# what to do with an empty property...



## m500dpp (Feb 17, 2006)

OK here are the details of my conundrum:

- My father has gone into a care home and we have to pay £1600 a month
- His pension+allowances are £1200 leaving us to find a top up of £400 a month.
- The bungalow he owns is worth about £200k but is currently empty
- Once his savings dwindle the council will pay the top up of his care, but put a charge on the property to recover their funds when it is sold.
- If we sell and put the funds on deposit, we will get a derisory interest rate.
- The bungalow would need some modernising to make it suitable for renting (its in perfect condition but the kitchen/bathroom/decor is dated) and it is a long way from me so I am reluctant to go this route.

All I can think of is:

- sell the bungalow
- Dad lends my sister and I half the proceeds each, interest free (formal signed loan agreement)
- My sister and I then become liable for the top up of his care.

Any reason why this would not work, or any other ideas. It doesnt seem sensible to leave the bungalow empty long term.....


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## justina3 (Jan 11, 2008)

selling at todays price doesnt seem to good an idea to me. I would get up there chuck a cheap kitchen and bathroom in and rent it out this will for sure cover the top up you have to make also if your dads pad is mortgage free then you will of course be getting a lot more than £400 so this extra money can go into a kitty to cover the costs of the kitchen and other improvments you had to make then you can sit back and watch the price rise of the property granted slowly but up it will go.


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## m500dpp (Feb 17, 2006)

Thanks Justina. There are a number of issues with renting:

- Cost of getting the place sorted - around £5000, and we dont have the cash available
- Rent would be £700 pcm approx less 10% (or more) agents fees, and then greedy Gordon would treat this as income for my dad, and there goes another 20%, so net income £500 and then theres annual gas and electric checks etc..
- I live 100 miles away, and get the wrong tenant and maintenance could cost a shed loads.

Agree about selling now, and yes the price will go up, depends on what use I and my sister can make of the lump sum now or later.....


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## EliteCarCare (Aug 25, 2006)

Personally I would update the areas that need it and then rent it with a local agent so they manage it (average fee is about 10% of the rent). :thumb:

Alex


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## PaulN (Jan 17, 2008)

Dont think you will get away with having and interest free loan on the total amount. It could look like your doing it so he hasnt got any cash for the care home.

Also your dad would have to pay a fair figure on tax it he gave you the money.

Cheers

PaulN


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## justina3 (Jan 11, 2008)

hmm this is a right pickle nothing is every as straight forward as you think, see what you mean about renting however how accurate is your 5k quote you can pick up a bathroom suit for under £250 these days. 

Sounds like you have a right headache on your hands though


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## m500dpp (Feb 17, 2006)

Paul, you are right, thats why I have said that my sister and I would be liable for the top up of his care fees, as you say you cannot simply give away assets to avoid paying the care fees.........

I am also aware the loan would have to be properly drawn up otherwise we could be liable for gift tax......

The other aspect is of course inheritance tax, but this is not an issue as we are well below the £320k threshold.

As I see it we are not attempting to avoid paying the care fees, neither are we trying to avoid paying inheritance tax. In essence it is the same as selling and putting the money on deposit, dad is just making the best use of his cash.....

Suppose the other option is to rent it as a holiday home, its a short walk from the beach so might be attractive in this respect.

This is a scenario that many find themselves in, 18 months ago we could have sold at a good price, invested the money at 6% or so and the lump sum would be increasing even after paying the top ups. Oh how the world has changed!!!

Oh further complication, my sister lives in Australia!!!!


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## ZedFour (May 6, 2008)

Does your Sister live close and would it be feasible for her to live in the property?

If so, she can sell her house and move in to your Dad's, pay you your _half_ and the council won't be able to touch a penny of your Dad's estate because it would make your Sister homeless...


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## m500dpp (Feb 17, 2006)

mmm bit extreme, I did consider retiring, selling our house and then living in the bungalow. In many ways not such a bad idea!!!! (but no not really practical.....)


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## PaulN (Jan 17, 2008)

When the money drys up the house gets sold.... they dont care whos in the house.

Im actually suprised anything is funded for the care home while he has a house. They would normally suck every penny out his account then ship him off to a council Home.......

I think renting it out is defo the way forward. How about some letting agent helping with the refurb and taking that back less £400 for your dad until the refurb amount has been paid back?

Failing that, get your sister to oversea the work if shes nearby.

Cheers

PaulN


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## m500dpp (Feb 17, 2006)

He's in a council care home, fees £1600, pension + allowances £1,200 so they are not paying anything towards his care. At £400 a month the £200k will last 42 years by which time my father will be 127!!!

Of course had my father not scrimped and saved and bought the property they would pay the whole lot!!!!


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## mba (Jun 17, 2006)

Get yourself here - Continuning Healthcare (basically CHC is free care costs if your fathers primary care is a health need). It is *not means tested* either 

http://freenursingcare.findtalk.net/general-chat-f1/

fwiw you as siblings are not and cannot be made liable for your fathers care fees. Do not sign anything to say you will pay out of your own pockets!!


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## mba (Jun 17, 2006)

m500dpp

You are describing the exact same situation as my grandma!

She went into a home last year and my Grandad was paying £400 top up but the SS (social Services) where paying £1200 = *1600 total*

However my grandad sadly passed away, leaving half his £200k property to my dad & aunty and half to my Grandma. The intersting thing although my gran has <£14,000 savings and therefore entitled to Free Care from SS, they are taking into account her share of the £200k (£100k)

She is now fully funding herself of £1200 and the SS are "loaning" her £400 a month that is accruing from the property, to be paid on sale of said proprty.

*re the property* - you need to be aware that your father will be taxed on the income. Plus someone on the above mentione d forum found out that when the tennant left the property they were liable for Council Tax payments every month. At present your father will not be paying any CT, but as soon as you get in tennants he will lose that protection and will not gain it back after they leave!


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## m500dpp (Feb 17, 2006)

yep thats the scenario......am sure loads are in this position. Quick look on the Inland rev site shows that an interest free loan might be treated as a gift. No problem with charging interest I suppose as my sister and I will inherit the loans and will essentially be paying ourselves interest!!!

Its annoying because we are not in any way trying to avoid paying the top up care fees, or inheritance tax (none due) we are just trying to get access to familiy money by selling the bungalow which is currently costing us money.....


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## mba (Jun 17, 2006)

m500dpp said:


> yep thats the scenario......am sure loads are in this position. Quick look on the Inland rev site shows that an interest free loan might be treated as a gift. No problem with charging interest I suppose as my sister and I will inherit the loans and will essentially be paying ourselves interest!!!
> 
> Its annoying because we are not in any way trying to avoid paying the top up care fees, or inheritance tax (none due) we are just trying to get access to familiy money by selling the bungalow which is currently *costing us money*.....


Are you & your sister paying for this? You shouldnt be, any bills should be taken from you fathers monies.

May i ask if the whole house is in your fathers name? Or has he split the property in the deeds that you and you sister own 25% each and him 50%?

Who is paying the £400 top up? Is it our of your fathers savings? did you also know that your father is allowed to give all children & partners as well as his grandchildren £250 each per year to cover christmas & birthdays *plus* £250 if any of those get married *Pus* a lump £3000 a year "gift" (not each, just a lump sum)

my dad & aunty are doing this as thay have Power of Attorney over my Gran (Dementia) which equates to

7 * £250 (Birthdays & Christmas) = £1750
2 * £250 (2 grandchild weddings) =£500
1 * gift = £3000

Total £5250 all legal & above board! My gran is also liable for any repairs & bills for the property.


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## m500dpp (Feb 17, 2006)

cheers. The bungalow is costing my father money and the top up fees are coming out of his dwindling savings. The bungalow is in his name completely. I have control of my fathers account, and in effect his money = our money.

Am aware of the amounts that can be given away, but my fathers saving are limited, the only real value is in the property.........


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## mba (Jun 17, 2006)

At the point he falls below £23000 in savings then SS will contribute (by way of loan against the property) on a sliding scale. At <£14000 savings then SS should pay for the care in full (again only as a loan against the property).

In your situation i would seriously think about renting first and foremost, yes he will get taxed on the income and you will have to see how that will affect his £1200 from pensions & tax credits etc... but getting a income from the property is best in the short term - however you will lose his right to free CT after you get tennants in!

Do you have Power of Attorney? LPA or EPA?

The last thing you want to do is sell the property imo. Post up on the forum aboe your situatio, there are some very knowledgable people in there! Was your dad admitted to a care home via hospital/SS or did he request to be moved there? (PM me if you wish)


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## lofty (Jun 19, 2007)

m500dpp said:


> He's in a council care home, fees £1600, pension + allowances £1,200 so they are not paying anything towards his care. At £400 a month the £200k will last 42 years by which time my father will be 127!!!
> 
> Of course had my father not scrimped and saved and bought the property they would pay the whole lot!!!!


Why is it that hard working people who pay into the system get 
nothing back ,while lazy scumbags who never work and pay no 
tax get every benefit going.It makes my blood boil.
My wife's parents have put their house into some sort of trust for her,to stop this happening to them.


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## Scotty Pro (Nov 12, 2008)

APT is the way to go. 
The Asset Protection Trust hands everything to the sons/daughters so the greedy Council and Government cannot get their mits on the house. Unfortunately this will not help the original poster, it has to be done before the parent goes into care.


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## Renmure (Jan 18, 2007)

Can't really offer any great advice ther than, as a landlord, make the point that when looking at the rental idea, if you expect to make a £500ish profit per month but then need to spend £400 of that each month then it is a close call as to whether or not you actually end up out of poclet. There are always small matters which arise and need some time or money spent on them and if you are 100 miles away then time is probably move valuable than money. It is all very well thinking that in the long term the housing market should pick up (it should do) but thats not too much help in the short/medium term.


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## -Ally- (Mar 6, 2009)

Unfortunately I cannot offer any advice but it is just so sad that when a parent goes into care it just totally becomes about money and not the welfare of the person in the home. 
It's a terrible situation for your family, I hope you get a resolve.

Ally


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## m500dpp (Feb 17, 2006)

AllyRS said:


> Unfortunately I cannot offer any advice but it is just so sad that when a parent goes into care it just totally becomes about money and not the welfare of the person in the home.
> It's a terrible situation for your family, I hope you get a resolve.
> 
> Ally


The happy part about this is that my father is very happy at the care home, has made friends and is eating properly so is much better off than he was at home. Having got his care sorted (about 8 months ago actually) I now need to do what I can to protect the family money.


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