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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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

226 replies

Arghhhhhhhelpjobinterview · 13/01/2018 23:07

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.
.me.

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?

OP posts:
Mxyzptlk · 14/01/2018 00:05

Has your aunt made enquiries about getting a mortgage for the flat and what it would cost?

RumerGodden · 14/01/2018 00:07

There are tax rules around renting to relatives for "peppercorn" rent, and accepting services/capital upgrades in lieu of rent.

You need proper tax advice regarding this arrangement, as chances are the "value" of her contributions (in lieu of rent) will be treated as tax rent by tax office and you will need to pay tax on them.

Also look at deductibility of repairs/maintenance if she is doing it rather than you paying for it. It might be better from a tax and legal point of view if she pays rent, but you pay her as a live in tradie to do up the flat....reimburse her materials and pay her for her labour.

don't set up any arrangement without proper advice.

RumerGodden · 14/01/2018 00:07

*taxable rent (as if paid in cash)

Karmann · 14/01/2018 00:08

Oh good lord the merchants of doom are out tonight. Provided you set it all out properly, and your aunt is in agreement I see no problem with it. As you say, it's win win all round.

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:08

misson its had little maintenance in some areas for 20/30 years! Walls need plaster.. Flooring needs doing, bathroom and kitchen! If I thought it was perfect or trusted myself I wouldn't be asking here for ideas Grin

Yes I have said this too her about renting somewhere else..

It's certainly something for her to consider.
I suppose the benefit for her is she knows me, we can get whatever we work out drawn up legally.. SHE knows the flat.. The area...

OP posts:
HeyhoIndigo · 14/01/2018 00:10

Don't do this. Aunt could default on the rent at some point, you say she has no job, she could just stay there rent free and she would have squatters rights. Could cause a family rift and a whole heap of hurt.

Not worth it.

HermionesRightHook · 14/01/2018 00:11

Why can't she just buy your flat with a very small mortgage, enough to do it up? That way it's hers and safe, and you have the money to reinvest yourself.

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:11

rumer brilliant points there thank you.

In terms of personal allowance I have no income and flat would be a full, max rent 400 per month. I would get solicitor to check over this and any other professional.. Thanks though! Being novice in property etc this is all stuff I don't know

OP posts:
Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:13

I don't think she can get The mortgage as no permanent job right now, this is her issue. She has a mortgage right now but won't be able to get a new one. Also the property has take away bear it and I have been warned if I sell it would probably be cash buyer.
As bank don't like to mortgages near take away

OP posts:
Puzzledandpissedoff · 14/01/2018 00:13

So she doesn't have a permanent job either? And the sum coming to her from the sale of her current flat would only be small? And she's not able to do any of the needed work herself?

In all honesty she doesn't sound in any position to commit to something like this ... you said yourself that you could rent it out later "if she left" and I'd say that' a very big IF

Surely the sensible thing is for her to rent something other than her current place, for you to sell the house and for everyone to step away from the nightmare this could so easily become

abbey44 · 14/01/2018 00:15

Speaking from experience of helping a family member in a similar way, I'd urge you to be very careful how you go about it. Get legal advice and speak to an accountant about the tax implications. Make sure you have a watertight legal agreement - what you enter into on an amicable basis, with the best of intentions and goodwill all round can go pear-shaped really quickly. You never ever think it will ("it's family..." ) but it does, and it can really cause awful ill-feeling.

I understand you wanting to help your aunt, and it will help you too, but the flip side could be very different. Good luck.

HolyShet · 14/01/2018 00:17

Is it more important to you to have a pension or help out your aunt?
I don't think you can do both

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:19
  1. puzzled I don't know what you mean. With her lump sum from flat sale she would be hard pushed to buy anywhere as good as my flat for the price, inspite of its Fallings it's got much going for it.

If she used five grand from her sale to do bathroom and other bits and then lived there rent free for one, two three years.. She is not eating into her capital left, she has job through agency its not permanent contact, she is applying for permanent roles and her agency work keeps her busy.

  1. selling it is also still on the cards, I'm looking at all my options but as said it's tricky.
OP posts:
Gemini69 · 14/01/2018 00:19

This is a disaster waiting to happen....

your going to lose this Flat lady Flowers

Puzzledandpissedoff · 14/01/2018 00:21

I also agree about taking proper legal advice, but frankly I doubt any solicitor would advise you to take this on, given your aunt's precarious financial position and all the potential upsets involved

They deal with the results all too often, you see ... and anyway, how would you coordinate the advice-taking with you both living in such different places?

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:22

abby I totally agree, she is loveliest person on earth but yes things never set in stone, she could get married, husband could start to complicate things.. Her family could get involved (some deeply unpleasant people there as well as nice)

It would have to be water tight.

And drawn up legally.

OP posts:
Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:24

My biggest issue would be she starts building work, something goes wrong and I'm left with half building site and having to find money to pay for it..

Which is why I think the her paying me rent up front sounds like a great idea.. Then me using that to do bathroom...

OP posts:
Gemini69 · 14/01/2018 00:24

Don't do it OP Flowers

Allthewaves · 14/01/2018 00:29

You could get a loan based on the value of the flat as you own it outright. Use that to do the flat up then rent it to your Aunt in a formal tenancy then you are both protected. You could pay her to project manage and agree reduced rent rate.

Puzzledandpissedoff · 14/01/2018 00:31

I'm sorry but I have to agree with Gemini; this has disaster written all over it

Even if a solicitor could pick apart the complications and draw up something "watertight", that can't prevent someone breaking the terms and blaming their poor circumstances - and if that happens it could cost many times what you've received to sort it out

You've already said that neither you nor your aunt are financially savvy, OP, so why put yourself through it?

Allthewaves · 14/01/2018 00:32

Or possibility of a buy to let mortgage as the flat will be your income. Your going to need electric certified as safe, gas checked, cabin monoxide monitors, smoke alarms justnoff the top of my head

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:32

Would it be possible to get loan in those circumstances.. With me not working? And flat not mortgage able..

I like earlier suggested she pays me rent in advance I use that for building work.. And we can agree no rent or reduced rent. If that's not evading tax or something...

OP posts:
Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 00:34

Gas is safe checked, heating is only few years old. Got battery carbon monoxide but electric not checked yet...

They all worked before but are very old.
So that could be issue and no wired in alarms but I'm sure I could do that.

What we don't have is fire boarding between shop below and flat which could cost a lot more

OP posts:
Allthewaves · 14/01/2018 00:35

Won't you need to hold her deposit in the landlord scheme for her security

AnathemaPulsifer · 14/01/2018 00:36

No permanent job to rely on.

How easy will you find it to evict your aunt when she can’t pay her rent? This is a family disaster waiting to happen. Sell as is (to aunt or otherwise) or get a year's rent up front to do the renovations.