Renting out mums house to help with care home fees

[Worrywart]

Hi all,
Wondering if anyone has been in my situation .
My mother is in a care home following a brain haemorrhage. I cared for her then had serious surgical complications myself rendering me disabled. So mum had to go into a home. She owns her own modest property whihc was disregarded at first but is now considered in her financial assessment. The council take the usual amounts, DLA, pensions etc and the remainder accrues as a debt. It’s deferred until after her day.
WE decided to rent the house out to try and reduce the accruing debt. It’s working ok , the rental income goes into her account and the council take it to pay towards the care home fees. The debt currently stands at about £18,000.
If something was to happen to mum would be have to sell the house immediately. It’s confusing as the council allow elderly people in this situation to keep £40k , thehouse is of low value, maybe £70k maximum but I’m not sure how it works when the house is rented out. I’d presumably have to give the tenants notice but houses in my town can take years to sell and I don’t really want it empty as I am in no health to look after it.
I know I’m over thinking, I’m just so exhausted by it all. She wouldn’t have enough money to pay the debt without selling the house unless I paid it but not sure about that either
House had been left to me my sister and 3 grandchildren.
Any thoughts ? X

[Chris From The Gulag]

Hi Worrywart.

Purely on the property angle ... full sp on care home fees / renting out property :

https://ukcareguide.co.uk/renting-prope ... care-fees/

An earler thread that throws up some very interesting considerations :

https://www.carersuk.org/forum/support- ... fees-30697

Income tax for one ... as is rental income IF any income based benefits / allowances are currently payable.

Tenants ... AST agreement ? 6/12 months term ? Standard terms and conditions ? On UC or UC due to be rolled out on the manor ?

Have the LA registered an equitable charge against the property ?

Presumably , on a Deferred Option Payment scheme ?

Council tax : depending on current occupiers , and their status , any discounts available ?

Utilities ... remain in your mother's name , to be charged as part of the rent ( ? ) ... future usuage ? ... or transferred into the tenant's names from a given date ?

One service a local letting agent could provide advice on ... togther with likely rent levels , deposit protection scheme , references and other statutory checks / local conditions in the letting market.

Condition of house ? Some LAs will insist of upto date certificates covering gas boilers / wiring / fire doors and exits etc. as well as registering with them as a BTL landlord ... again , local letting agent comes in useful here.

If collecting the rent direct , be aware of the Money Laundering Act ... all local letting agents on my manor do NOT accept cash for rent payments.

Do not lose sight of a contingency fund for likely repairs and replacements ... if down to the tenants , that may be a problem come collection time.

One flat in my complex ... £ 300 bond to meet £ 2,400 worth of repairs before the flat could be let again ... moonlight departure 2 days before end of the AST ... no forwarding address !

For the full sp on renting out property , the following link will be of immediate interest :

https://www.gov.uk/renting-out-a-property

I will assume that your mother's home will need to be sold at some future date to repay the debt owed to the LA.

No future accomodation problems when that occurs ?

Others may be along with their comments on other areas :

Benefits ( Full range ... your mother and your own )

Assessments ( CHC / Nursing ... either ever offered ??? ... LA )

Power of Attorney ?

Will ... indication of intentions ... a trust established to protect the interests of the grandchildren ? .. to name as co-beneficiaries will create problems ... especially if they are not " Sui juris " ( 18 or over ) ... formal will ?

[MrsAverage]

Imho, surely a brain haemorrhage would mean she should be funded under CHC as its a medical condition and you shouldn't have to be paying fees at all.

I may be wrong, hopefully others with more knowledge will be along

Kr
MrsA

[bowlingbun]

When mum and I knew she could never go home again, we agreed to sell the house. What are you keeping it for? It's omly causing you worry. Draw a line under it all let yourself free from a millstone. I can't begin to tell you what a relief it was for me.

[Rosemary_1706]

You probably ought to work out how much you stand to benefit by continuing to rent out the house, with all the angst of being a landlord, versus selling it. If the rent goes to pay for the carehome, might the LA be actually benefiting by your keeping the property and not you????

[bowlingbun]

Exactly!

[Worrywart]

Thanks all.

We looked into CHC but she didn’t qualify. She didn’t really tick the boxes as she is better than she was, she now has vascular dementia but wouldn’t qualify.

The council Are the letting agents so they found the tenants and did actually do quite a bit of work on the property to bring it up to speed. We have an AST and the property is supposed to be completely managed by the council. I really took a leap of faith as I worked in housing benefit for 25 years before my health collapsed. I know the problems that can come with renting but because the council basically take over, I agreed. ( more on that later ).

We didn’t sell as it’s a low value property that I was born in. It’s a lovely cottage overlooking the castle yet terraced houses such as this tend to sell for about £70k. They also take years to sell quite often going to auction thanks to lots of new builds in the area with lots of starter home offers. We thought that whilst the house was tenanted at least it was being looked after and generating an income all of which was going towards the debt,

My head can’t seem to factor If we will be better off or not. As without a crystal ball it’s hard to calculate. There is a deferred payment option on the house so after my mother’s dsy the debt will have to be paid. Without knowing how long she will live and what house prices will do, I csnt work it out as she is allowed to keep £40,000. I’m so exhausted by it all, I’m feeling really stupid! The accruing debt is obviously being reduced by the rental income but it’s still increases by £6000 a year. She has no other capital to speak of and no one in the family ( apart from us ) are in a position to pay the debt off. But I really don’t want the stress , my sister sits in the fence and the rest of the family want to keep it say8ng it will all work out in the end.
Give me strength!
Thank you for your replies and input

[Rosemary_1706]

Thank you for your explanation. I can see why you're keeping the house in the family. No matter how you feel, you are far from stupid. It's a complex situation and very stressful.

[bowlingbun]

That sounds a good arrangement with the council. If they are looking after it, can you pinpoint exactly what you are so stressed about?

[jenny lucas]

You can put a house on the market without having to get the tenants out first! The house can even be sold WITH tenants still living in it, and staying on after it's sold.

You might not get as much, as then it would be a Buy-to-let property, but on the other hand, as a BTL with tenants already in, that's attractive to investors (they know the rent is coming in, and they don't have the expense of finding new tenants.)

Also, even if it is sold with 'vacant possession', again, you might as well leave the tenants in until such time as an offer is made on the property. It can easily take 3 months for conveyancing to complete, so that gives you the two months' landlord notice period that you have to give the tenants. That said, is their lease for a set period of time anyway (eg, a year at a time), or are they on an AST (Assured Shorthold Tenancy) where the tenant gets a 'guarenteed' first six months in the property (and, in deed, is obliged to pay rent for six months), but after that the tenant can give one month's notice to leave, and the landlord must give two.

While tenants are in, THEY pay the costs of council tax, utilility bills, and, of course, they 'occupy' the place so squatters can't get in, and keep it warm and dry etc etc.

So, even if the council do require it to be sold, leave the tenants in till you get an offer on it, then give them notice to quit. (Of course, they might choose to leave anyway, if they know it's going to be sold, so yes, you may get a 'void' where there is no tenant, and you still own it.)