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Renting mums house to pay care home fees

Discussion in 'Legal and financial issues' started by Worrywart 2, Feb 8, 2016.

  1. Worrywart 2

    Worrywart 2 Registered User

    Jul 7, 2015
    39
    Hello all,
    Some advice please.
    My mother is in care and is self funding. Her property will be taken into account next month and so after her pensions are taken there will be a shortfall of about £200 per week, about £9000 per annum. I know we can put a charge on her house as we don't want to sell it yet. It's a low value house and my mother has a brain injury - sometimes I think she is getting better and would hate to sell her house yet.
    So options are - rent the property out to tenants or rent out on a holiday let basis. We live in a coastal town and there is demand. It's estimated a holiday let could generate about £5000 per annum so would help towards the shortfall. The remainder will be paid via the charge n the property ( I thnk what happens is the shortfall accrues every month but this can be reduced by the rental income).
    Has anyone done this and has anyone got any advice, I realise there will be tax implications plus we would have to get liability insurance.. If we proceed we would go through a letting agent who charges commission obviously. It's not a money making exercise just a way of generating some income and reducing the debt that will accrue on the charge.
    Sorry for long post. All on my shoulders and I'm not in good health . My mother hates the home and begs to come home constantly. It's a living nightmare.
    Thank you.
     
  2. realist1234

    realist1234 Registered User

    Oct 30, 2014
    108

    Nothings easy is it?! Please see 'Treatment of property...' download at the bottom of this link http://www.ageuk.org.uk/home-and-care/care-homes/paying-for-permanent-residential-care/

    As usual it is all rather confusing, but from what I read, you would be free to set up a deferred payments agreement iro your mum's house with your LA, and rent it out in the meantime. The rent would be viewed as income and would therefore be used to reduce the overall amount repayable under the deferred agreement once the house is sold. I understand that if your mum currently pays a 'top-up' fees amount then I think this can also be included in the deferred agreement, though I'm no expert! The LA should be able to advise, but I think we all know what they can be like - You should read up first on your options before asking for their advice as they don't always understand the law!

    Given what you said that your mum could possibly get better and eventually be well enough to return home, then you certainly would not want to sell the house now. Few people actually enjoy living in a care home, but sadly it is sometimes the best place for that person given their health. But you might consider looking at other homes if your mum is very unhappy, though I appreciate she may 'hate' it simply because its a care home and the whole situation. I obviously don't know the details of her health, but is care at home with a care package definitely not an option?

    Best wishes,
    Peter
     
  3. SylviaVolunteer

    SylviaVolunteer Registered User

    Jun 28, 2012
    1
    Eton, Berkshire
    Having a good tenant is more important than the rent received (in my opinion)

    We inherited a house which we rent out. We deliberately charge a low rent for this in order to have a better choice of tenant. This has worked out very well for us and if you can take the financial hit then I recommend it. We don't use a letting agent.
    We found our tenants through a neighbour who recommended them - the husband is her grandson.
    In return for the low rent, they did the re-decorating and re-carpeting which was necessary when the previous tenants moved out (after over 40 years there).
    You need to decide whether to allow pets and/or smoking.
    If the property has gas then you (or your letting agent) will need to arrange an annual Gas Safety check.
    I recommend letting to a family. You can get more by renting out rooms as a house of multiple occupation, but that has a lot of legal requirements.
    I hope it works out for you and for your mother.
     
  4. Kevinl

    Kevinl Registered User

    Aug 24, 2013
    4,665
    Salford
    Renting can be very successful on the other hand it can be a complete nightmare.
    As Sylvia says (and welcome to TP, I se this is your first post) it can work but without the numbers it's a bit difficult to do the number crunching.
    If you go for a holiday let you'll get more money per week when it's let but that might (if you're lucky) be fore 3 months of the year, insurance and council tax will be payable for the whole 12 months, it will need to be furnished and all the furniture will need to be fire regulation compliant. Either kind of let will need specialist insurance and checks on the gas and electric should be checked too, budgeting for vacant periods, marketing costs if you go down the holiday route it'll soon add up.
    You say it is a "low value property" so I guess the income from either kind of let would reflect this too.
    A shortfall of £200 a week is nearly ten and a half thousand pounds a year, if you could generate the £5k you suggest how much of that would be profit? I'd suggest (big ball park guess) that about £3k of that would go in council tax, insurance, maintenance, annual safety checks to say nothing of your own time and effort.
    New laws mean as a landlord you have to do immigration checks on any tenants, have fire and carbon monoxide detectors fitted, any deposit you take has to be lodged in a government approved scheme, you have to show the tenant an energy performance certificate, pay standing charges for the gas, electric and all the other utilities when the property is empty, I could go on...
    Any income could be liable to income tax (doesn't matter it's going in care home fees) so add the £5k generated to her pensions and any other income then deduct 20% from any figure over £10.5K for income tax.
    If all the numbers add up do it but from what you've said I doubt they will, on a low value property it's very hard to to get the numbers to add up.
    K
     

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