Power of Attorney & investing

BibbityBobbityBoo

Hi all, new to MSE and needing a few different bits of advice but starting with this first. I hope I can explain myself clearly and make some sense with my tired old brain. 😊

My mum has dementia and has recently moved in with us, leaving her house empty. We plan on renting that out via an agent for her. Mum also has enough savings to purchase a small buy to let property and we feel this would be a good investment for her rather than leaving the money in the bank accruing barely anything in interest. 
As my brother and I both have PofA would this form an acceptable plan as a way to maximize mum's assets? 

Any help gratefully appreciated. 

Keep_pedalling

Unless you are experienced landlords I would not look at letting out her house, and even if you are, purchasing a second property is way beyond your authority as her attorney. It is certainly not in her best interests to tie up the bulk of her assets in illiquid assets when she has limited life expectancy and may need full time care in the near future. 

The costs involved are going to be significant (bringing her current home up to a standard where it can actually be rented out, a large tax bill on the purchase of the new property) and again spending her money on this is not in her best interests. 

tacpot12

Keep_pedalling is right. The risks involved in renting are too great to justify in your Mum's case, unless one of you is an experienced landlord. You can get returns with less risk by investing in the stock market. You should not take risks that you don't need to take. If neither of you have experience investing in the stock market, you should take independent financial advice. You might consider doing so from a member of the Society of Later Life Advisers (Society of Later Life Advisers - SOLLA) who should be best able to consider your mother's financial needs.  

 

BibbityBobbityBoo

Hi all, thanks for the replies. I have checked on the .GOV website and it apparently isn't beyond the scope of PofA to invest mums money in property as it is seen as a looking after her assets.
Also, leaving mums house unoccupied is a risk and is also a waste. 

It would need a little work to bring it up to scratch for the rental market but that is also acceptable as is classed as maintaining mum's asset. 

Apologies for asking on here but I'd hoped someone that had been in the same position might come forward with their own experience and offer advice...pitfalls.. reassurance. 

Personally, I can't think of any better way for mum to maximise the assets she already has to help plan for the possibility that she may eventually need paid care. At the current cost of care, her savings will be gone within a year and then they'll sell her house. If we can add to her savings pot with 2 rented properties it will obviously last longer before being depleted by the nearly 5 thousand a month in care costs that's to come. 

Mum herself previously had a rental property so it's not a new thing and we would put everything in the hands of an experienced agent to ensure all was done process anyway. 

RAS

Mum had a rental property in an entirely different market. Just getting the certificates and licences cost money and things are getting harder and less effective financially.

A "professional" agent is pretty much useless as it's your mum who gets sued if the agent fails to renew the certificates, register the deposit or make repairs. And it's mum who has to pay for eviction or the repairs, and cover the lost rent until things are sorted out.

MEM62

I am sure that your mum, if she understood the implications, would not want to be a landlord.  It is also the case that the ship sailed on BTL's being the holy grail of making money years ago.  If tested, this would not be seen as acting in your mother's best interest. 

poseidon1

You may have a long wait to hear from attorneys acting on behalf of others, who can relate any positive stories of administering buy to let's in the current hostile environment.

There is extremely good reasons why hordes of small BTL landlords are thundering to exit the sector. Perhaps you should acquaint yourself with the current issues plaguing the sector before committing to what could be an expensive error on your mother's behalf.

 As indicated by @MEM62 the BTL ship has very much sailed in this regard.

Keep_pedalling

There was a long running thread sometime back (which I can’t find now) where someone had rented out their mother’s London house to help with care fees and ended up with the tenant from hell who stopped paying rent. It took them months to get them evicted which racked up massive legal expenses, and the tenant also caused significant damages to the house wracking up many thousands of pounds in repair costs. 

If your were experienced landlords aware of all the risk and responsibilities then this might be something to consider, but for absolute beginners I would not go near this with a long barge pole.

elsien

I was going to say what if it cost for a lot of money with a bad tenant trashing the property and taking months to get out.
If your mother would not have considered being a buy-to-let  landlord when she had capacity, then you shouldn’t be doing it on her behalf now.

Renting out her property into her own property in some circumstances is doable but does still carry the above risks. If moving in with you doesn’t work out and she does need some form of care then how is that gonna be paid for unless she has substantial assets because that would involve evicting the existing tenant and then the time taken to sell. 

I’m another person considering that the potential risks outweigh the benefits. And you do have to think about how your mum would have managed the money.  

I have LPA for my brother but he has made it very clear that any sort of investment is not what he would want and the LPA should not do that. I cannot override that and nor would I I want to, even though investing could well get a better return on his money. 

tooldle

When my parent had lost capacity and was no longer able to live independently, I as LPA sold the property and invested the proceeds, having taken advice on bespoke managed investments. Making the funds last as long as possible whilst looking for low risk growth, was my aim. Parent came from a family of long living folk. 

Your proposed plan for Mum involves significant costs at the outset with potential for ongoing costs and losses. Why not have a chat with an IFA (mum included), to get an idea of what growth could realistically be achieved for what cost? 

On a more personal note, caring for mum will get harder and more time consuming as the disease progresses. Having ultimate responsibility for two rental properties may be a stretch too far for the LPA’s when faced with mid or late stage dementia care.

sheramber

Your mother will be liable to pay tax on her rental profit.

There will Capital Gains Tax to consider when the house is sold. 

Additional stamp duty will be payable on  the BTL purchase