Renting out property to support Nursing Home fees

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Hi All,

Has anyone rented out property to cover care home fees? MIL struggling to accept that she needs nursing home placement and flatly refusing to consider selling her home. Someone suggested they rented out their parent's property to support her care costs, but we are very wary of stepping into this minefield. We have heard all sorts of nightmares about tenants not treating the property well, defaulting on payments and leaving large repair bills in their wake. Is it really wise to be depending on such an uncertain income stream to help fund the roof over her head, or is this just not worth the risk. Also, would she still need to declare the rental income to HMRC for tax (she is over 80 if that makes any difference)? I am sure the rent will only part cover the fees, although she will qualify for CHC nursing care funding which I believe is around £156/wk, but even then, will be relying on her savings to top up any money the rent generates, so once these are gone, the house would have to be sold anyway.

I am planning to speak to a local letting agent for advice tomorrow, and get and idea of the monthly rental income, but in meantime would welcome any advice please, thanks
Hi Linda .... a minefield if ever there was one !

A starter for ten ... Google search ... Letting property to finance care costs ... will throw up several stes offering advice , and the basics to consider.

I strongly recommend perusing a few to get a gist of ALL the factors involved. There are several which are potential minefields in themselves let alone when combined with the other factors !!!

If an LA is involved , they will be " Interested " in more ways than one ... as will the Taxman.

Let us know your further thoughts once you have digested the basics.
Be sure to ring our Carers UK helpline for advice.
Here are a few questions to fine down what is practical.

Are YOU able to maintain the property if it isn't let out?
Is she claiming Attendance Allowance?
Has she been assessed for full CHC funding, not just the funded nursing care element?
Has the LA given you details of their "Deferred Payments" scheme.
Thanks both for replies.

I have already done some Googling and can see some of the pitfalls. If she had a 5 bed detached house she might get near the rental income to actually cover her projected fees, but its just a tiny 2 bed bungalow, so suspect we might be lucky to get £5-600/week, therefore only cover 1 week/month of her care costs. Then we have the ongoing maintenance and repairs, times when rent might be missing (between tenants etc) and agency fees, etc. We would willingly maintain the property, but the additional costs for any repairs would obviously also dent the money she will be receiving from it.

She has had no official financial reviews at all yet, hospital confirmed the nursing element applies but not sure if there is anything else she would qualify for as yet. Its all come about very quickly and the assessment process has not caught up with us yet. Renting out her home was just a suggestion to try to placate her total unwillingness to let it go, but not even worth mentioning and getting her hopes up now. I think she feels she wants to pass the property down the family, but none of us want it (or need the capital) and want her to use the money to give her quality of life from now on ... but as a loving, giving mother she still wants to provide for her family and put herself last :roll:

Can anyone enlighten me on the deferred payment option please? Does it apply the same everywhere or are there regional variations as I know our LA are cash strapped!

I also read something about first 12 weeks fees are only assessed on her actual "money" savings, rather than her assets? Is this the same thing as above? Does this 12 week amount need to be paid back at later date? If not, any advice on this much appreciated.

Thank you all :)
Unless her house is a palace, or unless her care home fees are very unusually small, the rent won't nearly cover them!

For example, my MIL is paying £700 a WEEK for her care home fees - that is for dementia care, and you don't mention that need for your MIL, so it may be a little less (so much depends on the part of the country - up here in the Home Counties I've been told £1000 a week by care homes - which is why MIL is in the west country!).

As you say, the nursing care element should be paid by NHS CHC (it is for my MIL, or else her fees would be £850 a week!).

MIL sold her flat a few years back, and has been burning her way through it. She's got about a third left now, and unless she dies within another two years at most, I reckon, she will die 'broke' (ie, with only the £23,500 she's allowed to pass on without the LA getting it for further fees).

It's a grim, grim situation for home owners, and whilst I can well understand why your MIL doesn't want to sell, her hand may be forced anyway, because once her savings are gone (ie, if she is using them to top up - possibly by up to half or more?? - the rental income from the house rent) she will be 'on the council' anyway, and they will insist either she sells the house to keep paying or, at best, puts a charge on it to repay whatever she'll have owed by the time she does die - a charge that most people will have to pay off by selling the house then. That said, if it 'comforts' her to think her home is NOT being sold right now, that might be kinder to her?

One more thought - would it be financially possible for her family to collectively buy her home? It's vital that you do actually buy it (even if 'gradually', over months/years) (this can be done, a friend of mine is doing this), rather than just 'pay her fees' now. If you pay her fees now, and the house remains 'hers' then the council can STILL come after it if you all reach a point where you can't pay her fees any more. So you'll have paid her fees and STILL not get the house!!

As for leaving the house empty, remember she'll still have to pay council tax on it, even if you take all the furniture out (it has to be 'uninhabitable' - though some folk simply draw the curtains so council inspectors can't see in to check - though they have powers to insist on entry, I believe??), after something like only 6 months (possibly only three). Councils do this to avoid having houses stand empty (and of course to boost their incomes!)

If your MIL has dementia, she should be exempt from council tax, but whether that applies to an empty house when she is in a care home, I don't know? One of the team of Carers UK experts, as BB recommends!

As for likely rent, you can get an outline idea simply by keying in the postcode, number of bedrooms etc, on to something like Zoopla, Right Move etc, and see what comparable houses are being rented out for. I can well understand your concerns, plus of course if you try and minimise the risk by enaging a managing agent to oversee the rental (and check out the tenants), then you are paying them, and your MIL gets less income .....

As usual in these situaitons, you tend to be damned if you do and damned if you don't.

One final thought, IF your MIL now needs round the clock care, you might try checking out the cost of employing a live-in-carer. This might not be any more than the care home fees, depending on whether you use an agency, or employ direct, and how much nursing care your MIL needs.

Sadly, the huge cost of 'elder care' is the reason that so many of us either have to sacrifice the 'family home' OR sacrifice the 'family'....ie, by taking in the elderly person ourselves, and looking after them to 'preserve' the eventual inheritance.

For me, we opted for the former, but luckily we 'don't need' her flat, and it was not worth a huge amount of money anyway. I still bet the money will be all gone by the time she dies......(And the exasperating/sad thing is that because of her advanced dementia, her quality of life is pretty grim, and she hasn't a clue what is going on.....all that money 'for nothing' if you see what I mean - she hardly enjoys life any more.....)(So if your MIL does NOT have dementia, please please please count that as a HUGE blessing, however physically infirm she may be.....she is still the person she always was, unlike my poor 'ghost' of an MIL.....)
Hi LesleyAnne
We rent out Mums flat in London. That and her income from pensions covers the care Home fees in the West Country.
My big bro had poa for finances so deals with everything and I don't know about tax situation , sorry,
Originally we did this so if she didn't like the Home she felt she could go back, but she was the one who suggested a Home first. She doesn't have dementia or any other medical issues.
The flat is still rented to the same couple 2 years later. We did use local agent to find them.
Get professional advice from local estate and lettings agents. There may be a 6 month contract you could try.
Best to get her assessment and costs known first, then look at how to meet it.
Kr
MrsA
Ps
She probably sees selling the house as a very final step and very scary. Theres no rush, and she needs time to adjust to all sorts of newness.
My post crossed with yours....I see, sadly, you have done those grim sums already....

I don't know about the 12 weeks etc, but lots of folk here do, plus the experts at Carers UK.

I can understand why she wants to 'pass on' her bungalow to her children, but it isn't going to be feasible really. I also wonder whether psychologically she is hoping she can 'come back home' at some point? None of us 'want' to sell our homes, do we?

Do check out the comparable costs of care homes vs live in carers, as that MIGHT just be doable????? Does she need 'overnight' care? Or is it just 'someone in the house all day' (plus maybe a call button for overnight??)

The only other possible option might be for one of her children to build/create an annexefor her maybe at their own home, and then do a 'little' of the care, plus then she pays for some 'day care'???

The bottom line is that elder cost costs a fortune, and that is the brutal truth of it.
Purely on the renting side , any rent received would count as income and certainly be taken into account by a LA and the Taxman.

Recent changes in taxation make owning a rental property a nightmare .... that aspect alone will throw up many problem areas as a Google search will reveal. If going down that route , it will be advisable to seek assistance from an accountant ( Who may also throw a little more light on the care cost element ).

As to the cost of care aspect , it is vital that you see the guidance of the Carers UK advice team as there are several factors .... including a complete check on all benefits / allowances which may be payable together with the classification of care to be provided ( CHC / LA element / Defered Payment Scheme ... as mentioned ... etc.etc. ).

Again , a Google search ... Care costs deferred payment scheme ... will reveal several sources to investigate.

Be VERY wary of factoring in all considerations before taking a step forward.
In our area, the New Forest, the local authority will lease a property, do any repairs and decorations required, as long as it is available to them for a given term, for someone on the housing list, so guaranteed income. However if mum qualifies for full NHS Continuing Healthcare, all care would be free, AND she would still be entitled to her pension!
Maybe spend some time reading the CHC"framework"?
Do not allow yourself to be railroaded into agreeing ANYTHING at short notice. Make any excuse but don't sign anything!