Buy-to-let to fund care home?

(6 Posts)
pinkpanda101 Thu 28-Apr-16 19:13:50

Hoping there's a property tax specialist or similar on here who can enlighten me on this!

FIL is now a permanent resident in a dementia care home. He is self-funding (pensions+attendance allowance+savings) and owns a house nearby. We are doing up the house with a view to renting it out to help pay his fees. DH has EPA and has managed his dad's finances etc for years. No siblings.

We have been informally advised that to bring the house up to letting standards would cost a lot and we would do better to sell it and buy a purpose-built flat to let out.

I gather that FIL would get residence relief on the CGT liability of a sale. Would he still be liable for the new 3% extra stamp duty on a new flat even if it's the only property he owns?

Also, will be it fairly straightforward for DH to do the sell/buy transactions even though the deeds are in his dad's name?

Thanks so much for any help you can give me smile

MarthaCliffYouCunt Thu 28-Apr-16 19:17:47

As a tenant i would want to know that the rent was enough to cover his care home fees plus plenty left over for repairs on the property. Have you worked out how much you would need to charge to cover all that and is that a realistic rental rate in your area?

3littlefrogs Thu 28-Apr-16 19:28:16

IME renting a property will only cover a fraction of the cost of care home fees - unless it is a mansion.

You will have expenses in terms of taxes, refurbishment, solicitor's and estate agent's fees (if you are buying/selling), landlord's insurance and safety certificates plus the work involved in managing a rented property if you don't want to pay an agent.

How much will you need once his savings have gone?

Fees for self funding are around £700-£900 per week so you would need to be able to let the property for around £3,200 per month. Would your tenant pay council tax, bills and contents insurance on top of that? Would you be able to charge more rent to cover maintenance and insurance?

You would need to look at similar rental properties in your area and see what you could expect to charge.

pinkpanda101 Thu 28-Apr-16 21:07:36

Thank you both.
I'm not looking for help with rent amounts (he has sufficient in pensions and savings to last a couple of years), but I do need advice on the legal/tax aspects of buying-to-let, as per my OP smile

3littlefrogs Fri 29-Apr-16 09:15:56

Ok. Sorry I misunderstood.
Perhaps you should post this in legal as you would be more likely to get appropriate advice there.

MimsyPimsy Fri 29-Apr-16 09:47:12

It will be his only property, so he won't have to pay the extra 3%.

When this happened to my poor mother (not dementia, but a stroke, so it was unexpected), we did up her house to rent it out. It didn't cost as much as we thought to bring it up to standard. We got it rewired (£3k) and put in a new kitchen. Who has advised you to sell? I would look carefully at the figures before doing this.

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