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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:
SavvyFishFinger · 14/01/2018 13:02

This thread should be on Mumsnet Classics.

It is a classic example of why someone should get advice from the right professional and NOT come on Mumsnet for advice from amateurs with the risk of not being able to take possession of your flat again because your aunt has established a beneficial interest in your property.

If you had a life threatening illness would you go and see a healthcare professional or put your hands in Mumsnet?

ParticularPosy · 14/01/2018 13:07

Far too dangerous to be the 'landlord' of such a property and even more so with a second person sub-letting. You would be breaking laws that protect tenants and keep them safe. What if an accident happens? You are liable!
Please think carefully. There are property and legal experts who are advising you and yet I get the sense that you aren't taking on board the serious implications of this.

Given all you have said about the flat, work needed, your lack of money to invest in it, the position over commercial premises sell it on the open market to get rid.

Could you reinvest using the cash from the sale to buy a property closer to home, one that doesn't need renovation or one that does given you are on hand to oversee. This would allow you to rent it out and manage it.

Could you reinvest with your aunt, buying another flat together that doesn't need renovation? This too would need to be a legal set up, but would allow her a decent flat using her lump sum and yours. This woukd give you a small income each month from her in the form of rent (half rent) and use your lump sum. All of course would need to be a business arrangement with legal, health and safety and tax advise.

SimonBridges · 14/01/2018 13:08

What do you mean Savvy? I’m seeing as many people saying don’t do it as do do it.

Graphista · 14/01/2018 14:56

And now you're considering adding a sub letter to this mess? Crazy! I'm with pp saying aunts at it, seen you coming a mile off!

Thymeout · 14/01/2018 15:27

No. Aunt will be paying rent when she's done up the bathroom. The amount she pays will relate to the costs of renovation. The cost of the renovation will come from the profit she makes on selling her property.

The problem for both aunt and Op is that neither has a sufficient/secure income to get a mortgage. Aunt's current mortgage is not portable till she gets a permanent job instead of agency work. Her alternatives are stay put in a miserable situation or sell up and rent.

Op has to work out which is riskier. If she sells the property, she loses a potentially profitable asset which will provide a decent pension. The capital sum she gets on a dilapidated property won't yield a decent return unless she's prepared to invest it in higher risk products. Interest rates are lower than inflation. Over time, property is likely to be a better investment. It sounds as if she will never be in a position to afford a buy-to-let property.

Both need professional advice.

Nanny0gg · 14/01/2018 15:33

When my friend rented and spent money on the flat she got a lower rent overall, rather than knocking money off each month.

Would that work?

icelollycraving · 14/01/2018 16:16

I wouldn’t touch this with a bargepole.
I rented a flat from my sister years ago as they had their first tenant trash it. They knew I would really look after it. For many reasons we both felt hard done by and it affected our relationship for some time.
The fact that you’ve discussed it at length with her is going to be tricky if you don’t go through with it. Not as tricky as it’ll end up if you do.
Subletting? Shock
How would you dictate what finish she does on the flat etc? A cheap and cheerful bathroom isn’t going to last.
I 100% would cut my losses and sell it. If you struggle paying the council tax, what about if the boiler packed up? It’s not cost free being a landlord. You really would be crazy to do it imo.
I’m not sure if she’s just getting giddy at a way out or telling you what you want to hear.

Puzzledandpissedoff · 14/01/2018 16:24

A cheap and cheerful bathroom isn’t going to last

Especially when OP seems to think that £5000 will cover a great deal of what needs doing Hmm

And what about ongoing repairs/maintenance? In such a property the aunt would probably claim she'd had to spend a fortune on other, future issues ... and that would be the end of any chance of getting rent from her down the line, never mind her leaving

icelollycraving · 14/01/2018 16:37

I guess if something is going to be worth £50k max you wouldn’t throw much money at it. However £5k won’t get you very far. The only way it may be ok would be if she was a builder/plumber/electrician etc as it is the labour that costs.
Seriously if you cannot get any finance between you and your dh then the money now would be a boon if you sold?

TheProvincialLady · 14/01/2018 17:03

OP do you want to rescue your aunt (though she doesn’t seem any more in need of rescuing than you) or do you want some financial security? It’s unlukeky you’re going to get both. If feeling like a lovely nice person is worth ££££ to you then go ahead. Otherwise, take some proper advice on what to do with the flat and the money and keep your family out of it.

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 18:23

Just come back in not read replies since I went out but I am not going to act solely on the back of this thread.

This is the hive mind at work lots of amazing points I would have never considered have been thrown up

OP posts:
Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 18:52

@thymeout yes thank you that's about the size of it.

Re high risk investment, because I am about twenty years off retirement age I would be happy to go for higher risk products and spread money around. I would get some into a sipp which is automatically topped up by the government and feed rest probably into stocks and shares isa.

Dh has a sipp and its been steaming ahead at 17 - 30% for last few years in stocks and shares!

Having grasp of issues before one involves any solicitor is always a good idea..

At the moment I am swung back to the selling it slightly reduced further than its rock bottom price.. Selling it whole. Then as pp said its her investment... Her responsibility... Her sole project.

OP posts:
IamLucyBarton · 14/01/2018 18:58

I would def do it.

Ch1neseM3al · 14/01/2018 19:02

Suggest
Find an auction house that will sell your flat, with a reserve price
Auction houses take a set fee or a % of the sold price
They should also be able to recommend a solicitor, which there will be fees
Investigate if you need to pay capital gains tax

A developer will probably buy it and renovate it to rent out or sell at a profit

You should get your money within 28 days if it is sold

You will then have your money to invest as you wish with no hassles

SouthWestmom · 14/01/2018 19:09

Why not sell it? Invest the money.

ForgivenessIsDivine · 14/01/2018 19:52

Don't rush in to this and think it through.

Your priority is to make sure the inheritance works for you in the medium and long term. You are thinking it future pension fund.

Risk is that you will loose control of this asset so you need to protect your interests in the property.

Between you, you have a flat, she has cash, she wants to live rent free for a while which she could do with her 50k. She could lend you the funds to do up the property, maybe even using a project manager and you could share the profit on the sale.

She wants to live rent free and get a lodger in to provide her an income, using her 50k. This is not enough for her to achieve her objectives. She wants to use your inheritance for her benefit. She could hand over her 50k to you in return for permission to live rent free in your property for 10 years. You could pay for the renovation, allow her free use of the flat and then invest the rest of the money. In 10 years time though, she could still have nothing and you will have the flat and the 50k which is probably not part of her plan!!

Gemini69 · 14/01/2018 20:51

I'm glad you're looking at all the options OP.. some fantastic advise on here Flowers

LoveProsecco · 14/01/2018 20:58

Agree with ForgivenessisDivine

Vickybroxbourne · 14/01/2018 21:06

Are you under 40? If so, and you want to invest for retirement I would recommend you look at investing the money into a stocks and shares lifetime ISA. The money is locked away until age 60, but the government adds an extra £1000 for every £4000 you add in each year. You could sell your flat and drip feed in 4k each year.
My understanding of SIPPs is that they are only advantageous if you are paying income tax, but I could be wrong.
Putting all your eggs in one basket of a single flat is riskier in my view, (many properties are still worth below their 2007 peak). Plus, you can only cash it in whole, in a one-time only deal.

RandomMess · 14/01/2018 21:09

Why doesn't she buy say a 50% share in it and then you pay the costs for doing it up.

She pays you 50% of lowest market value rent like you would with shared ownership?

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 21:24

Surely us both owning it though really meshes us together, she wants to sell it, I don't.. Vice versa..

Something happens to her or me and the other person is left in deadlock until will sorted out or stuck with a partner they would never have gone into business with.

Worse case scenario!

What are the advantages of joint ownership?

I guess I would get 20 grand. Use half for flat repair and kitty for future issues.. She does same and she gets to keep the remainder of her money.. If she lives there does she pay me rent!

If we both sell it I guess we get half again...

OP posts:
Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 21:26

Vicki just missed the Lisa unfortunately.

OP posts:
RandomMess · 14/01/2018 21:31

Look into the legal about one of you forcing the sale - the other would have first refusal and presumably at slightly lower market value.

Once the work is done it is mortgageable for either of you. Realistically perhaps you can both sell it in 3-5 years or you keep it as a rental and she moves on.

I think it's important that the refurb is done inexpensively and that a budget is agreed. White suite and tiles put can paint walls colour etc.

Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 21:51

I have been advised because it's above a shop and near a take away its highly unlikely it will be mortgage able

OP posts:
Original poster
Arghhhhhhhelpjobinterview · 14/01/2018 21:52

So if she went as joint owner, would she pay me rent?

OP posts: