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In thinking this is a win win situation? Am I missing something?

(227 Posts)
Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:07:51

I am not financially savvy nor is my aunt.

Due to funny family ages I have an aunt who is only year older than me. Not really relevant..

I have inherited a small flat, which needs new bathroom and kitchen and general over haul. Ie new plaster etc. However it's got new heating boiler, very warm, good windows grin

It's too much for me to do up, and it's far to far away, that's not an option at all for.

My aunt has very tight finances and is desperate for some where to live. She has thought about buying my flat outright which would leave her with no budget to do up the flat.. She would have to get loan off her df or he pays out right for bits and pieces. But she would own flat (long lease).

Or.. I have offered if she pays for the bathroom to be done, she lives there rent free for cost of bathroom plus extra months as a thank you... And so on. Meaning she keeps bulk of capital, to invest... She gets my flat to live in...

And we get something in place legally to say... For every x she invests.. She gets x amount of months rent free. I also get something to protect me.

She gets sanctuary, plus her capital.. I get my flat looked after, council tax and bills paid and slowly done up.. By her but also me.
Looking at this as a ten year project?

Any spokes I'm missing?

WhatCanIDoNowPlease Sat 13-Jan-18 23:25:33

Will she be getting housing benefit when renting?

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:27:12

No. She has job, semi stable job but from me she won't technically be renting for many years but she will be paying bills and council tax

NancyDonahue Sat 13-Jan-18 23:27:51

It sounds a bit complicated to me. I think if you can't live there you'd be better off renting it out properly or selling up.

Either way, you should get the work done. From your description I would guess you need to spend roughly 10k to get the flat up to a good standard. If you get that done you'll almost certainly make the money back plus profit on selling, or you'll be able to rent it out.

If I was you, I'd get a loan to get the work done and rent the flat out the flat out using the rent money to pay off the loan

teaandtoast Sat 13-Jan-18 23:28:14

What do you eventually want to do with the flat? If I didn't want to live there, I'd probably sell while the flat still has a long lease.

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:29:50

No that doesn't work for me, I am not near it to over sea work, I can't get a loan. The property has a ceiling value due to area.

It's in cheaper area of the country, not South.

MyKingdomForBrie Sat 13-Jan-18 23:29:58

What mercenary replies. I would absolutely help my aunt out in this situation, and yes I do think it is win win as you get the work done without having to outlay cash at the outset.

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:31:32

I own the freehold.
I can't live there and at moment don't need too it's one bed
We have two small dc.

Eventually, the flat will be done up to either rent out properly... Or to sell but sell modernised.

Schlimbesserung Sat 13-Jan-18 23:32:33

I find it's usually best to have a more formal agreement (ie a sale or formal rental agreement), especially with family. A looser agreement can quickly become troublesome when one party starts to feel taken advantage of, or the circumstances change.
You also need to think about how this would end. Supposing you need to sell, or want to move in. What if at the end of 10 years she doesn't want to move out? I'd really strongly recommend seeing a solicitor and getting a solid formal agreement with all eventualities planned for.

HolyShet Sat 13-Jan-18 23:33:23

Too complicated, too much scope for falling out

Get a loan/series of loans to do it up

Agree a rent that pays back the loan - minus an allowance for her to supervise/project manage works

Agree in principle that she will have use of the flat for x years under these terms with a break clause so you've both got an out

CotswoldStrife Sat 13-Jan-18 23:33:30

Tax - income tax for you and capital gains tax on the property when sold.

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:35:07

Mercenary is good, it seems like such a win to me I perhaps can't see wood for the trees!
I retain my asset and whilst right now I am sahm and money is tight, we get by! My asset will be accumulating value with general house price rise and with modernising too.

If she decides she wants to buy it, I will invest money in stocks and shares isa and a sipp.

Schniffter Sat 13-Jan-18 23:37:44

How long would your aunt be able to live rent free in your flat? Will there be a defined period of time which would cover the cost of the replacement bathroom?

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:38:37

Ooh why income tax? What would I be taxed on.
I may not sell it after ten years.. It would depend but I guess I would get taxed if I sold it anyway.

I can't get a loan I'm a sahm I am not working at the moment.

If I could get loan, worse case scenario.. She doesn't commit to it for some reason and I'm left with no one in there, no works over seen and no one to pay back loan with council tax and bills on top.

Walkerbean16 Sat 13-Jan-18 23:41:08

But if she does the bathroom now it will be getting dated and old in ten years time.

Wauden Sat 13-Jan-18 23:41:36

I would research the tax, financial and legal pitfalls very thoroughly first and get good advice from professionals.

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:41:41



Not 100%sure how we would work it out but would get it put down legally... Once we did on some sort of scale?

The flat is not habitual without bathroom done.. It's critical so give her months free + cost of bathroom... Then once bathroom done and she has had months free to cover that.. Give her more month's based on what she puts in eg new floor.. Equals x months..

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:43:01

Walker it's literally unusable right now, dodgy electrics, very poor dreadful shower, loo falling thru floor a bit tiny sink.

So a modern bathroom now would be amazing.

esk1mo Sat 13-Jan-18 23:44:06

what happens when she finished paying for stuff, would you ask her to leave? id be worried she would grow to (rightly) love it as her home and not want to leave.

would she be happy to live in it without having the bathroom/kitchen done? if she was, then i’d let her move in and charge rent, that way you are getting an income, then after X amount of years you could use that income to do bathroom/kitchen then sell (to her or someone else)

Schniffter Sat 13-Jan-18 23:44:55

I'd do it, as long as the duration living rent free was pre determined. Also, helping you both's a nice thing to do particularly if you get on.

Schniffter Sat 13-Jan-18 23:45:17

Oh and also if you're not reliant on the rental income

ButteredScone Sat 13-Jan-18 23:46:39

Rather than allow her to do it up (recipe for disaster):

You take a small mortgage and do the bathroom to the way you want/your standards. She then pays off the mortgage through a rental agreement for an affordable amount each month. Take income tax into account and work out double payments.

esk1mo Sat 13-Jan-18 23:46:40

just saw your still sounds a bit too complicated. maybe you could go halfers on a new bathroom and charge her cheaper rent?

i can see her feeling a bit used/put out, if she essentially pays for your property renovations and you benefit from the sale, but she doesnt.

Arghhhhhhhelpjobinterview Sat 13-Jan-18 23:47:15

It's not habitual right now without bathroom. She literal couldn't wash or use loo grin

It would be legally drawn up, every money she spent she would get that exact back in fee rent and a few months extra good will.

Say after 7 years flat all done up.. And she had loads of extra free rent as good will she would have to start paying the going rent.

glitterbiscuits Sat 13-Jan-18 23:48:06

Have you thought about Capital Gains Tax?

For example if you inherited it worth £100,000 and you sell it for £120,000 you will have to pay tax on the profit.

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