selling v letting dilemma

Discussion in 'ARCHIVE FORUM: Support discussions' started by Áine, Jun 8, 2006.

  1. Áine

    Áine Registered User

    As many of you know, dad went into a nursing home earlier this year and I'm in the process of clearing his house out in order to sell or let it.

    In favour of selling is that it's in a bit of a mess - not really had anything done to it for 20ish years and would need new bathroom, kitchen and fully re-decorating in order to let.

    In favour of letting is that it would continue to bring in some money and so dad's nh fees wouldn't simply be eroding his capital.

    It struck me that another option might be to sell dad's house and with the money buy somewhere that was more suitable to let, and let that instead.

    Anyone know if this is permissible under court of protection, or anything i should be wary of in trying to do it?

    thanks
    Áine
     
  2. Kayla

    Kayla Registered User

    May 14, 2006
    621
    Kent
    When Mum went into a care home last year, we asked two letting agents to come and advise us on letting her house. They were very helpful and explained how the market worked in our local area. Mum's kitchen was put in 25 years ago, but neither agent thought this was a problem because it looked clean and tidy. They were actually more concerned about the two year old walk-in bath because young couples don't like anything connected with the disabled. Several families came round to look and our first tenants left the place as they found it.
    Already a couple have booked a second visit, so we hope to let it again soon. Why not ring a reputable agent and ask for advice, because they won't charge you and the housing market is different in various parts of the country. We're within commuting distance of London which probably makes letting easier for us. Selling and buying houses would be very expensive in professional fees and Stamp Duty. Redecorating might be a cheaper option, especially if you could do some of it yourselves.
    Kayla
     
  3. Margarita

    Margarita Registered User

    Feb 17, 2006
    10,824
    london
    The Court of Protection (Enduring Powers of Attorney)

    As long as the person is using the assets in the best interest of the said person your be Ok Anie .

    yes say what kayla says get a few Estate agent in to give to there view If it could be rented out in the condition it is in
     
  4. Helena

    Helena Registered User

    May 24, 2006
    715
    I cant see how renting out a house can bring in the kind of money needed to fund care home fees

    In my area they are up to £700 a week
    You would be lucky to get £700 a month in rent for a small 2 bedroom semi
     
  5. Kriss

    Kriss Registered User

    May 20, 2004
    513
    Shropshire
    We wanted to let Aunts house rather than sell as we hated the idea of selling it. However we had discussions with local agents and although it is in a good area with strong let potential there are minimum standards that would be expected and though the house is in good order there are expenses associated with an upgrade and with maintenance during a let. Upon reletting another redecoration would be expected etc.

    We then spoke to Aunts Financial advisor and he had no doubt that in the current and foreseeable financial climate the capital tied up in the house would generate far more in investment income (even in the safest/most secure investments) than letting would.

    We were stuck between the heart and the head argument but the house is now on the market.

    Kriss
     
  6. Michael E

    Michael E Registered User

    Apr 14, 2005
    619
    Male
    Ronda Spain
    Kriss hi,

    May I first say that you should never trust a financial adviser.

    It is a very important title that means nothing. Whilst I am sure there are some good ones around the majority are in it to make money and will put their own interests first. I do not have a solution for how to choose one but always remember - the higher the return that is offered on your money the higher the risk of loosing some or a lot of it is...

    I have posted elsewhere that letting is a serious matter and requires lots of effort to make the property presentable and there will be always ongoing maintenance. (This month I have had to install two new CH - Hot water boilers in flats of mine) The return on the capital is excellent if you manage the property yourself and do not pay extortionate amounts to high street letting agents. Not only is the return on capital higher than any thing else the value of the property will rise with inflation so the rents will also rise - long term - You will be well ahead of anything the investment market can offer... The down side is you can get bad tenants and not get any income at all for up to 6 months... does not happen often but does happen - sometimes. (when this happens and you have employed an agent they will wash their hands of the problem and send you to lawyers for advice)

    The other solution is just to sell the property - invest very safely in non risk returns - Building societies that have the highest rate and move it from society to society as the rates change... (remember financial advisers take their fees from your investment - indirectly) With the capital earning interest and paying monthly care home fees you just keep going till the money is all gone and then hand the problem over to the state...

    Not sure if this is helpful but I can give you all the rental forms and contracts you need and I have a little book about independent rentals which you can also have if you want it and decide to go down that road..

    Michael
     
  7. mumof3

    mumof3 Registered User

    Feb 6, 2006
    82
    How deferred NH charges work in practice

    The leasing versus selling question is one which we will have to decide about at some stage too. Putting on a purely practical hat, leasing is a viable option for my MIL's property as it is in good condition with a recently installed modern kitchen and bathroom. Importantly we are not too far away and could probably cope with managing the leasing ourselves and thereby avoid agents fees. (Past experience of leasing out our own property has told us that this is largely money for nothing.)

    However, I confess to being clueless about how residential/nursing home fees actually work in practice. For a person who lives alone, I know that deferring the fees is an option if it is not possible or desirable to sell a property. What happens though if a person has a small amount of capital (under the threshhold for self-funding) together with a monthly income from pensions and benefits and an income from leasing their property? I think this would be the position my MIL would be in ie there would still be a shortfall even with leasing out her house.

    Would her whole monthly income go towards NH fees whilst the outstanding monthly balance is deferred until her house is eventually sold as we are assuming would happen?:confused: Also, I have heard there is often a two-tier system with diferrent rates for local authority and self-funders. If a person is part-funding/part-deferred how would this work in practice?:confused: :confused:

    Is anyone in a similar position to this at present? My MIL is not yet at the stage of requiring NH care but the SW and CPN have told us that the need may come about suddenly rather than us having lots of time to consider different options. Reading this and another thread has made me think that this whole issue is clouded in mystery and we should probably learn about it now rather than when we are in the middle of a crisis.
     
  8. noelphobic

    noelphobic Registered User

    Feb 24, 2006
    3,452
    Liverpool
    My mum is in a nursing home and her property has not been sold. She is on deferred funding. The nursing home charges £575 per week for self funders, £450 per week for local authority funded residents. We are being charged the lower rate so there is actually a big disincentive to sell the house - it would effectively cost £125 per week more to be in the same home with the same care etc.
     
  9. Áine

    Áine Registered User

    thanks for replies, but, maybe i didn't make this clear enough .......... it's not so much whether I sell or let, but whether it's allowable/legal/whatever to sell dad's house and use the money to buy somewhere else to let.
     
  10. Michael E

    Michael E Registered User

    Apr 14, 2005
    619
    Male
    Ronda Spain
    Áine hi,

    Sorry I misunderstood... As Nada says the help line is probably the way to get the exact information.

    A short while ago I got Power of Attorney over my wife's financial affairs (actually our joint affairs). Once registered I have the right to sell the house and do anything with the money - That is in her best interest. I can be required to provide the court of protection with accounts etc to show that I am not trying to steal from her but there really is no limit to what I can do - provided it is for her.
    I can see no difference with selling a house and investing in rental property on behalf of the sufferer than putting the money in a building society... But I would call the help line..

    Michael
     
  11. Kriss

    Kriss Registered User

    May 20, 2004
    513
    Shropshire
    Hi Michael

    thanks for your advice - it sounds as though you have had or been very close to a bad experience from a FA?

    Maybe I am a little luckier as I am an accountant and do have my own experiences to draw on. Before Aunt deteriorated she wanted badly to sort out her affairs and seemingly having collected a variety of advisors over the years and investments in all manner of places she interviewed 3 and I was relieved when she selected the guy that I had personal dealings with and had recommended to her.

    She is very fortunate to have substantial funds to support her ongoing care indeed without the house proceeds her current income from existing pensions and investments which are dealt with by a leading broker are very nearly covering her care fees. It was decided at a very early stage that the profile from the investments would be for investments in "low/medium" risk markets and if/when the house is sold that the proceeds will be in "low" risk markets. Compared to the performance of her previous portfolio - handled almost entirely by a leading bank -we have no concerns. Indeed looking back the way the bank dealt with her funds we would have been justified in making a complaint on her behalf as it appeared to have been very poorly structured and resulted initially in taxes that were totally avoidable - perhaps "beware of using a banks Financial Advisor" would be appropriate in this case.

    I would advise anyone to select advisors with a great deal of care and to ensure that you consider all of the alternaties being offered based on your own situations. It may seem a strange thing to say but think of the advice that is commonly given to gamblers "Risk only what you can afford to lose".

    You will notice this is me with my "head" on this morning instead of my "heart" - If the house is not sold this summer my heart is suggesting that maybe we sell our own home and move north renting hers instead. We are a little too far away to consider letting externally without agents but maybe... ?

    What will be, will be. One day at a time and all that. What makes this part seem so completely and utterly depressing is when I can't help but think how she has no money concerns at all but is now unable to appreciate any of it. Apart from her love of bananas there is nothing she wants for or needs on a regular basis.

    Kriss
     
  12. Michael E

    Michael E Registered User

    Apr 14, 2005
    619
    Male
    Ronda Spain
    My Mum who was a very bright intelligent woman did though - not more than she could afford to loose but... and I agree - bank finacial advisors are just as bad and probably even less accountable! I hope other visitor to this forum take on your advice as an accountant!

    I am still managing my flats in London from France - I rent a little below the market price and get a good choice of tenants and the 'savings' by not paying agents are substantial. Getting harder now - Monique travels courtesy of Ryan Air quite well but... times are a changing..

    Somebody else on this forum mailed me saying that after a lifetime of work and achievement they were stuck with an AD partner which meant they had nothing at all . I dare not even think about it much!

    Good luck with the move - I have the nicest house I have ever had in my life ... no not going there!!!!!!!!!!!!!!!!!!

    fair winds

    michael
     
  13. Áine

    Áine Registered User

    thanks Michael
     

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