How complicated is this?

doodling

Hi,

I think it is a terrible idea.

Making a 19 year old student a landlord, with all the issues that entails is bonkers.  Especially where they are bang in the middle of a family dynamic they may not have the maturity to deal with.

The Uncle would almost certainly be a tenant rather than a lodger.

Any growth in value would be subject to capital gains tax unless the 19 year old actually lives there and from what has been written they won't.  I certainly wouldn't want to live with a smoker and I expect a 19 year old will have stronger views!

Note that sale and rent back is a regulated activity so unless you happen to have the necessary permissions then it would be unlawful to do that.  I suspect that it also covers gift and rent back!

This needs to be tackled with a clear decision.  Either get the house sold or get an agreement that everyone is stuck unless the occupant dies.  Offering to buy people out allows them to step away from having to make a choice they are uncomfortable with, leaving you as the bad guy if it is eventually sold before the occupant dies.

Of course, if your son is particularly evil then he would accept your kind offer, take ownership of the house, evict the tenant, sell the property and have a nice nest egg to start his life with.  Alternatively life might force him to do that for some reason (bankruptcy / divorce being the two common reasons).

FlorayG

cdbe11 said:

I don't know which piece of legislation would turn him from a lodger to a tenant? He used to pay his keep to his mother and when she passed away he paid it to his father, in future he would pay it to his nephew - he would never be the sole occupier of the house. It would be a lifetime/as long as he needed it offer with no question of "getting him out" - he's my wife's brother.


I think the most we could expect to receive is £200/week (index linked) including bills, so 10,400 less council tax (1,200 - with exempt student and 25% discount), say 2,500 for bills - (water, gas, electric, insurance and boiler cover) plus 1,000.a year for contingency/maintenance (I'd do the maintenance myself and know that's realistic).

Who is living there with him now? Nobody? Then he is now a tenant.
Also 'exempt student and 25% discount' won't apply  if you find you can do the landlord/lodger arrangement - there will be two people living there. A lodger counts as a resident and you can't apply BOTH discounts. 

silvercar

FlorayG said:

cdbe11 said:

I don't know which piece of legislation would turn him from a lodger to a tenant? He used to pay his keep to his mother and when she passed away he paid it to his father, in future he would pay it to his nephew - he would never be the sole occupier of the house. It would be a lifetime/as long as he needed it offer with no question of "getting him out" - he's my wife's brother.


I think the most we could expect to receive is £200/week (index linked) including bills, so 10,400 less council tax (1,200 - with exempt student and 25% discount), say 2,500 for bills - (water, gas, electric, insurance and boiler cover) plus 1,000.a year for contingency/maintenance (I'd do the maintenance myself and know that's realistic).

Who is living there with him now? Nobody? Then he is now a tenant.
Also 'exempt student and 25% discount' won't apply  if you find you can do the landlord/lodger arrangement - there will be two people living there. A lodger counts as a resident and you can't apply BOTH discounts. 

An exempt student would reduce the number of people eligible to pay council tax in the property to one. Therefore the single person discount is applied.

https://www.citizensadvice.org.uk/housing/council-tax/student-housing-council-tax/#:~:text=If%20someone%20you%20share%20with%20isn't%20a%20full%2Dtime%20student&text=There%20is%20a%2025%25%20discount,the%20property%20for%20discount%20purposes.

FlorayG

silvercar said:

FlorayG said:

cdbe11 said:

I don't know which piece of legislation would turn him from a lodger to a tenant? He used to pay his keep to his mother and when she passed away he paid it to his father, in future he would pay it to his nephew - he would never be the sole occupier of the house. It would be a lifetime/as long as he needed it offer with no question of "getting him out" - he's my wife's brother.


I think the most we could expect to receive is £200/week (index linked) including bills, so 10,400 less council tax (1,200 - with exempt student and 25% discount), say 2,500 for bills - (water, gas, electric, insurance and boiler cover) plus 1,000.a year for contingency/maintenance (I'd do the maintenance myself and know that's realistic).

Who is living there with him now? Nobody? Then he is now a tenant.
Also 'exempt student and 25% discount' won't apply  if you find you can do the landlord/lodger arrangement - there will be two people living there. A lodger counts as a resident and you can't apply BOTH discounts. 

An exempt student would reduce the number of people eligible to pay council tax in the property to one. Therefore the single person discount is applied.

But would this apply if the student is the householder and the second person a lodger? Usually this accounts for students who are the lodger or living with a parent. Does a student living alone qualify for zero council tax?

saajan_12

cdbe11 said:

These are some of my concerns. It would be my son's official address but being a young student the reality is that he' wouldn't spend any significant time there - but there are no laws to say that he has to. He would have the council tax and bills in his name.

.. 

I don't know which piece of legislation would turn him from a lodger to a tenant? He used to pay his keep to his mother and when she passed away he paid it to his father, in future he would pay it to his nephew - he would never be the sole occupier of the house. It would be a lifetime/as long as he needed it offer with no question of "getting him out" - he's my wife's brother.

..

I think the most we could expect to receive is £200/week (index linked) including bills, so 10,400 less council tax (1,200 - with exempt student and 25% discount), say 2,500 for bills - (water, gas, electric, insurance and boiler cover) plus 1,000.a year for contingency/maintenance . 

The question of who lives there does look concerning.. A non term time address (and when he's not on holiday or with you) is close to the wire if not over it of that not being son's main residence.
Correct no law that says he has to live there, but if he doesnt' then he can't use the RAR scheme, which is decided on facts. Also as a student, presumably he's declaring he lives at the term time address in order to be exempt from the council tax there. He can't be living in two places at once for term time. 

Especially if he's within the personal allowance, then it might be better to declare uncle as a tenant. It would involve extra responsibilities, but its better to be on the front foot and cover the responsibilities rather than risk uncle later claiming he's a tenant if there's a falling out. 

cdbe11

Not looking good is it!

However I would like to "fact check" some of the comments -

does the length of time someone has been a lodger somehow make them into a tenant?

does a lodger become a tenant when he is the sole occupier of the house following the death of the owner/landlord, in the period of execution of the estate?

*If either/both the above are true then I suppose it would take it into the realms of "sale/gift and rent back" as said - but if it's not then it doesn't? From what I have read, he merely becomes an "excluded tenant" until the estate is settled and the new landlord (of a lodger not a tenant) moves in?

CGT - term time student accommodation doesn't qualify for PRR and doesn't disqualify the student homeowner from PRR on his main (and only home - and there's no set criteria of staying there "x" number of days etc - for parents of typical students these days you could be lucky/unlucky enough to see them at home for even a few weeks a year), the HMRC manual specifically mentions a single lodger not affecting this? I should imagine many mature students with lodgers are in this situation but I haven't seen them moaning on the news about getting CGT demands.

Potential disabled adaptations - private landlords/homeowner's with a lodger are not responsible for funding these?

Council tax - Student exemption and single person discount work in parallel - and apply to both main residence and student accommodation.

Maintenance etc - I'm a landlord, my son would ask me to help and I would.

While I greatly appreciate the comments, I'm struggling to verify that some of them are actually correct and it's not helping the decision making. I'm continuing to research this, and would appreciate any pointers/links to legislation people may have regarding the tenancy/CGT issues highlighted.

I'm definitely moving towards the "more hassle than it's worth" side but would like the facts, eg the stuff about funding adaptations, rather than people's thoughts. But appreciate the advice is "worth exactly what I'm paying for it"!

If it ends up not working out, his options are buying somewhere smaller (which he could afford) or renting a retirement flat from the council (it's an area where these are available) - it's just the family are concerned about his particular "adjustment" to this situation - obviously you could say not concerned enough to postpone their inheritance and let him stay there - but some members have their own issues where we consider it of equal priority that they receive their inheritance asap (someone mentioned a lifetime interest - I believe this was in an earlier will but (without going into chapter and verse) was changed due to circumstances of other family members).


Thanks, and apologies if I appear argumentative - that's probably because I am!

lincroft1710

Those who want their inheritance now should be pro-active in sorting out the problem other than by coming up with (frankly) ludicrous schemes whereas one beneficiary has to buy the others out and allow another beneficiary to live in the house until he passes or moves on.


I see only 2 viable options.


1) sell the house now and the "lodger" takes his share and finds somewhere else (probably the more practical)

2) wait until "lodger" passes or goes into care, then sell house and split proceeds 3 ways


Being a smoker does not necessarily mean he will die early. My father smoked 20 a day (less as he got older) and lived to be 88

TheSpectator

It's a bad idea, simple as

sheramber

How complicated is this?

Very

Claddagh_Noir

It probably would have been better if the residing relative had a life interest in the property stipulated in the will. 

Let your son experience the benefits and perks of being a FTB in his own time

It is also a little distasteful saying the BIL is a heavy smoker and will croak it soon!  What's the betting he outlives everyone who is a heir to this house - even the super fit healthy and younger relatives?  Talk about tempting fate!