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Advice, please, on finances

Discussion in 'Legal and financial issues' started by Distressed55, Sep 15, 2018.

  1. Distressed55

    Distressed55 Registered User

    May 13, 2018
    Hello everyone

    I'd like your views on a problem. I know that everyone on TP will give an honest opinion.

    I hold joint power of attorney with my siblings for my parent.

    Their view is that we rent parents house, and do deferred payment arrangement with the council to cover the substantial shortfall.

    My view is that we sell the house, invest the proceeds. Even at the low rates today, the interest income is more than the rental income, particularly since there is substantial work to be done to the house, to be paid for by my parent, to get it into a rentable condition, the work is not necessary if we sell.

    Long term, selling is best too. The dpa only covers 80% of the valuation of the house, so the funds run out quicker, plus there's interest charges and so on to add. And no guarantee of either house prices rising or tenants being available to rent.

    The quandary is - as an attorney the decision to be made is solely what is in the best interests of the donor. Which would clearly to be sell. Or am I just being too strict in my interpretation?

    Views gladly received. Thanks.
  2. marionq

    marionq Registered User

    Apr 24, 2013
    If you do the sums on costs of renting through a management firm, tax, repairs and replacement plus potential hassle of tenants then as a money making option it’s not great. Personally I would sell. Job done. Fees paid.
  3. Rosettastone57

    Rosettastone57 Registered User

    Oct 27, 2016
    Hi I'm in a similar position at the moment with trying to sell my mother-in-law's house to pay for her care fees .We looked at a rental option but we decided that the location of the bungalow would not attract renters in the first place .. therefore the only option is to sell. Also the amount of money we would be able to get monthly in rent would not help substantially to cover the care fees. My husband did not want to be a landlord either with all those responsibilities
  4. Duggies-girl

    Duggies-girl Registered User

    Sep 6, 2017
    According to yesterday's papers. Brexit may knock 30 per cent off house prices.

    Probably scaremongering but it may sway their point of view.
  5. Sirena

    Sirena Registered User

    Feb 27, 2018
    I don't think you are being too strict in your interpretation - you must do what is best for the donor, and if the best option is selling, you should do that. I didn't have to make that decision because my mother was in a rented flat, but if she'd been a property owner I would have sold it. There are too many risks with renting - will you get a tenant, will they pay promptly, will there be unlet time or unexpected expenses. If you sell, you know exactly how much money you have for fees, it's there in the bank. There are enough unknowns with dementia, without voluntarily adding in more.

    Do you know why your siblings think renting is a better option?
  6. Distressed55

    Distressed55 Registered User

    May 13, 2018
    I suspect because they want to keep as much of their inheritance as possible, in the form of the house rather than cash. They won't say that though. I agree with all the points that you've raised though, but it's falling on stony ground......
  7. Normaleila

    Normaleila Registered User

    Jun 4, 2016
    I sold my aunt's house as soon as she went into a care home. The gross rent would been £18,000 per annum at the very most, even with a new kitchen and bathroom. Much less after overheads and tax. The DPA charges and interest would also be a cost that should be taken into account.
    Perhaps you should put the figures on paper and ask them to explain why renting is preferable. Include absolutely all costs - including voids (weeks with no tenant), wear and tear, new kitchen, interest, etc. Also, if they want to rent it out, are they willing to do all the work? (Whatever they say, the true answer is no.)
    I agree with you that selling is best. Renting is a gamble that income will cover costs, that you'll find tenants, that tenants will pay the rent and not trash the place, that it will eventually sell for more than it would sell for today.
  8. Sirena

    Sirena Registered User

    Feb 27, 2018
    When all the points covered by Normaleila have been taken into account would the figures really fall in their favour? Not that they should be thinking in terms of their interest, but since they are....
  9. Distressed55

    Distressed55 Registered User

    May 13, 2018
    No, the figures really don't work, but they expect the parent to pay for everything and then have the good manners to pop off to a higher plane when the improvement work is done. But they are like human ostriches, except they don't have their heads in the sand...trying to get them to face reality is almost as difficult as dealing with the parents dementia. Except I tend to occasionally get sense out of my parent, which I don't with the siblings.
  10. Duggies-girl

    Duggies-girl Registered User

    Sep 6, 2017
    My sibling said he would do anything to keep his dad in his own home, he has actually done nothing other than leave me to do it all until the last couple of weeks when I have had a little help.

    In hindsight it would probably have been better for dad and myself if dad had gone into a care home a year ago. Dad would have been fine and I would have been in a better state of mind than I am now.

    Dad has more than enough money to keep himself safe and secure in a care home and selling his house would have been the best option to pay for it. Knowing what I know now I would happily have given up any inheritance for the sake of my well being over the last couple of years. In fact I would consider it money well spent.
  11. love.dad.but..

    love.dad.but.. Registered User

    Jan 16, 2014
    I had the same situation with my 2 sisters but in dad's case funds were needed to top up his private and state pension to cover NH fees. Everything for dad fell on my shoulders which was fine to a point. I wanted to sell...they both wanted to rent. I said in that case althouģh using a letting agent I would step away from dealing with the house and let them manage everything...I was going over every week to check..dealt with everything to do eith the house finances and care. .cut grass etc. I did a pros and cons sheet subjectively for both ideas and sent it to sisters. The upshot was that we would have needed to spend some money to bring it up to rental standard which didn't seem a good use of dad's dwindling savings...he would have paid tax on any income...letting agent fees ..insurances..etc...so the rental income still would have left a shortfall and my sisters agreed with me that the house should be sold. He died 18 months later and it certainly simplified matters then. I spread his funds across institutions getting the best interest rate at the time.

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