Renting out mums property

Discussion in 'ARCHIVE FORUM: Support discussions' started by redlester, Aug 4, 2007.

  1. redlester

    redlester Registered User

    Mar 29, 2006
    To cut a long story short mum is currently in hospital after a wandering episode/fall, and has been transferred yesterday to the specialist alzheimers ward at the local General, for assessment as to what should happen next. I am 99% sure the upshot will be residential care being required - she wont accept help at home from anyone other than me, and I can no longer give what is needed as she really is in quite a bad way now with incontinence etc. She's also in danger if she's now started wandering.

    So my mind turns to the cost of care. She has assets well over the limit so will have to pay full whack for everything. Her various pensions give her an income of around £1,000 a month with is not a bad start, she owns a 3 bed semi in a quiet village and a one bed flat in a Scottish border town (no mortgage on either). My thinking is if I rent out both the flat and mums house, surely that added to her pensions will be enough to pay for care home fees, and avoid having to use her savings or selling either of the properties? I could always top it up myself if there is a small shortfall?

    What I am posting for is simply to ask if anyone has any tips on the legal side of doing this. I have an unregistered EPA at present - would I be advised to have it registered ASAP? Are there any pitfalls for me to look out for in relation to the process of renting out properties which are not actually in my name? I am intending to use letting agents to handle it all both here and in Scotland, whats the average sort of percentage that they take from the monthly rental fee?

    Any advice or experiences would be appreciated.

    ps. Also have the heartbreaking task of re-homing my mums dog, who she loves to bits, but there is no other thing for it. Anyone know the best people to contact regarding that, in the East Midlands? I am aware of the Cinnamon Trust, but is there anywhere else?
  2. lizzie2596

    lizzie2596 Registered User

    Jul 3, 2007
    I am in the process of registering my Mum's EPA, which will take at least 4 weeks as this is the time that Mum and informed relatives have to register objections with the Court of Protection.

    If there are financial issues to be addressed and you feel that your Mum is no longer able to manage them then you should register the EPA anyway. As to whether it will allow you to rent out the property, I would imagine so but you can always get some advice (solicitor, CAB etc).

    Liz x
  3. sue38

    sue38 Registered User

    Mar 6, 2007
    Wigan, Lancs
    Hi redlester,

    I'm sorry to hear about your Mum. It does sound as though the time has come to register the EPA. Legally there would be no problem in renting out your Mum's home under an EPA if this was in your Mum's best interests. As for the Scottish property, I'm afraid I don't know. You would need to contact a Scottish laywer to check that an English EPA would be recognised.
  4. Natashalou

    Natashalou Registered User

    Mar 22, 2007
    I cant comment on the pitfalls specific to renting something out you dont own, but being a PSL is no picnic.
    A tenancy will usually be an AST of 6 mo in length. Deposits now have to be lodged with a recognised body rather than held by the landlord, and it is yet to be seen how easy it is to access this money if things dont go well rather than it being returned to the tenant.
    Whether you have a managing agent or not, the reality is if you get the tenants from hell they can be difficult and expensive to get rid of. To bring a tenancy to an end you have to first issue a NOSP, then proceed to court, obtain a possesion order, and in a worse case scenario then wait for the court bailiff to turf the tenant out of your possibly by now trashed house.
    If in all this time no rent has been paid you can be thousands out of pocket and even if you get a money judgement not a lot of real hope of gettin your money back.
    This is a worst case scenario but has actually happened twice to my partner leaving him around £25k out of pocket with lost revenue. court and bailiff fees etc.
    Im sure there are good tenants about but there is no way I would personally ever risk this avenue.
  5. redlester

    redlester Registered User

    Mar 29, 2006
    I can understand there might be drawbacks, problems, etc. but I would MUCH rather go down this route than sell the properties - that would have to be a real last straw scenario. I'm sorry but I don't know what "PSL" "AST" & "NOSP" stand for.

    It would be a risk if I were relying on it totally as her only income, but I'm talking about it "topping up" her pension. Also she does have a considerable amount of savings to fall back on too. I will do it, but I will definatly do it via a letting agent, not privately.
  6. Brucie

    Brucie Registered User

    Jan 31, 2004
    near London
    NOSP = Notice of Intention to Seek Possession (UK legal document)

    AST = Assured Shorthold Tenancy

    PSL = ??Private Sector Landlord??

    I can only speak for our experience and we have a property that is rented out [ours not on behalf of anyone] but we have a managing agent retained on a basis of collecting rent.

    We have a super tenant who has been there 2 years and is likely to be there a further year. No problems at all.

    We specify not to rent to anyone other than a single family, 6 month agreement, ideally a company let.

    The tenant actually paid a year in advance for the first year, at the agents suggestion.

    Worth checking with local letting agents on the local market, etc.

    You need all sorts of certificates for safety etc, also inventory check.

    Watch out for income tax, and other tax things that need to be taken into consideration.
  7. Margaret W

    Margaret W Registered User

    Apr 28, 2007
    North Derbyshire
    Renting out v selling

    Yeah, I thought of this for my mum's little house. Market value £125,000, could fetch £450 a month in rental. Agent's fees 15% plus VAT (unless you want to respond to every problem yourself), Electricity and gas checks every year, £100, Insurance £500, Central heating service charge, £200 a year, repairs to building, washing machine etc. say £100 a year (if part-furnished, i.e. white goods only), net income less than £3,000 a year. Taxable. And I haven't considered at least 2 months a year with no tenant, deduct another £900, income £2,100. Taxable. Oh, and the little problem of all furniture having to comply with fire safety regulations. Also, Tenants expect every little problem to be dealt with promptly - the overflow is running, can you please send a plumber tomorrow!

    Alternative, sell the house, invest say £122,000 after selling expenses, in a high interest account (plenty around at 6% or more p.a.) income £7,320 (taxable). Really, there is no contest.

    Of course, there is the chance that the property will rise in value. It is an unknown, and I wouldn't like to speculate. If I was able to speculate I would be worth my weight in gold. But you are currently looking at over £7,000 gross income by selling, compared to around £2,000 gross income by letting (and a lot of hassle and worry at a time in life when you don't need it).

    You could always consider selling a property and investing the funds in a property market investment which tracks the value of property. Not my choice, cos I am risk-averse, but it might be a compromise for you. Don't forget if you have POA you are honour-bound to deal with finances responsibly.

    I don't know. Why not try renting for a while and see how it goes.

    You say you have two properties. The sale of the second home will attract Capital Gains Tax, so maybe renting it out might be a sensible option, even if the rental profits are not so great. I would suggest taking professional advice on this.

    Let us know what you do and how it works out, cos it is a problem that lots of us face when working out how best to finance long-term care for our parents.


  8. Brucie

    Brucie Registered User

    Jan 31, 2004
    near London
    as Margaret says, why not try this?

    But first, find out all that you can about becoming a landlord and the options that are open to you, and the responsibilities, financial and legal, that you would have.
  9. Natashalou

    Natashalou Registered User

    Mar 22, 2007
    another safer alternative might be to contact the LA and see if they will rent the property for temp accomodation. Rent is usually lower but guarunteed whether the tenants pay or are in residence, and damage is put right up to a certain level agreed before the lease is signed.
    disadvantages here might be the LA will want a longish lease..3 to 5 years is the norm..and they might be problems if you need the house back in that time.
  10. Michael E

    Michael E Registered User

    Apr 14, 2005
    Ronda Spain
    Although renting out several flats has been a 'lifesaver' for me financially during the last 15 years, I do think the analysis of Margaret W' s post makes a lot of sense. I am now steeling myself to selling all of them and just investing the money....

    With property prices where they are at the moment, the almost inevitable 'hassle' and the occasional tenant problems, makes me feel it is no longer worth it. I am lucky as a non resident I am not liable for CGT on my 2nd homes.

    (Capital gains tax on 2nd homes is a very important consideration and might make renting a better proposition)

    It is a judgement call and depends on how much of a hands on landlord you want to be... What has actually decided me is that at 65 my life expectancy is not that long and frankly I do not want the problems any more... Makes the financial equation easier to resolve I think.


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