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

[Arghhhhhhhelpjobinterview]

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

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?

Puzzled as long as that bathroom and kitchen and other bits got done.. Even in the very worse case scenario she had a personality change, went crazy, had awful husband etc.. Squatted... Even then it would have been given a massive over haul.. And after getting them out.. I would have fiat in better state than started.
Very old relative living there...

I think this rent up front is brilliant idea and that alone has made thread worth while along side all food for thought.

The only thing is what rent could I charge when it's not liveable?

In good state 350 to 400 at push.. So let's say 350...but would it be ethical to charge called rent when technical couldn't live there

Would she not be entitled to see this as an investment and therefore have/own a share in the house if you were to sell it? I'm not sure what's in it for her otherwise. She has the hassle of living somewhere unliveable, dealing with all the builders, paying for the work......

Hopefully once it started it would take 8 weeks. Over say four years she would technically only be paying for one year? Something like that. So she gets freedom from her current stressful situation, she gets to keep most of her capital from her flat sale.. And she gets vastly reduced rent..

I keep thinking if situation was reversed would I do it? Or would I just rent something else..

The only thing with renting elsewhere is one is at mercy of someone else, huge fees up front to rent.. Never know until something goes wrong if landlord is any good... Could move in and bad neighbours... But even so I'm not sure!

I think it’s a disaster waiting to happen tbh. What is she going to do in 7 or 10 years when you want to sell it once it’s done up where will she go?

You may want to sell but she may not want to move so are you willing to evict her or just let her live there for the rest of her life?
And once the ‘free rent’ has run out what if she doesn’t pay the rent for any reason like if she hasn’t got a job..are you willing to evict her or will you let her live there rent fee?

Could you sell her the flat minus the amount that it will cost her to do it up, or has the flat been valued in its current state and she can’t afford that amount?

Living in a renovation project is amongst the most stressful living situations.

Sounds like you’re getting her to use her lump sum on your flat. You know her - is she the type to easily save that back up whilst living rent free? Or would you be depriving her of her chance at home ownership?

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).

This is by far the best option for your aunt and probably best for you too.

It sounds like a good solution for both of you. Just discuss everything up front and get it all in writing. It would be safer for both of you if you use a solicitor.

Could you sell her half the flat at it’s current price and then with the money you get, you gave some money to put into a do up the flat kitty. When the flat can be rented out, you rent to her at market value but you both have invested?

I don’t the bathroom will need an overall after 10 years if done nicely, just don’t do it up too much on trend, then it won’t go out of fashion! My bathroom is 11-12 years old, I’ve been here 8 years, it’s all white tiles, bit of colour and massive shower. Would like it to be more trendy but if I was renting it out, it would be perfect for another 10 years easily!

anathema

Her buying out right is definitely still on the table but her df is not totally reliable for the money... Her lump sum would be around ish 50 thousand... The work would be around five grand to get basic bathroom and kitchen done.

Thought about both investing in it but I think that's far more complicated. One of us has to own it I think.

Total disaster in the making!

1 if her unstable job falls through and she has to claim hb she may be ineligible due to your being related - it doesn't matter what you (landlord) are using the money to pay for, any sum of money paid in exchange for roof over head = rent.

2 you are EXTREMELY vulnerable as a landlord if you allow a tenant to live in an unsafe/uninhabitable property - not only from tenant suing but from fines which can easily go into 1000's. There are LOTS of regulations on energy performance, electrics, gas, carbon monoxide and smoke detectors (which have to be hard wired into mains electrics now), all electrics must be pat tested, fire regs... A working toilet is a basic human right, she pays you even a penny you're legally a landlord is my understanding.

3 you need to keep on right side of tax man - different regs for furnished/unfurnished

4 you have to keep any deposit in a certified scheme

5 are you sure she'll leave when you want her to? If she's done nothing wrong it's incredibly hard to legally remove - hell even if she wrecks the place it's not easy. If the property is in Scotland there's a whole load of new laws come in that protect tenants of 6 months or more.

6 you're responsible for repairs not her, can you afford this? Or insurance to cover? (I think there may be legal requirements on buildings ins too if renting out)

And that's all BEFORE the family/emotional stuff gets involved!

If you genuinely felt altruistically you could sell it to her with a reduction of enough to allow her the money to do the repairs.

Wow she's no job, sale of her flat won't be a decent amount - no no reason at all why she wouldn't try and bag a free flat 🙄

No the biggest issue is you could genuinely lose the entire property and any money you've invested in it, even if she's on the up, all it takes is one persuasive relative who talks her into believing YOU have taken advantage of HER.

Bad bad bad idea!

It sounds a brilliant idea in theory OP, but you need to realistically assess your relationship with Aunt. Is your relationship close enough this is adhered to but not close enough that feelings would get in the way?

What if you need to suddenly sell? Leaving her homeless and out of pocket?
What if the house burns down? Leaving her homeless and out of pocket?
What if she moves in on the premise of doing it up but the work never happens? Leaving you out of pocket and in an awkward position?
What if the amount she has invested is surpassed and she won't pay rent? This could destroy your relationship and leave you with an awful lot of hassle on your hands to get her to pay/get her out.
What if you dispute over money?
What if you fall out?
What if she wants to move a partner in?
What if she loses her job?

There are lots of what ifs that you both need to hash out.

My personal advice is to bear heed to the old adage - 'Never go into business with family'

I can't see what's in it for her?

You keep saying free rent, but she isn't getting free rent. There is no difference here between her paying you rent every month and you using it to renovate and your plan. She is still paying somehow.

It's a massive risk for her, invest thousands into someone else's property and potentially be on the streets a few months later.

I don't know about you but your aunt would be mad to do this.

Not sure why pp are saying that bathroom will need replacing after 10 years with one careful, owner? Is that the lifetime of a bathroom now?

No one can live there till bathroom is done. If Op puts it on the market now, it will sell to a developer for peanuts. Proceeds of sale invested in building society earning v little at the moment. Less than inflation. Property a better investment. Op can't afford to do it up.

The only problem I can see is whether aunt can afford to rent when bathroom is done. Is she mortgage free at the moment? Or will rent be the same as her mortgage? Will interest from remaining invested capital bridge the gap, if there is one? Or will you rent it to her at less than market value, as a sort of caretaker/project manager?

I think, as it stands, your aunt would be in a more precarious position than you. Couldn't she sell up and buy something within her means so she has a long-term asset? Giving up a property you own in order to rent is a step down for her.

It seems to me you need a cast-iron exit clause, so, if the arrangement doesn't last 10 yrs, no one loses out. Circumstances change. Aunt would have to be given money from the sale if she hadn't lived there long enough to benefit from free rent in lieu of improvements. You'd need a good property lawyer for advice. Plus in-put from local estate agents.

Yes, sometimes family/friends fall out, but equally it can be a more flexible and reliable arrangement than with strangers. I did a house-swap with my daughter and son-in-law, which has worked out v well. No complaints on either side and a totally stress-free move for all of us.

Sorry - lots of cross posts while I was pondering.

I just can't see how this could work, have you even got an idea of how much it would cost for a new bathroom and kitchen? Even if you could get that done within the budget of the theoretical years rent up front it would firstly be massively unfair to ask her to live in a building site for however long it takes to do it. Then you'd be left with no available cash for, solicitors fees, taxes, any maintenance that needed doing. What if the boiler broke? Would you ask her to pay the next year's rent up front to pay for a boiler?

The only way I could see it working is if you were able to get a buy to let mortgage on the property, maybe ask her to oversee the work before she moves in, in return for a small discount on the first couple of months rent.

Bad idea.

However, another might be to sell her a half share of the flat. Use that injection of funds to renovate and she then moves in paying you a rent for your half.

You need lawyers, both of you.

Family and business like this rarely mix well.

The property is all yours, and you are regarding it as a future pension.

you could look into giving your aunt a private mortgage, it could be a very low interest, low deposit and then take the balance over xx number of years. that way she has a property, if she sells, she must pay off the mortgage, so make sure you do it all above board. The property is then hers to do up as she wants, you don't need to oversee anything andthat income can go into a savings account/ISA or a private pension, upto you.

this way you have an income starting as soon as the mortgage is finalised. you will have to look into tax implications as regards the 'loan repayments' you will be getting from her.

but the biggie, you will not have to renovate the flat, she will, no worries for you, she could at some stage in the future re-mortgage with a recognised lender and pay you off in full.

This really doesn't sound like a great plan. Where will.your aunt be living whilst she's paying for the new kitchen and bathroom to be put into your flat? Because she won't be able to live there.

As a landlord you will have certain responsibilites re safety of the property. And you will have to.pay tax on the rent you receive: www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

I would get out a loan yourself, get the work done and then sell.

Would your aunt getting free accommodation at different stages be seen as benefit in kind for tax purposes?
All l can envisage here is you asking Aunt to leave in a few years and the whole family being in uproar as to how cruel and mean you are and a big family rift coming. Your Aunt will be homeless and it will all be your fault , in their eyes.
And look up fire regulations for rented properties and that should be enough to cause you to run a mile from this idea.
You would be better off just to give it to your Aunt now for a complete knock down price and at least you would have something from your inheritance. But remember you can't get bitter layer if she turns it into a palace.

She would be living back at home whilst this is going on but she is desperate to get out. She has already had quotes and time lines for builders etc and for bathroom which is tiny.. She has been quoted anything from 2/ 4 weeks but that's with other work too.

If she has money to do up your flat, she has money to spend on her own rent/mortgage..

By doing it the way you suggest, she has ownership of your flat in a way - regardless of 'agreements'.
It's way too complicated and if things don't work out, relationships can be damaged.

Either-

1. Sell her the flat in its current condition.
2. Sell the flat to someone else and she rents elsewhere.

I agree that it's a step down for her.. However in my mind she would be separately growing her capital in investment funds...whilst getting somewhere to live with a landlord she knows and who will leave her alone etc.

The flat was valued at two quite different prices we have gone for the rock bottom price anyway.

Which is reflected off the state its in. I'm not sure about further reduction for bathroom when that's already reflected in the price.
This is the only inheritance I am going to get, and my own situation isn't great.

I wonder if we sold it for less so can she can out right afford to do bathroom, but somehow pays me back but then I don't think that will work.. As then it could put too much pressure on her for other bills.

Insp the thing is her df made very positive overtures to assist her when she broached this with him ages ago. He seems to have backed off a little.