transfering house to children

cx6

This is another view 

Am I Legally A Landlord Even If I Don't Charge Rent? (propertyinvestmentproject.co.uk)

user1977

cx6 said:

This is another view 

Am I Legally A Landlord Even If I Don't Charge Rent? (propertyinvestmentproject.co.uk)

Maybe find something from a legal authority, rather than someone with the disclaimer:

"I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice."

Grumpy_chap

macman said:

Because there has been no 'consideration' (i.e. the  tenant receives the right to occupy the property exclusively in return for a consideration- rent). 
It's something of a legal grey area, as usually in such agreements the tenant provides other services in lieu of rent, such as labour, or maybe carrying out improvements to the property. But, without a consideration, it can be judged that no contract has been formed.

I wonder whether there has been 'consideration'?

The simple description of the proposal is:

• Parent gives house to children
• Parent lives rent free until death

The same outcome is achieved if the steps to achieve the above actually, from a legal perspective, comprised:

• Parent sells house to children
• Parent pays the sale receipt to children as advance rent
• Parent lives in the house until death

The latter approach is more akin to "reversionary property schemes" that are available.  Given that transfer of the house requires legal advice, the details of selling the house and paying a lump-sum advance rent would be something that the legal people would formalise.  To avoid the tax implications associated with paying a substantial advance rent, the process may even develop as follows:

• Parent sells house to children
• Parent gifts sale receipt to children, excluding nominal sum
• Parent pays nominal sum to children as consideration for life-time lease
• Parent lives in house until death

Another approach that basically achieves the outcome but with specific consideration:

• Parent gifts house to children
• Parent pays annual peppercorn rent for life-time lease
• Parent lives in house until death

I am not legally qualified, but there do seem to be simple ways that the house can be gifted and the rental agreement also exist without materially changing the practicalities of the outcome.

That this part can be resolved does not make the whole idea any better than if this part could not be resolved.

macman

Once again, the point is being missed. We are not concerned with whether the owner of the property needs to comply with the numerous LL regulations, but whether a contract forming a legal tenancy has been created.
Referring us to various opinions on random internet sites does not make a convincing case.

Grumpy_chap

macman said:

Once again, the point is being missed. We are not concerned with whether the owner of the property needs to comply with the numerous LL regulations, but whether a contract forming a legal tenancy has been created.
Referring us to various opinions on random internet sites does not make a convincing case.

I have not referred to any random opinions.

I was simply giving examples of how the 'consideration' allowing the tenancy to be created could take different forms.

It is also possible that the "life tenancy" could actually be under long-lease rules rather than tenancy.

I am quite certain that, if person A wishes to gift their property to person B, subject to a life-interest for person A, that can be achieved simply through legal processes. 
It is not that different to what happens in "reversionary property" arrangements, nor that different to what happens if person C (owner) dies leaving their property to person B (child) in will subject to life-interest for person A (unmarried partner).

I do accept, the detail of how this is structured may well mean that a LL / tenant relationship is not formed.  That also would seem to make things more straightforward as, if structured as a life-interest lease / tenancy, it would seem to disconnect the forced sale and eviction in the event of relationship breakdown or benefits claim. Though the property could still be sold for reduced value subject to the life-interest continuing.

macman

Grumpy_chap said:

macman said:

Once again, the point is being missed. We are not concerned with whether the owner of the property needs to comply with the numerous LL regulations, but whether a contract forming a legal tenancy has been created.
Referring us to various opinions on random internet sites does not make a convincing case.

I have not referred to any random opinions.

I was simply giving examples of how the 'consideration' allowing the tenancy to be created could take different forms.

It is also possible that the "life tenancy" could actually be under long-lease rules rather than tenancy.

I am quite certain that, if person A wishes to gift their property to person B, subject to a life-interest for person A, that can be achieved simply through legal processes. 
It is not that different to what happens in "reversionary property" arrangements, nor that different to what happens if person C (owner) dies leaving their property to person B (child) in will subject to life-interest for person A (unmarried partner).

I do accept, the detail of how this is structured may well mean that a LL / tenant relationship is not formed.  That also would seem to make things more straightforward as, if structured as a life-interest lease / tenancy, it would seem to disconnect the forced sale and eviction in the event of relationship breakdown or benefits claim. Though the property could still be sold for reduced value subject to the life-interest continuing.

My comment was in response to cv6, not to you, but you posted before I completed my reply.

born_again

Grumpy_chap said:

The simple description of the proposal is:

• Parent gives house to children
• Parent lives rent free until death

The same outcome is achieved if the steps to achieve the above actually, from a legal perspective, comprised:

• Parent sells house to children
• Parent pays the sale receipt to children as advance rent
• Parent lives in the house until death

Except the whole purpose of giving the house to the children is so that they do not have to sell it to fund their care when going into a care home.

Grumpy_chap

born_again said:

Grumpy_chap said:

The simple description of the proposal is:

• Parent gives house to children
• Parent lives rent free until death

The same outcome is achieved if the steps to achieve the above actually, from a legal perspective, comprised:

• Parent sells house to children
• Parent pays the sale receipt to children as advance rent
• Parent lives in the house until death

Except the whole purpose of giving the house to the children is so that they do not have to sell it to fund their care when going into a care home.

I think you have edited my post such that the response is out of context

born_again

Grumpy_chap said:

born_again said:

Grumpy_chap said:

The simple description of the proposal is:

• Parent gives house to children
• Parent lives rent free until death

The same outcome is achieved if the steps to achieve the above actually, from a legal perspective, comprised:

• Parent sells house to children
• Parent pays the sale receipt to children as advance rent
• Parent lives in the house until death

Except the whole purpose of giving the house to the children is so that they do not have to sell it to fund their care when going into a care home.

I think you have edited my post such that the response is out of context

Not sure which bit is out of context as you said 4 times "Parent lives in house (rent free) until death"

The whole point of the OP was to avoid selling the house to pay for care costs. Not live in it till death,

Grumpy_chap

born_again said:

Not sure which bit is out of context as you said 4 times "Parent lives in house (rent free) until death"

The whole point of the OP was to avoid selling the house to pay for care costs. Not live in it till death,

No, the OP wanted to avoid paying for care homes costs and avoid the house being sold to meet that cost.

The discussion then veered off to talk about the house being gifted to the children and whether that creates a Landlord (children) / Tenant (OP) relationship.  It was suggested that the contract / lease my not exist as there would be no 'consideration' if there is no rent paid.

That was where I came up with there being no difference between

• gifting the house to the children and living rent free, 
• or selling the house to the children, paying the proceeds to the children as rent and then living in the house with no further rent

The latter of these approaches would create the contract as there would then be 'consideration'

It is not really relevant to the OP as there are so many reasons why this is a bad idea and very likely would not achieve the outcome that the OP desires as DoA and / or GwR.