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To sell house or rent it out?

Discussion in 'Legal and financial issues' started by Dino, Oct 1, 2018.

  1. Dino

    Dino Registered User

    Aug 7, 2011
    #1 Dino, Oct 1, 2018
    Last edited: Oct 1, 2018
    I'm all in a tizzy as what to do.

    Mum is in end stages Alzheimer's, she owns a house which my brother, as the previous Deputy, was renting out....and pocketed all the rent and part of her pensions but that's another story:(....he died last year and now I am Deputy.

    I live in the US and had to hire a management company to evict the tenant as he didn't pay rent since my brother died, 14 months worth of rent in total.

    Don't know whether to rent the house out through the management company or sell it.

    Mum's nursing home bill is all being paid for, she was all self pay but now the Council said it's being paid for.

    Think it's called continuing health care.

    My brother who had Deputyship managed to steal many thousands from mum, thought the OPG was supposed to watch over Deputies!!!

    I am so stressed and upset to the point of not sleeping. Mum loved her house so much and it was very important to her that when she passed away her kids would receive inheritence from it.

    I don't want to sound selfish and mean because I dont mean it that way atall but if I sell the house will the money from the house sale go towards mum's nursing home care every month? Even though she has the continuing health care? Does that stop if you sell the house?

    Is this because she has under £10,000 in her bank account? (Brother stole money)

    Don't know whether to rent it out or sell. I am finding it so stressful.

    Another huge factor is my younger sister has severe brain injuries (from 8 years ago) and lives in a care home, she will never be able to go home, her inheritence is important as it will be needed as she needs care for life.

    Mum's lawyer is Executor so in the end he will sell the house if I keep it.

    Sorry to say because of what I went through with my awful brother I do not trust anyone and am imagining the lawyer stealing the house money!!!!

    Again, sorry if this comes off as selfish, I reported, contacted etc so many people....OPG, COP etc to watch my brother yet he still managed to steal.

    Oh, and my brother did not pay mum's nursing home bill at one point, the payments were deferred to the tune of £41,000 so that has to be paid back from any sale of the house.

    Anyway I'm rambling, I battled my brother for almost 10 horrendous years, trying to get help for mum when he was abusing her etc then trying to stop him stealing from her so my nerves are so shot!!

    Thanks for any advice, going to try and rest..
  2. Distressed55

    Distressed55 Registered User

    May 13, 2018
    Hi @Dino

    That's a lot to try and cope with, no wonder that you are stressed.

    First of all, if your mum is receiving continuing health care, then that does mean that she has health concerns over and above her dementia to qualify. Ordinarily, dementia patients don't get a look in. It does mean that her care is funded by the NHS. That is not to say that she won't be reassessed and found to no longer qualify. CHC is a victim of austerity and under pressure to cut costs.

    Youve done the most important first step, which is get deputyship, so at least now you can act for your mum.

    What I would do - find out how much rent you can reasonably receive for your mums house. Factor in things like management fees, repairs, and anything else that the landlord has to pay - insurances, gas safe certificates - and draw up spreadsheets to see how much money it's going to bring in. Then, as you've already been stung by a rotten tenant, void periods. After that, you need to deduct tax at 20%. Compare it to the level of care that your mum is currently receiving. I know that you aren't paying for it, but you need a comparison, and things may change. If you are feeling brave, factor in the future - what happens if the care costs increase by x amount, and rents by y amount.

    Then you will be able to make an informed decision about whether it's worthwhile keeping the house. If renting it isn't going to bring in enough to cover at least a week or two of the care costs, it's just not worth doing. And the amount that you are looking at needs to be the figure after costs and tax, not the pure rent.

    There is a system called deferred payment, which you already know about. The local council picks up the shortfall between the rent and any other income, and the amount of the care costs. For that, they have a second charge over the house and charge you interest on the amount you are effectively borrowing. This would have only happened before your mum was assessed as qualifying for continuing health care, when she was fully funding.

    Then you need to get a valuation on the house, to work out how much it's worth. Deduct the amount that you owe under the deferred payment scheme, and have a bash at the accrued interest . That should be available from internet searches.

    The balance can be invested, and you'll need to look at how you can do that. There is an £85k compensation limit if you put it in banks, and you need to investigate whether the bank etc will accept deputyship applications remotely. See how much interest you'll get.

    And then it's another spreadsheet. How long could you pay for care costs if you sell? Again, I know that you Arne paying for your mums care costs, but you need a comparison. Also bring in her pension. She must be receiving one.

    And the just compare renting versus selling. Which brings in the better return is the one you want.

    That is the dispassionate approach. What you can't see from the spreadsheets are the emotion. I know that your mum loved her house, but I'll bet she loved you more. And if she knew what this is doing to you, what would she say? You aren't being selfish, quite the opposite, you've done everything to protect her, and you are still doing that.

    If you decide to sell the house, the deferred payment will need to be paid back, plus any rolled up interest. The balance is still your mums. You may need to go back to the COP (depending on what your original application said) to be able to invest. So it's going to be in her name.

    When the inevitable happens, then either the house or the funds will be available for distribution in accordance with the terms of your mums will, but not before.

    Sorry for the v lengthy response. I'm sure that if I've got anything wrong, then others will correct me.

    Good luck.
  3. Bunpoots

    Bunpoots Registered User

    Apr 1, 2016
    The only thing I would add to @Distressed55 is that if you think your mum may pass away in the middle of a house sale it might be safer to rent as things get complicated if probate is needed and long delays can happen. At least with a tenant in place you won't be responsible for any of the bills while the house is empty.
  4. allchange

    allchange Registered User

    Nov 29, 2015
    #4 allchange, Oct 1, 2018
    Last edited: Oct 1, 2018
    I'm sorry you have been faced with so many problems. I thought deputies had to submit annual accounts and to pay an insurance premium (an annual guarantee bond) but I am an attorney not a deputy.

    Just to add to the above post the 85k deposit protection is per banking group, due to take overs etc some banks with various trading names all belong to the same banking group.

    Just in case you aren't familiar with UK taxes, when you come to sell the house it may be subject to capital gains tax. The years your mum lived there are exempt (private residence relief) and the last three years of her ownership (as she moved into a care home), there should be private lettings relief in addition to this as it was rented out for some years. There should also be a capital gains tax allowance to offset any gain. Any resulting gain would be taxed at your mother's marginal income tax rate(s). Depending on the house value there could be no, little or a lot of CGT to pay. If it is very high then you could be better to let the property fall into her estate as then it could be subject to inheritance tax depending on the estate value but no CGT would be due.

    To calculate the initial gain position before tax allowances calculate the sale price less purchase price less purchase costs less selling costs less any cost of improvements (e.g. extensions) but not repairs. You then need to calculate the percentage of years your mother lived in the house plus the last three years she owned it, add in letting relief (limited to a maximum of 40k of the increase in value). Google CGT on private residence to see worked examples/the HMRC site. If the property is of modest value and she lived there for many years then CGT is not likely to be a major issue.

    On the other side of the equation renting is a lot of hassle and regulations for private landlords are constantly increasing making it an ever less attractive proposition.

    Sorry if this seems a bit cold blooded to discuss but unless your mother needs cash to pay bills if CHC is removed then these factors should be taken into consideration. If your mother becomes terminally ill (six months or less expected then there are special CHC rules).

    ETS An afterthought, if your mother is leaving a high value estate then if there is no property in the estate then if she is a widow she could potentially leave 650k free of IHT, but if a property is left to her children then this could potentially increase to 900k under current IHT legislation.

    Obviously as Deputy you will work in your mother's best interests but in some areas this may coincide with yours/not be to her detriment.
  5. canary

    canary Registered User

    Feb 25, 2014
    South coast
    Deputies do indeed have to purchase a surety bond in case they misappropriate funds.
    Do you have actual evidence that your brother has stolen your mums funds? If so, I would contact the Office of Public Guardians and see if it can be recovered through the surety bond.
  6. Dino

    Dino Registered User

    Aug 7, 2011
    Hi and thank you so much for your detailed response.

    Mum's self pay at the nursing home was £1,000 per week, the rent would be just under that but as you say tax etc would be taken off.

    I think I'm leaning more towards selling the house, it's too stressful.

    Plus the previous tenant is causing problems, writing bad reviews about the house on the property managements website. The reviews are not true, he's just being vicious.

    One thing though is he complained on the site about the bedroom up in the roof not being safe. My step father was an architect who built the bedroom so I cannot imagine it being unsafe, however because of that complain I had to have the Coucil go out to take a look at the tune of £645...just to look.

    They need to go back out again after I've removed the carpet and the roof boarding plus got to remove the spiral staircase that goes up to the bedroom so they can get a closer look.

    This is stressing me again on top of everything else.

    I'm thinking of going over to England and speak with an estate agent in person.

    Don't know if I can put the house up for sale without doing all the above.

    Thank you again for taking the time to reply, greatly appreciated

  7. Dino

    Dino Registered User

    Aug 7, 2011
    Hello, greatly appreciate your reply.

    Yes, Deputies should submit annual accounts, I can clearly see looking through mum's bank account that my brother was transferring monies to an unknown account (not mum's) paying himself which you're not supposed to do along with charges for things that have nothing to do with mum.

    Plus the rental income no where to be found.

    You do take out a bond so hopefully some of the monies can be replaced.

    I think I am leaning more towards selling the house, it's proving so stressful.

    The previous tenant is causing problemw by writing false reviews about the house on the property managements website...even the manager said the tenant is going to be trouble.

    One thing though, he complained about the bedroom up in the.roof being unsafe, my step father was an architect who built the room so I cannot imagine it being unsafe, however I had to have the council go out to take a look to the tune of £645...just to look.

    They need to go back after I have removed the carpets and the roof boarding plus remove the spiral staircase leading up to the roof.

    I don't know if I can sell the house without doing all that first, I need to speak with an estate agent about it.

    Again, thanks so much for taking the time to reply!

  8. Dino

    Dino Registered User

    Aug 7, 2011

    Thanks so much for your response.

    I've contacted the OPG about my brother.

    I can see looking through mum's bank account my brother was transferring monies to an unknown account, one to the bank of Ireland, paying himself monthly and charges have been made which would have nothing to do with mum.

    Plus the rent monies are nowhere to be seen.

    The previous tenant did write he paid the rent in to an account my brother gave him plus how much he was paying.

    I'm hoping the bond will cover this.

  9. Dino

    Dino Registered User

    Aug 7, 2011

    Mum is at end stage, I've thought about the possibility of her passing away during a house sale but am finding, especially with me living in the States, all too stressful plus the previous tenant is causing problems.


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