of deferred rent now stands at over £30k. 

This is extremely concerning to us as when they purchased the 50% share the amount paid for it was most of the savings they had and took them to having around £15k left. With this figure and their low income from pensions they were actually entitled to pension credit so should have also been entitled to a large proportion of the rent being paid by housing benefit. 

As a family we feel that the not for profit care company has financially exploited a vulnerable elderly couple during the original sales process as Father in law's share has now reduced to around 25%.

Any advice would be much appreciated as immediate family are now having to assist Father in law with all paperwork and phone calls 

So this was a choice they made - they weren't forced to do this?

This sounds like something that they/you should have understood before agreeing to defer the rent. 

This is a bit unfair. Every purchaser has to do their own due diligence and understand what they're doing and the pro's and con's of their choices. The care company may not be able to advise people on how to approach their finances - they're a care company, not financial advisors. 

Why has his share reduced? If they bought a 50% share, that's surely what he still owns?

AdrianC

mal40 said:

...they were actually entitled to pension credit so should have also been entitled to a large proportion of the rent being paid by housing benefit. 

Did they ever apply for it?

If not, then how were your ILs landlord meant to know they were eligible?

mal40

Our concern is they obviously didn't fully understand it at the point of sale and we wonder how many other vulnerable elderly people this could have happened to. 
Immediate family were not included in any of the sales process otherwise we would have researched it thoroughly and advised them against the deferral.
He still on paper owns 50% however the total rent deferred will have to be paid to the company from his share when the property is sold. At present this amount is almost 50% of his original purchase price. Added to this it was a new build and all of the identical apartments that are selling now are doing so for at least £30K less than the original sale price.

Bookgal88

Others might disagree, but I really don't think there's anything to be done here. 

I agree that it doesn't sound like your in-laws fully understood what they were doing at the point of sale, but that's not the fault of the care company. Your in-laws agreed to all of this when they purchased the property. A conveyancer will have advised them to fully understand what they were agreeing to before signing any documentation. If they didn't understand but didn't ask any questions and just signed everything anyway, that's really on them. It's unfortunate. 

It sounds like they didn't want the assistance of family at the time of purchase (which would have been the right time to ask for it), but now want it when things have gone a bit off-piste (but it's too late now). 

What sort of outcome are you wanting to achieve?

mal40

They did apply for pension credit whet their savings were radically lowered. To my knowledge they did not apply for housing benefit as they didn't realise they could/should. 
At a recent meeting with a staff member of the landlord. The question was asked if the rent could begin to be paid so as not to increase anymore.
The response from this staff member was that "benefit from housing would not be available as the company are not actually asking them to pay rent." 
Until such time that is as the company's 50% share and the deferred rent combined become the market value of the property.
Once this value is reached the landlord will send a letter instructing the rent will now become payable but by the time this happens the landlord will claim all of the proceeds of the property once sold.   

Bookgal88

mal40 said:

At a recent meeting with a staff member of the landlord. The question was asked if the rent could begin to be paid so as not to increase anymore.
The response from this staff member was that "benefit from housing would not be available as the company are not actually asking them to pay rent." 

This doesn't sound like it can be the complete response, as it's not actually an answer to the question being asked...

mal40

They said they would have to check with the finance department. Then, informed Father in law of the amount if money he would have to find each week for the rent if it could be done. He began to worry, when I tried to reassure him explaining that he wouldn't have to find all of it as he would get help with the payments the staff members response was just that. They also mentioned that they had to make sure it was in his best interests. As a family we feel that continuing to defer the rent is only in the company's best interest and certainly not at all in Father in laws.

user1977

I don't see how it benefits the landlords to defer the rent. I would expect most landlords would rather have cash coming in regularly, than have the prospect of maybe getting it at an unknown date in the future.