Property

vivalex

Registered User
May 5, 2017
2
Good Morning! My Mother who has been in a Care Home for 1 year and she has sold her lovely bungalow which was our family home for 60 years.
I have Power of Attorney along with my 2 Sisters. Mum's savings have all disappeared for the care home fees, so the money from the sale of her bungalow has started being used. We realise we will have to invest a large amount for her future and the safest investment is property.
Can anybody advise whether we are able to purchase a smaller property in her name which she can rent out?
Thank you for your time, any reply would be very helpful, thank you.
 
Last edited:

cobden28

Registered User
Jan 31, 2012
442
Good Morning! My Mother who has been in a Care Home for 1 year and she has sold her lovely bungalow which is our inheritance and our family home.
I have Power of Attorney along with my 2 Sisters. Her savings have all disappeared for the care home fees, so the money from the sale of her bungalow has started being used. We realise we will have to invest a large amount for her and the safest investment is property.
Can anybody advise whether we are able to purchase a smaller property in her name which she can rent out?
Thank you for your time, any reply would be very helpful, thank you.
Surely your mother's bungalow only becomes your 'inheritance' after your mother has died? I'd suggest taking proper legal advice on how best to invest the monies from the sale of the bungalow so that it will produce the most towards funding your Mum's care costs.

When my Dad went into permanent residential care in 2002 the family home of 50 years had to be sold and the money invested to provide an income which h would fund his care costs for the rest of his life (he died in 2005).

The money that was left in my Dad's estate was divided between myself and my half-sister, as per dad's will.
 

northumbrian_k

Registered User
Mar 2, 2017
927
Newcastle
Not sure about whether you could do what you suggest but perhaps a more pertinent question is why you would do so. If it would be in the interests of your mother then you would be acting properly as attorneys ie any rental income would need to be spent on your Mother's welfare and safe-keeping. But the first sentence of your post suggests that your motivation may be more to do with protecting your 'inheritance'. You have no automatic right to inheritance and may only inherit what is left of your Mother's estate after she dies. Before that, in my opinion, spending whatever is necessary to help her comes first. Sorry if this is not what you wanted to hear.
 

Ginny Hendricks

Registered User
Feb 18, 2016
17
I presume, as you have PoA, that you could do this - though whether or not the rent would cover the fees is something to think about. You don't mention if your mother's been assessed for NHS support; certainly she should be if not. She might get nursing care funding (currently £156.25 pw) if she doesn't qualify (as most don't, shamefully) for her full costs.

Good luck.
 

love.dad.but..

Registered User
Jan 16, 2014
4,473
Kent
I didn't read the first sentence as losing your possible inheritance more that like when I sold dads house to pay for his care more that it is the sadness of having to do it. You would need clear OPG and legal guidance but I would think if it can be shown that everything is being done to protect and increase your mums funds to be used for her care then you are acting as attorney in your mums best interests. However, Looked at renting before selling dads house and the amount after upgrading to rental regulation and property standard, expenses, income tax from rental etc, the list goes on, it wasn't viable so things to consider as part of your thinking.
 

LadyA

Registered User
Oct 19, 2009
13,562
Ireland
In fairness, Vivalex has not come accross at all as trying to "protect their inheritence". From reading her post, it seems that what she (or he) is asking is, "would it be a good idea to buy a smaller house with the money from the sale of her mum's house, to rent out, in order to stretch out the proceeds of sale for longer, so they would fund mum's care for longer, rather than just let the capital dwindle away each week. Would this be a viable option?" Would that sum it up, Vivalex?
 

northumbrian_k

Registered User
Mar 2, 2017
927
Newcastle
In fairness, Vivalex has not come accross at all as trying to "protect their inheritence". From reading her post, it seems that what she (or he) is asking is, "would it be a good idea to buy a smaller house with the money from the sale of her mum's house, to rent out, in order to stretch out the proceeds of sale for longer, so they would fund mum's care for longer, rather than just let the capital dwindle away each week. Would this be a viable option?" Would that sum it up, Vivalex?
Original Post was quickly edited to remove reference to 'inheritance' so LadyA's later, more kindly response may be more appropriate than mine!
 
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arielsmelody

Registered User
Jul 16, 2015
516
I think you need to sit down and really look at the numbers before you do anything.

If the only funds your mum has are the proceeds from selling her bungalow, then I assume she will need to use most of that money to buy a new property. Then there will be the costs of buying the new house (legal fees etc) and the cost of any work that has to be done to make the property suitable for rent.

Once you have allowed for agency fees etc, will the rent cover the care home fees in full? If not, how will she fund the difference? What happens if there are problem tenants, and she loses, say 6 months rental income? Or major repair expenses such as a new boiler or a leaking roof? What happens if you change your mind about renting and put the house on the market - how will the care home fees be paid in the meantime? I don't think she would qualify for the 12 week disregard from the local authority by that point.

It's not going to be practical to rely on renting to cover care home fees unless she also has savings elsewhere or someone in the family can step in to pay bills in a crisis.
 

Saffie

Registered User
Mar 26, 2011
22,506
Near Southampton
Original Post was quickly edited to remove reference to 'inheritance' so LadyA's later, more kindly response may be more appropriate than mine!
Ah but in that case your response is probably more accurate then. The OP probably realised how it would read. As I didn't see it inits original form I can't comment but it does seem a slightly odd thing to buy another house when the owner will be living in a nursing home. I think arielsmelody's post makes a lot of sense.
 
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Bunpoots

Volunteer Host
Apr 1, 2016
3,817
Nottinghamshire
I can see the logic in investing some of the money in a rental property. Obviously we have no figures but if the original bungalow sold for 200k for example and a rental property could be bought for half that price then that would still leave enough cash to pay for care for a while.

A good rentals property in my area can net about 6% (after agents fees etc) so I would be tempted to look around the quality estate agents and see what's on offer. You can sometimes buy a property with a proven tenant in situ and get a much better return on your investment than money in the bank.


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istherelight?

Registered User
Feb 15, 2017
117
Good Morning! My Mother who has been in a Care Home for 1 year and she has sold her lovely bungalow which was our family home for 60 years.
I have Power of Attorney along with my 2 Sisters. Mum's savings have all disappeared for the care home fees, so the money from the sale of her bungalow has started being used. We realise we will have to invest a large amount for her future and the safest investment is property.
Can anybody advise whether we are able to purchase a smaller property in her name which she can rent out?
Thank you for your time, any reply would be very helpful, thank you.
Hello, Vivalux.

We have just let out my Mum's house and, even without the hassle of selling/buying, it has been quite hard work. Not sure I would have done it had I known how time-consuming it would be. And we will have to go through the palaver of selling it in the end anyway.

My Mum had enough savings to fund her (very expensive) care home for 18 months, otherwise we would not have considered it. We are also prepared to step in if finances are compromised in any way.

Just to get the house up to rental standard cost £9,000 and the net rental will only cover 25% of the CH fees. We do, however, expect the house to appreciate in value, probably more than any other investment, which is why we did it.

A council representative said that they have independent advisors who can help in these circumstances. It may be worth you going down this route.

Good luck.




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istherelight?

Registered User
Feb 15, 2017
117
Oh hello again, Smashy. Yes, what seemed like a good idea at the time (the rental option) will probably leave Mum's funds breaking even. If we're lucky!


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Kevinl

Registered User
Aug 24, 2013
4,774
Salford
Don't forget about the income tax. If her income and pensions are over £10k PA then 20% goes straight to the taxman. Certain expenses for running the house can be deducted see the link below. You'll also have to do an annual self assessment if the rent is over £2,500PA.
I could never make the figures add up, I could have rented my mum's house out but I calculated that one months rent would pay for about one weeks care, plus the set up costs; electrical and gas safety certificate, insurance, annual boiler checks, immigration status of the tenants...the list just went on and I really couldn't be bothered as I'd have to sell it sooner or later.
Any increase in the value of the house may well be liable to Capital Gains Tax as it's no longer her principal private residence so you may have to factor that in too.
The minute interest rates go up house prices will go down the experts say, none of us home owners like to admit it but the potential is there for a house price crash, we live in uncertain times as Smashy says.
K

https://www.gov.uk/renting-out-a-property/paying-tax
 

lemonjuice

Registered User
Jun 15, 2016
1,535
England
Any increase in the value of the house may well be liable to Capital Gains Tax as it's no longer her principal private residence so you may have to factor that in too.
I recently wrote to HMRC about this very issue as we will soon have to sell my mother's house. Apparently she, the owner of the house will not be liable for tax, but I as PoA will? :eek: That came as a bit of a shock. With the loss of the rental income and the huge increases over the years and house prices staying static in hindsight I wonder if renting was the best way to go.
 

istherelight?

Registered User
Feb 15, 2017
117
Don't forget about the income tax. If her income and pensions are over £10k PA then 20% goes straight to the taxman. Certain expenses for running the house can be deducted see the link below. You'll also have to do an annual self assessment if the rent is over £2,500PA.
I could never make the figures add up, I could have rented my mum's house out but I calculated that one months rent would pay for about one weeks care, plus the set up costs; electrical and gas safety certificate, insurance, annual boiler checks, immigration status of the tenants...the list just went on and I really couldn't be bothered as I'd have to sell it sooner or later.
Any increase in the value of the house may well be liable to Capital Gains Tax as it's no longer her principal private residence so you may have to factor that in too.
The minute interest rates go up house prices will go down the experts say, none of us home owners like to admit it but the potential is there for a house price crash, we live in uncertain times as Smashy says.
K

https://www.gov.uk/renting-out-a-property/paying-tax
The tax side of things really annoys me. The house is being rented out to pay the care home fees that the tax payer is therefore spared from paying. Yet the net income is taxed.

As for a market crash, well chances are all my PWDs money will go to pay care home fees so the LA will just have to step up to the plate sooner. Grrrr.

Rant over!


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lemonjuice

Registered User
Jun 15, 2016
1,535
England
The tax side of things really annoys me. The house is being rented out to pay the care home fees that the tax payer is therefore spared from paying. Yet the net income is taxed.

As for a market crash, well chances are all my PWDs money will go to pay care home fees so the LA will just have to step up to the plate sooner. Grrrr.

Rant over!


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I think many people would share that frustration.
 

Amy in the US

Registered User
Feb 28, 2015
4,619
USA
In addition to making sure that this makes financial sense, and getting legal guidance, don't forget to consider the time and labor involved in being a landlord (managing a property, finding renters, collecting rent, making repairs, et cetera).

My mother now lives in a care home and if I had to manage a property for her, in addition to all the other care tasks I perform (and trying to line my own life), I would go mad in short order. Your experience may differ, of course, but it's worth considering. I'm happy to leave the managing of my mother's money to her investment advisor.

Best wishes on finding a good solution for your situation.
 

lemonjuice

Registered User
Jun 15, 2016
1,535
England
SOLLA - Society of Later Life Advisers
IFA - Independent Financial Adviser
UK - United Kingdom ;-)

At present they can get 2% conservatively (Low risk) to 4% aggressively managed (High risk).

Care annuity bonds may also be worth considering.
Thanks for that.
Mind you 9using a quick calculation) even with a £100 000 investment it would only yield £4 000 (at the higher rate) the first year and with £30 000+ deficit each year the yield over a 3 year period with decreasing capital on which to gain interest would only be around £6 800 ish, which would only mean an extra 6 week's fees! That's frightening.
 

vivalex

Registered User
May 5, 2017
2
Hello, I still feel in a quandary not knowing what we should do with the rest of Mum's money. She has used all the rest of her savings over the past 18 months and now starting to use the proceeds from the sale of her bungalow to pay for her Care in the Nursing Home.
We feel it would be rather risky to put it in to a High Risk Savings Account and no other savings will provide enough money for her care over a longer time.
So we feel that buying property would be the best for her future? We would most probably buy a house that needs work then a member of the family moving in paying rent whilst there.
Do you think this may be the best option or am I 'barking up' the wrong tree?
 

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