Property POA - "Paying Market Rent", when does it apply?

[David Webb]

I have a query regarding an LPA, relating to the advice given on the Govt POA website:

More specifically, I am trying to work out whether the restrictions on "letting someone live in the donor’s property without paying market rent (anything they pay below market rent counts as a gift)" would apply in the case of an attorney staying in a property of someone they have POA for on an ad-hoc basis (such as one night every couple of weeks). This would be staying overnight when visiting a parent who is now in a care home.

All of the advice and guidance I have found online seems only to relate to an attorney living permanently in the house of someone they hold POA for. The property is otherwise empty, so there are real ongoing costs to keeping it unoccupied (insurance, utilities standing charges etc) rather than selling it to fund residential care.

I have been unable to find an answer to this query on the GOV website, or on any external advice sites so it would be great if someone could give me a steer on whether the guidance "about paying market rate" is also relevant to overnight stays, as in which case I am assuming that paying an equivalent hotel or AirBnB rate would seem to be the right thing to do?

 

[nitram]

I would say that staying overnight every two weeks allowing you to visit the donor was allowed, you are acting in their best interests by visiting, also regular visits are probably necessary to comply with insurance terms.
You are not gaining, if the property was not available there is an argument that you could pay for accommodation out of the donor's funds.

 

[Cazcaz]

I don’t see an issue while the person is self funding. As soon as the money runs out the house will have to be sold to pay for their care. It until then as long as it is only for a night (eg no one can be said to use it for a holiday/break, as that would need to be paid for I think at market rate).

 

[Rosettastone57]

I think you're over thinking this. When my mother in law was in a care home, her daughter came over from the USA to visit. She stayed in her mother's home for 10 days with my husband, who was attorney. No one gained anything from this arrangement and to be frank, my husband didn't even think there was anything wrong with this temporary arrangement.

 

[David Webb]

I think you're over thinking this. When my mother in law was in a care home, her daughter came over from the USA to visit. She stayed in her mother's home for 10 days with my husband, who was attorney. No one gained anything from this arrangement and to be frank, my husband didn't even think there was anything wrong with this temporary arrangement.

Are you sure?

There is surely a 'gain' in that an attorney is saving themselves a night's hotel costs, and there is also the ongoing costs to the owner of maintaining a vacant property which they are never going to be able to move back into.

 

[Rosettastone57]

Are you sure?

There is surely a 'gain' in that an attorney is saving themselves a night's hotel costs, and there is also the ongoing costs to the owner of maintaining a vacant property which they are never going to be able to move back into.

Perhaps I didn't make it clear. My husband didn't save a hotel stay, we lived 5 minutes drive from my mother in law's home, he simply stayed with his sister to keep her company. My sister in law didn't want to stay in our home. We didn't have any family or anyone else who was remotely interested in what the attorneys were doing.

 

[Pebblepebble]

I would read rent as a formal agreement where the person lives there. As the POA has an address for his/her main home and pays utility bills and council tax there I can't see it being a problem.

 

[nitram]

the ongoing costs to the owner of maintaining a vacant property which they are never going to be able to move back into.

I was (falsely ?) assuming that this was a temporary arrangement while the future of the house was being decided, clearing out ready for sale or rental.

 

[My Mum's Daughter]

"letting someone LIVE in the donor’s property without paying market rent (anything they pay below market rent counts as a gift)"

It actually says "LIVE" which to me is completely different to stay. If you stayed in a hotel for a couple of weeks, you'd never claim to live there so surely the same should apply to this property.

 

[Cazcaz]

"letting someone LIVE in the donor’s property without paying market rent (anything they pay below market rent counts as a gift)"

It actually says "LIVE" which to me is completely different to stay. If you stayed in a hotel for a couple of weeks, you'd never claim to live there so surely the same should apply to this property.

No attorney should themselves gain financially from the PWD’s situation, nor should they allow others to do so.

in this instance, if the house had already been sold then the visitor would have to pay for accommodation. Therefore to not gain financially, they should do the same.

however if the person is still self funding, so the LA hasn’t YET asked for the property to be sold, I think the visitor would be safe, providing it can’t be deemed as a holiday(which would be paid for under any other circumstances so must be paid for here). Eg if it’s for one night occasionally vs a week away.

 

[Shedrech]

Hello @David Webb
Welcome to DtP

I think there's a difference between a once over stay and something regular, and necessary duties under LPA and visiting as family ... someone living in residential care has no need for a house for their own use; keeping one empty seems unnecessary

There are costs to keeping an empty property and risks too, so maybe it's actually time to sell it so that it's not a drain on finances ... a house that has been empty for a while and known to be so may lose value, and you never know how long it will take for any property to sell when funds are needed

 

[jaymor]

I agree overnight stay is fine as a one off or whilst the+house is being prepared for renting out or selling. An attorney has to work in the best interests of the donor and leaving a house empty or used on the occasional night means the house can’t be used for renting out at full market rate or be sold. It will be costing the donor money when it could be bringing in an income to be used towards their care or be invested for the time they may need it. It all depends how the LA look on how the attorney has acted in looking after the interests of the donor. With the state of LA funds available they must be really looking deeply into funds that should or would have been available.

Maybe get some professional advice so it doesn’t all back fire at a later date.

 

[David Webb]

It's a self-funding situation anyway, so its not really an LA issue - and I'm not sure how that changes the POA attorney duty to not gain financially from the attorneyship anyway>

My question however was very much along the lines of the last few replies, in that keeping a house essentially vacant involves real ongoing costs (and risks of costs associated with general decay etc) to the owner, prevents the house being let out to generate income, and means any funds from its potential sale are unavailable to invest (even to just stick in the bank). Keeping it vacant only so it can be used when staying overnight and visiting the "donor" in a local care home seems a bit of a grey area in terms of the "no benefit" test.

 

[Cazcaz]

It's a self-funding situation anyway, so its not really an LA issue - and I'm not sure how that changes the POA attorney duty to not gain financially from the attorneyship anyway>

My question however was very much along the lines of the last few replies, in that keeping a house essentially vacant involves real ongoing costs (and risks of costs associated with general decay etc) to the owner, prevents the house being let out to generate income, and means any funds from its potential sale are unavailable to invest (even to just stick in the bank). Keeping it vacant only so it can be used when staying overnight and visiting the "donor" in a local care home seems a bit of a grey area in terms of the "no benefit" test.

The self funding situation may end, if the LA become involved it changes immediately for the future and the LA may look at how the attorneys have dealt with the house prior to them taking over and in theory could go to the OPG if they think the attorneys didn’t act in the PWD’s best interest. Thus possibly ending the POA altogether.

There is a “grey area” as you say because while the PWD is self funding, if the only way to get a family member or very close long term friend to visit is to allow them to use the house for an over night stay you have a slight dilemma. On the one hand they could be said to be benefiting from the use of the house, on the other the benefit to the PWD such a visit would bring mentally/emotionally/physically.

 

[David Webb]

There is a “grey area” as you say because while the PWD is self funding, if the only way to get a family member or very close long term friend to visit is to allow them to use the house for an over night stay you have a slight dilemma. On the one hand they could be said to be benefiting from the use of the house, on the other the benefit to the PWD such a visit would bring mentally/emotionally/physically.

That's in some ways the crux of the matter - is staying for free at a house that is being owned by the PWD (and costing them money to maintain) a "gain" equivalent to the cost of staying in a local hotel... ?

"Living" in a house owned by the PWD for free is clear cut, but staying overnight isn'texplicitly covered anywhere I've been able to find..

(The LA look-back stuff is interesting and helpful though)

 

[Cazcaz]

That's in some ways the crux of the matter - is staying for free at a house that is being owned by the PWD (and costing them money to maintain) a "gain" equivalent to the cost of staying in a local hotel... ?

"Living" in a house owned by the PWD for free is clear cut, but staying overnight isn'texplicitly covered anywhere I've been able to find..

(The LA look-back stuff is interesting and helpful though)

But the main this is the house must be sold as soon as the PWD gets close to needing LA support, the value of the home must be used for the care of the PWD. it can not be kept either empty, occasionally occupied or occupied unless the occupier is officially renting it.

The LA will look into all aspects of the PWD’s finances and how the attorney(s) have acted. They can go back as far as they wish, no maximum time cap.

 

[Shedrech]

You seem to be suggesting that the Attorney, not you, is keeping the donor's property simply to use it as free self catering accommodation for a night a fortnight... expecting the donor to pay all expenses for a property they themselves have no use of or for... I assume the property is still furnished for the use of the Attorney

And asking whether the Attorney paying an amount to stay each night would be in line with expectations on an Attorney

Seems a family disagreement may be behind this.... and so amicable family relationships may be at risk... families do fall apart over such situations, so take that into account

 

[David Webb]

Thats usually the case in these things, sadly.

If the guidance was clearer on the .GOV website, it would however be useful for anyone looking to sidestep what could easily become an emotionally charged discussion, and move it into the realm of facts and legal advice.