Concerns about sibling renting mums home

[questiontime28]

DM owns her house outright. It has been empty for a while as she is living with her new partner. My mum loves her house, it is her safety net and she has a strong emotional attachment to it.

My sister has asked DM if she can move in as her landlord is ending her tenancy. The agreement is that she will pay ‘rent’ to my DM, so the house won’t be empty and DM will get some much need extra cash.

DM has said sister has agreed that it will be for a fixed time period and that if anything happens to DM’s current living situation during this time sister agrees to leave and give the house back.

My concern is that sister is selfish and can be a freeloader and take the piss for personal gain - eg, will break something expensive and not pay for it to be fixed. I know DM is conscious of this too.

I am going to suggest she writes a contract outlining all agreed points and they both sign it. But can anyone advise if there is anything else DM should do to ensure she protects herself in this situation?

DM is young and healthy but I do have a worrying niggle about it something did happen to her while sibling is living in the house, could my sister just refuse to ever leave? DM is sole owner

Is there anything she can do to make sure this would never happen?

Your mum is looking at a lot more problems than just your sibling abuse.
If she accepts rent, she will need to get a gas certificate for the heating. Change her insurance and check whether the LA needs her to register as a Landlord.
She will have to declare the rent on her tax return. When she does sell she will have to pay CGT as it is not her primary residence.

I am sure others will add to the list of pitfalls in being a landlord.

My BiL moved into my FiLs house when he went into a home. It has caused massive resentment and fall out.

Who pays for utilities and repairs? Council tax? Redecorating?

What are the terms of your mum's will? Will it be easy to get the house sold of your sitter was a sitting tenant? Is she paying market rate for rent?

A friend of mine has allowed her daughter and partner to rent her old house. However, the house was previously rented and complied with legislation for a rental. The daughter also signed the standard agreement that had been used for previous tenants and my friend continues to complete a tax return which includes the rental income.

However, in this case, OP, at the end of the day it's your Mum's house and your Mum's child. You can only gently draw the potential pitfalls to her attention.

Thanks everyone, this is all food for thought

To answer a few questions - it won’t be market rate rent, my sister would pay the council tax and utilities

I will speak to DM about her will to make sure this is all taken into account

If your sister doesn't pay market rent, would she be deemed as receiving a benefit in kind, which would be taxable.

And if your DM is effectively gifting your sister the difference between market rent and actual rent each month, is she going to give you the same amount of money? Or make up for it in her will at least.

She could draw up an ast, even for a reduced rent.n

So would it be better for my mum if she did charge full market rent?

She can charge what she chooses but people who get things for next to nothing tend to value them less. There is a benefit to dm having the property occupied and heated.

She needs to sit down with you both, look at all the costs involved. Do you know if she is aware of all the extra costs involved and all the regulations regarding being a landlord. Did she think it was just a case of your sister slipping her money each month?
What are her neighbours like? Are they likely to snitch if she tries to do it ‘of the boooks’.

If your sister is thinking of claiming help with rent costs, this could be problematic.

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https://england.shelter.org.uk/housing_advice/benefits/claiming_benefits_if_you_rent_from_family

The contract you're suggesting wouldn't be legal. And could be safely ignored by sister. Your mum would have to give proper notice if she wanted to move back in and go through the legal eviction route if sister said no.

Your DS will need insurance and your DM will need landlord insurance too.