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Renting or selling a property if funds not needed for care.

starryuk

Registered User
Nov 8, 2012
1,320
Good evening everyone. Please can anyone give me their thoughts on this situation.

I have joint and several POA for finace for my elderly relative, who is in a care home, is self funding and no longer has capacity.
I believe the time has come to sell her property.

However one of the other attorneys refuses to agree to this and would like to keep the house and rent it out to his son with a private rental agreement. The attorney insists that it would be in my relative's interest to increase her income. But she does not need any more money and I can foresee a multitude of problems, should my relative, who is 94, die in the near future, while the son and his young family are settled there as tenants. (The third attorney is not a relative and probably doesn't really want to be dragged into the argument)
I have been told that I am being ridiculous and not thinking things through properly in disagreeing with his plan. Personally, while I understand that he is seeing an opportunity to benefit his son, I am not at all sure that it is ethical or justified.
We all know how family relationships can be destroyed over this kind of thing and I don't want it for mine, but I worry about my responsibilities as POA.
 

Louise7

Registered User
Mar 25, 2016
2,594
I think that you're right to be a bit concerned. As financial attorney you and the other attorneys must all act in your relative's best interests.

If someone is living in the house and is not paying the full market rent then an application must be made to the court of protection before you allow this:

https://www.gov.uk/lasting-power-attorney-duties/property-financial-affairs

As landlord's the attorneys will be responsible for ensuring that there is a proper tenancy agreement in place, plus will also have to ensure that the property has the correct safety certificates for gas, electric etc. You will also be responsible for the upkeep/maintenance of the property plus will have to pay income tax on the rental income:

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

Once you have factored in all of the above how much income is your relative likely to receive, and is it going to be more financially beneficial to her to keep spending money renting out/maintaining the property rather than sell it? The situation requires a lot of careful thought and all three attorneys should at least discuss the situation together, considering the pros and cons, as you are all responsible for ensuring that financial decisions are made in your relative’s best interests even if you can make those decisions separately rather than jointly. The attorney who is pushing to rent the house out to his son needs to be fully aware of the legalities and if you and/or the third attorney disagree that renting the house out is in your relative’s best interests financially then you should contact the OPG and they will make the decision for you. If the OPG makes the decision rather than the attorneys arguing amongst themselves about it then it may at least minimise any potential family fall-outs.
 

starryuk

Registered User
Nov 8, 2012
1,320
Louise,
Thank you! You have explained everything so clearly for me and you are so kind to take the time.
I know the attorney will come up with figures to say my relative could ’make a profit’ out of his plan without considering any future potential costs which might become involved...and without mentioning the benefit to himself of making the house a ’family home’ or a ‘second home’ for himself.
Thanks too for suggesting the OPG as a potential way forward.
 

Bikerbeth

Registered User
Feb 11, 2019
1,709
Bedford
My brother and I disagree about whether to rent or sell. Mum does have an accountant and we have decided to pay accountant (about £300). To provide independent figures taking into consideration firstly Mum’s best interest and then if and only if no difference any affect On inheritance tax.
we are then hoping that the numbers in black and white will make the decision without us falling out
 

Weasell

Registered User
Oct 21, 2019
759
It seems to me the only truly important thing here is that you do not allow this to cause you to much upset.

I have worked in a rehab unit and the very high ages of the patients with dementia is remarkable, 94 is just a youngster!
Depending on the life expectancy the other power of attorney could be right?

Having said that I agree with you.
Excellent advice above.
Remember it could be rented with a twelve month contract, and probate always takes time, so all will not be lost whatever.
So however it ends up don’t worry! When you have a conscientious personality it is too easy to get distressed!
I would retain the evidence of the steps I had taken in the best interests of the estate, then shrug my shoulders?
As I say your well-being seems the most important thing to me.
 

jaymor

Volunteer Moderator
Jul 14, 2006
13,321
England
What has to be remembered too is that at some time it could be necessary to sell the house to continue funding. It takes time to sell a house and care fees have to be paid until funds are available.
 

starryuk

Registered User
Nov 8, 2012
1,320
Thanks everyone. I have read and will think about everything you say. To be honest, if the proposal were financially beneficial and all above board, I wouldn't worry so much. It is just that I can see major problems because it is the attorney's son and the attorney might find himself in a difficult position (as would I), for instance when my relative dies and the house needs to be sold, if they didn't want to move out, or if the son finds himself unable the rent for any reason.
But, Weasell, I shall try not to worry...too much!
 

love.dad.but..

Registered User
Jan 16, 2014
4,614
Kent
Perhaps reminding the attorney that at all times you all have to ensure the donor's interests are protected and that a rental would be at a rate valued by an estate agent appropriate to the location, type of property etc...in case the attorney thinks it would be family rates! Even if renting to a family member, everything should be put on a legal footing with a rental agreement etc so when the house requires selling whether for funds or death when it is included in the estate for all the beneficiaries a firm notice period is agreed. The house would require safety certificates etc for renting. I looked at renting instead of selling my dad's house when he was in his NH but the maths didn't add up....after paying tax on the income and maintenance costs together with some updating he would have not have gained that much to supplement his pension to self fund. Looking after his empty house for 2 years fell on my shoulders and it was a relief to sell, not have that added commitment and have his money in his bank if and when it was needed for him.
 

Bod

Registered User
Aug 30, 2013
1,352
If renting does become a possibility, use a Letting Agency, there are numerous legal items which have to be addressed.
Not only Gas and electrical safety issues, but the Right to Rent legislation. It is possible that whilst the father has Right to Remain in the UK, the son may not, and as such any letting would not be legal.
Letting is now getting to be a real minefield.

Bod
 

starryuk

Registered User
Nov 8, 2012
1,320
Update:

I took everyone’s advice, asked an estate agent for rental price and suggested getting a solicitor to help set up tenancy agreement.

oh dear!!
attorney is kicking off, accusing me of being unreasonable in insisting we should get the tenancy agreement set up by a solicitor. Also says he was hoping for a family discount rate which he would supplement himself. So I am in the doghouse!!

He wants to help out his son. Fair enough, but now I am worrying that I am being unfair. Are we allowed to rent out at a discounted rate? I can’t seem to find an answer.
 

Sarasa

Registered User
Apr 13, 2018
2,027
I'm not an expert, but the bottom line as far as I can understand it is that as attorney's you are not allowed to benefit. Renting out the property at a discount rate seems to fall into that category. I'm not sure what he means by the subsidising the tenancy either.
I too can foresee lots of problems even if you don't need to sell the house further down the line to fund your relatives care.
I think you need to involve the third attorney and get their opinion and maybe phone up the Office of the Public Guardian and ask theirs too.
 

canary

Registered User
Feb 25, 2014
13,933
South coast
Are we allowed to rent out at a discounted rate?
No, An attorney is not allowed to use POA to benefit themself or their family

As an attorney you have to make financial decisions that are in her best interest, not the families
 
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starryuk

Registered User
Nov 8, 2012
1,320
Thank you for that. It is good to get some support

I don’t understand the bit about topping up the amount every month. Doesn’t make sense to me. He says he wants to give his son a helping hand. But if he wants to ‘top up’ to help his son save, he could just do that for his son at his present property.

I just don’t understand his objection to asking a solicitor to set up the tenancy agreement either. I have spoken to the other attorney, who thinks as I do, but I am getting the blame. Oh well, I just have to stand my ground and hope the dust settles eventually.
 

canary

Registered User
Feb 25, 2014
13,933
South coast
I reckon that he still thinks he can wangle it so that his son gets a reduced rate.
If there is no official tenancy agreement, how are you going to enforce that you get the full amount each month? If its just left as a "gentlemens agreement" whats to stop him "forgetting" to top-up?
 

Shedrech

Volunteer Moderator
Dec 15, 2012
9,442
Yorkshire
Hi @starryuk
I had exactly this with my co attorney who suggested their son rent dad's house at a suggested sum which was nowhere near market rate, 'to give (dad) a bit of extra income' and to look after the house... I never understood the look after part as dad wasn't going to ever live there again

I did email the OPG and put the situation to them as a suggestion that was being made (with no hint of the fact that the Attorneys were disagreeing as that's probably best kept from the OPG).. .. the response was clear, full market rate with proper agreement signed, all legalities covered

I passed this on and was told that Attorney responsibilities and OPG info was open to interpretation and they had had different advice (not told from whom)... all nonsense

I did fall out with the Attorney but after a bit of a stand off (during which the son lived in the house keeping it safe from vandals, paying nothing) the house was sold.... of course I was the bad guy.... but I honestly feared it was a way of keeping the house until dad died and then I'd be under a lot of pressure to let the son stay rather than sell to share the proceeds, maybe selling to them at low 'family' rate... none of this would have had my dad's agreement

Sadly, you need to decide whether to stand your ground or not... something will break either way... and the 3rd Attorney needs to actively back you up

It's not possible to have the other Attorney removed, that can only be done by a donor who has capacity or the OPG... or the Attorney themselves can contact the OPG to stand down
 

Louise7

Registered User
Mar 25, 2016
2,594
Are we allowed to rent out at a discounted rate? I can’t seem to find an answer.
@starryuk If you click on the first link in my first post to you (2nd Aug) you'll see that the OPG guidance states that you need to apply to the court in order to do this:

You must apply to the Court of Protection for any other type of gift or donation, even if the donor has given them before. These include:
  • paying someone’s school or university fees
  • letting someone live in the donor’s property without paying market rent (anything they pay below market rent counts as a gift)
  • interest-free loans

I agree with @canary. The attorney seems to be suggesting that his son will pay below market rent and he will then 'top up' the extra amount himself. If that is the case why would he be saying that it is 'unreasonable' to put a formal tenancy agreement in place? A 'family discount' will require an application to the OPG who will decide whether this is reasonable or not. As you have mentioned previously, if your elderly relative passes away and there is no tenancy agreement in place it may cause problems as it will mean a more lengthy/costly process through the courts if the tenant refuses to leave the property. As previously mentioned, contact the OPG to explain the position and seek their advice.
 

Duggies-girl

Registered User
Sep 6, 2017
2,144
I agree with the others and I would steer clear too. If you decide to rent then by all means do but not to this person, It sounds like a heap of trouble to me.

My SIL suggested that her daughter and a friend move into dads house after he die (to keep it safe) As soon as I mentioned council tax, electricity and gas etc she changed her mind. I didn't even get the chance to mention rent.

A family discount would not be in the interest of the relative and you may find it difficult to get them out in the end.
 

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