Where is the definition of what you can & can’t do?

[Kikki21]

Hi everyone
I’m presently filling in COP forms. The plan is this. I want to take over the running of my mum’s finances & look after her property as she no longer has capacity. She did have capacity so I didn’t do POA, well I did fill out the forms actually but they hadn’t gone anywhere when she had a crisis, went into hospital & now has no capacity & the medics & everyone else know that it is a permanent loss.
So she owns a property & there is no mortgage on it. So she would be self funding due to having a property but I want to defer payment of the care home fees on it & then just pay the top up fees, she does receive nursing allowance per week so I don’t know what I would be paying if anything?

As it stands at the moment, the top up fees are £40 a week, however no one has invoiced me for them as yet or asked for any money so not sure if they are using the nursing allowance element or not & it covers it.

I know my mum has a bank account with a fair amount of savings in it & I want permission to use some of the money to part renovate her bungalow so that it can be let out on short term lets.

Anything I do to the property will make it more saleable as it is old fashioned & in need of refurbishment in some areas at the moment so I intend to put laminate flooring in & do some redecorating too. It might need a new bathroom suite & will need new furniture too. I don’t want to go mad spending loads of money on it but I want the house to earn its keep & keep my mum comfortable so that she has money for hairdressers, chiropractor, pocket money & of course anything else she might need plus of course garden maintenance & other house maintenance stuff.

Now all this will take time to project manage, administrate & look after & of course guests to look after too. I live very close by so that’s not a big issue & I have experience of renovating a place as I did up my fiance’s flats ( on a budget!) but the grey area seems to be that some people think that i’m not allowed to pay myself an admin fee from the rental fees from letting it out?
I see it as a business that primarily would be helping my mum but that I have to use my time & energy & sort it out so it would only be fair to pay myself a nominal fee.

It seems on this forum that the popular option is to just sell a property & start paying the fees & that any alternatives aren’t considered.

Has anyone got experience of doing what I want to do?

 

[jenniferpa]

i’m not allowed to pay myself an admin fee from the rental fees from letting it out?

I think some people would be right. Having said that, as you are applying to be a deputy, you can actually include this request in your application. I don't know likely it is that it will be granted however.

 

[Kikki21]

I think some people would be right. Having said that, as you are applying to be a deputy, you can actually include this request in your application. I don't know likely it is that it will be granted however.

Those are my thoughts thank you. It’s actually a minefield filling in the forms. I don’t know some of the information so will have to state that on the form. I don’t want a lot of money from the rents but enough to cover my additional costs but then I could put those down in the accounts I have to do.

 

[Kevinl]

You must be mad, sorry but becoming an "accidental landlord" is the worst idea in the world.
Firstly you do realise that any income from the property is subject to income tax, so if your mum just gets a state pension most of her tax free allowance will be used up by that, so factor in 20% for income tax, if she has other incomes then that may be as much as 40% tax.
You can tidy the place up but you'll have to have the gas appliances checked on an annual basis and as a landlord you're responsible if they break down, likewise all the electric system will have to be certified as safe and all the appliances PAT tested, along with the furniture being compliant to the Fire and Furnishing Regulations 1988 and labelled as such.
As you'll be taking a deposit you'll have to join one of the approved landlord deposit schemes and tell the tenants which one (in writing) and give them your name and address as the law requires.
Even if the tenant is a relative or a family friend you will of course (again as the law requires) copy their documents giving them the legal right to be in the UK or risk a fine.
A letting agent may do all this and things like credit checks to and want about 10% of the income, they'll also do all the contracts and the LA will want to see them if you want a DPA so you'd have to clear all the contractual side to their satisfaction.
If you sit down and really do the numbers, now, it makes very little sense. In the past when things were a whole lot less formal then people did do things in a way that now aren't allowed, it may have worked then but does it work out the same now?
I worked out that if I let my mum's house out one months rent would cover about one week in a care home and that was without me getting anything or the risk of bad tenants, landlords insurance, boiler breakdowns or unlet time. I could never make the numbers add up, the first 8 months rent would have to go on bringing it up to standard and after that the income would have been a pittance compared to care home fees which can, and do, go up much more than private sector rents.
I don't understand if you're mum is self funding and you've applied for a DPA why there is a top up. After the 12 week disregard she pays the whole of the fees as a self funder so all of the fees should be paid by the LA as part of the DPA. Self funders don't pay top ups unless I'm missing something?
The "nursing allowance" I guess if Funded Nursing Care and that goes to the home to cover the nursing element of her care over and above their standard care, normally this doesn't get a reduction in the fees but some homes do reduce the fees if you get FNC, but this is only available to people in e designated nursing home not a care home.
K

 

[Saffie]

Kevin is right. The fees quoted by a home - even a nursing home - usually have already taken the nursing element into account. All the nursing homes I contacted for my husband had anyway. The allowance goes towards the cost of having nursing care.
I’m assuming you have already discussed your plans for your mother’s funding of her care/nursing home with an LA financial assessor and it has been approved but as you seem confused about topups perhaps not. If so, then I think it would be wise to do so before making further plans so you have the whole picture.

I am not sure why it would be acceptable to be paid an administration fee for managing your mother’s house as it is your choice to do this rather than sell it and I would be surprised if it was accepted but the CoP though there is nothing to stop you trying. It might be considered a separate application however, incurring another fee as the original application is just to be a Deputy though it does seem to vary.

Perhaps you wish to hold on to the house but, as Kevin has said, it could be a false economy. That of course depends on rental less costs and the fees. The £40 a week top up you mentioned, even if it was relevant in this circumstance, sounds very low - you could add another 0 for most topups here in the south - so perhaps the fees are not that high but the day of reckoning will come when the LA want repayment of their costs and I think they charge interest too but as I have no experience of this I might be mistaken - though in today’s financial climate I’d be surprised if they didn’t!
It does seem a lot of hassle to go through if the house will eventually have to be sold anyway to cover the repayment which probably contributes to the reason why so many others simply sell and self-fund rather than defer payment. However good luck in whatever you decide to do.

 

[lemonjuice]

Lots of issues here.

The £40 a week top up you mentioned

as Kevin says

I don't understand if you're mum is self funding and you've applied for a DPA why there is a top up. After the 12 week disregard she pays the whole of the fees as a self funder so all of the fees should be paid by the LA as part of the DPA. Self funders don't pay top ups unless I'm missing something?

If your mum is temporarily there under post hospital admission, there may be a smaller top up to pay, but top ups were not allowed from 1st party self-funders, apart from the initial 28 days, unless things have changed. Then usually self-funders just paid 'full whack' Though some on here weren't billed fr a while and weren't aware of the increase, until they suddenly received the invoice. And year on year self-funders do have bigger yearly increases.

the day of reckoning will come when the LA want repayment of their costs a

there will be all the added interest repayments added to the bill. May not make the venture financially viable.

Letting out the property certainly is not an easy option and you shouldn't pay a lot of money 'making it more attractable to tenants, as it's unlikely she could recoup the costs involved. Certainly a bit of repainting you could do yourself- though you may not pay yourself anything for it. But not doing major renovations like a new bathroom. Better to accept a smaller rent. And it's always better to rent unfurnished, so no new furniture should be needed.
Though on reflection by the time she'd lose 20% to HMRC, and you must notify them and fill out a Self-Assessment form every year, the amount incrued in rental payments may not make enough of a difference to even offset the DPA interest repayments, so look into it some more.

 

[lemonjuice]

In answer to your initial question 'Where is the definition of what you can/can't do', my personal yardstick was
use my time/ability to make the best use of my mother's money/resources to ensure she had the best possiible care
to ensure I in no way 'benefitted' during my period of being her advocate and PoA.
That included ensuring I didn't give myself a birthday /Christmas present from her or receive any 'compensation' for my services. I did allow small presents to her grand-children initially, but after a while we all agreed that as she had no awareness of what a present was and could receive no enjoyment in 'giving them we'd pass on those too. She was long past the stage of 'querying why she received presents and didn't give any fortunately and had she been our decision may have been different.

 

[Norfolk Cherry]

I am also hoping to let out my mum's house if and when she goes into care. I already have experience as a landlord and I think it can be worthwhile depends where the property is. In our case the house is in a city centre location of a university city and can achieve a relatively high income. Also, property prices in the area are continuing to climb, so that will increase the eventual amount of capital we have to pay off the deferred payment. We have had a few expenses over the years (replacement of a door and the gutters needed work) but the income definitely has been way above what we would have received in a savings account even when you take tax into account. I've worked out that the rent plus her pensions plus a bit of top up from us would achieve around £4000 + a month, which I'm hoping will be enough with the deferred payment scheme?

 

[lemonjuice]

I've worked out that the rent plus her pensions plus a bit of top up from us would achieve around £4000

If you can achieve high rates because of locality and that would be the figure after losing 20% in tax, then it's probably worth considering. Also factor in that after 3 years her home ceases to become 'her home' and changes to 'an asset' and when she does die Capital Gains may be payable on any increase in value after that time.

In fact I did rent out my mother's house for the 6 years she was in the NH, but I had an agent to deal with any problems and fortunately had no gaps in tenancies (another factor to consider when your mother would be liable for Utility and Council Tax bills whilst receiving no income). In fact if you fail to notify HMRC and fill in the Self-assessment forms and you'll incur late payment penalties depleting your mother's savings further. In our case the rental over those 6 years wouldn't even have covered 9 months of care. So whether it was worth it is questionable and in our case too house prices actually fell so she didn't have an increase in value during those last 3 years. Rental properties are not generally valued as highly as those on owner-occupancy.

 

[Saffie]

I am also hoping to let out my mum's house if and when she goes into care. I already have experience as a landlord and I think it can be worthwhile depends where the property is. In our case the house is in a city centre location of a university city and can achieve a relatively high income. Also, property prices in the area are continuing to climb, so that will increase the eventual amount of capital we have to pay off the deferred payment. We have had a few expenses over the years (replacement of a door and the gutters needed work) but the income definitely has been way above what we would have received in a savings account even when you take tax into account. I've worked out that the rent plus her pensions plus a bit of top up from us would achieve around £4000 + a month, which I'm hoping will be enough with the deferred payment scheme?

If the income would be that good, why bother with deferred payments at all. Why not use the money to pay the care/nursing home fees at the time and avoid paying interest which could cover a number of years?

 

[Norfolk Cherry]

Thanks for the tips @lemonjuice , @Saffie, I'm just not sure how much it will all cost. I think if she ends up in a high dependency unit, it can cost £1000's a month? Hence the deferred payment plan? Can you start off paying the fees and revert to deferred payment plan at a later point in the care? I can see she may well have to use up all her assets, it all depends on how much care she needs. I know mum and dad would have wanted to leave money to their grandchildren, so I feel an obligation to do my best and if it doesn't work, I'll feel at peace as I'll have tried my best. I have to say, I do think it's wrong that people have to pay tax on rental income from their home when letting it out to pay care costs? The state is treating the income as if it's the same thing as profit from a private company. When you think about all the tax concessions available to owners of businesses and corporations, surely they could make a concession for people needing care for dementia?

 

[love.dad.but..]

I looked very carefully at the logistics both practical and financial of renting dad's house out..I had poa. Like your mum's house my dad's whilst a very nice house in a very nice town would have needed an amount of money spent to bring it up to rental standard and legal requirements. The OPG told me within reason this was acceptable as the whole benefit was for dad in receiving income to assist his self funding fees. He was fortunate in that he had a reasonable works pension state pension and AA. FNC did not however reduce his fees. However after working out the legitimate expenses... ongoing maintenance... etc and income tax the rent pm which the house could attract whilst substantial would not have been anywhere near enough after taking away the above to cover the £1700 pm fee shortfall and likely to increase annually through fee increase. Even using a letting agent the landlord as you know from your rentals has to be hands on to a certain extent and your posts always reflect that you are already feel pulled in a lot of directions and busy so perhaps selling if that needs to happen eventually anyway is a better option it isn't that rental option isn't considered by many of us just that the sums often don't add up. Probably the best thing is to phone of COP as a starting point to explain your plans and ask what expenses are considered for the benefit of your mum and clarify your proposed admin charge to your mum.

 

[Jessbow]

I couldnt make it add up, fortunately my late mum was awarded CHC funding so it didn't come t it in the end.

Unless someone is likely to return home, what is the point? Defered payment is going to accrue a huge bill that is going to have to be paid at the end. If the money will have to come from the property it will have to be sold anyway.

If you mother has a fair amount of savings, why are you not using it to pay the nursing home fees? Seems daft to me not to.

 

[lemonjuice]

I do think it's wrong that people have to pay tax on rental income from their home when letting it out to pay care costs? The state is treating the income as if it's the same thing as profit from a private company. When you think about all the tax concessions available to owners of businesses and corporations, surely they could make a concession for people needing care for dementia?

With you all the way there.
And also that their fees include VAT, as it's 'a service.' I think there should be some concessions for those who are in care but 'not by choice', but because of an illness which isn't recognised as such.

 

[lemonjuice]

. I think if she ends up in a high dependency unit, it can cost £1000's a month?

More like over a £1000 per week. some larger rooms with access to the garden attract fees of £1500 per week. And considering most of the residents don't actually need/want that, families are being persuaded to pay over the odds to assuage their guilt at putting their PWD into care.

 

[love.dad.but..]

More like over a £1000 per week. some larger rooms with access to the garden attract fees of £1500 per week. And considering most of the residents don't actually need/want that families are being persuaded to pay over the odds to assuage their guilt at putting their PWD into care.

£1300 pw for Dad before end of life last year so no doubt another increase has been added since. Self funding gave me choice initially but in the end after several dementia homes refused dad and some would not have met his walking and independent access to his room needs choice was not a particular factor...after looking at 16 across a wide area it was who would take dad...I certainly wasn't looking for an all singing and dancing one ...that is the going rate for most NH in our area.

I think Jessbow's comment also came into my thinking...dad was never going to go home so why not sell if the sums don't add up anyway...sentimentally keeping a family home possibly..inheritance is not relevant ...my dad's house his money for his care..if rent cannot keep up with fee increases in future years and it is difficult or impossible to predict in advanced stages for some when end of life will happen for whose benefit is the house going to be kept for. If the rental income more than covers expenses and a fee shortfall and for a good few years ignoring the physical aspect of looking after a second property and all the other possible issues to be covered then only you can weigh this up with clarity from COP before you commit yourself.

 

[Kikki21]

You must be mad, sorry but becoming an "accidental landlord" is the worst idea in the world.
Firstly you do realise that any income from the property is subject to income tax, so if your mum just gets a state pension most of her tax free allowance will be used up by that, so factor in 20% for income tax, if she has other incomes then that may be as much as 40% tax.
You can tidy the place up but you'll have to have the gas appliances checked on an annual basis and as a landlord you're responsible if they break down, likewise all the electric system will have to be certified as safe and all the appliances PAT tested, along with the furniture being compliant to the Fire and Furnishing Regulations 1988 and labelled as such.
As you'll be taking a deposit you'll have to join one of the approved landlord deposit schemes and tell the tenants which one (in writing) and give them your name and address as the law requires.
Even if the tenant is a relative or a family friend you will of course (again as the law requires) copy their documents giving them the legal right to be in the UK or risk a fine.
A letting agent may do all this and things like credit checks to and want about 10% of the income, they'll also do all the contracts and the LA will want to see them if you want a DPA so you'd have to clear all the contractual side to their satisfaction.
If you sit down and really do the numbers, now, it makes very little sense. In the past when things were a whole lot less formal then people did do things in a way that now aren't allowed, it may have worked then but does it work out the same now?
I worked out that if I let my mum's house out one months rent would cover about one week in a care home and that was without me getting anything or the risk of bad tenants, landlords insurance, boiler breakdowns or unlet time. I could never make the numbers add up, the first 8 months rent would have to go on bringing it up to standard and after that the income would have been a pittance compared to care home fees which can, and do, go up much more than private sector rents.
I don't understand if you're mum is self funding and you've applied for a DPA why there is a top up. After the 12 week disregard she pays the whole of the fees as a self funder so all of the fees should be paid by the LA as part of the DPA. Self funders don't pay top ups unless I'm missing something?
The "nursing allowance" I guess if Funded Nursing Care and that goes to the home to cover the nursing element of her care over and above their standard care, normally this doesn't get a reduction in the fees but some homes do reduce the fees if you get FNC, but this is only available to people in e designated nursing home not a care home.
K

The thing I don’t want to be that kind of landlord. Very short term lets are different. I am talking about the property being an Airbnb property. I have been a landlord myself & know what that involves.
Thank you for your input.

 

[Kikki21]

I am also hoping to let out my mum's house if and when she goes into care. I already have experience as a landlord and I think it can be worthwhile depends where the property is. In our case the house is in a city centre location of a university city and can achieve a relatively high income. Also, property prices in the area are continuing to climb, so that will increase the eventual amount of capital we have to pay off the deferred payment. We have had a few expenses over the years (replacement of a door and the gutters needed work) but the income definitely has been way above what we would have received in a savings account even when you take tax into account. I've worked out that the rent plus her pensions plus a bit of top up from us would achieve around £4000 + a month, which I'm hoping will be enough with the deferred payment scheme?

Thank you for your input.
My mum’s property is on the outskirts of a large city in the Midlands with 2 Universities plus lots of local employment. I have experience of being a proper landlord under a short term contract arrangements & also Airbnb which can bring in lots more rental. My fiance’s flats bring in all sorts of people & his flats are in a small town but pretty central. He can bring in £1000 a month extra. My mum’s property could double that.

 

[lemonjuice]

The thing I don’t want to be that kind of landlord. Very short term lets are different. I am talking about the property being an Airbnb property. I have been a landlord myself & know what that involves.
Thank you for your input.

Seems if the CoP will let you, you're pretty sold on the idea.
And should your Mum live a lot longer than you may anticipate, you can always sell at a later date and repay the DPA and clear the interest repayment. Bear in min usually the LA will only allow 80% (ish?) of the value of the property in their equations.

And please do ensure you notufy HMRC that you are renting out the property and fill in the Self -Assessment forms as it will affect her tax code. As a landlord yourself you must be familiar with these and know 'which allowances' you 'can claim for' on her behalf.

 

[Kikki21]

Thank you for all the comments, I think a lot of you are mistaking the fact that I don’t want to be a normal landlord as being an Airbnb property is entirely different!

There are no contracts, just agreements between you & the people staying there. Anything from a minimum of 2 nights to a week.

My mum is just slightly over the threshold of savings and has the property so she would be self funding.

I do think it is awful that you have to consider selling a property to provide care for someone who has happened to get dementia, it is wrong on so many levels but that’s another subject.

I’m really conflicted because my mum’s consultant didn’t give her a long life expectancy in December, he gave her weeks & months. I guess it is a miracle she is still here & I think if she had gone back to live at home on her own then she would not be alive now.

It’s hard to know what to do for the best. I know that by renovating the house a bit, it will make it more attractive to a buyer. I can obviously get the usual 3 valuations from estate agents round to give their opinion.

I’m going to start clearing the house out this weekend so that’s the first job before anything else starts.