Rented house and inheritance (Is GF BU?)

[OatAndRaisinCookie]

This is about my grandfather. And he’s been asking if we think this is fair. GF is 85 if it helps.

GF owns his own home, mortgage free. Worth around £180k (3 beds with garage, decent sized garden and options to extend). Currently it’s rented out to a family and the money after money to the management company is used to pay for my GFs sheltered accommodation. He’s compus mentis, but has mobility issues so likes the security of the SA.

Technically on his death the house will be sold with proceeds split between his daughters. His worry is the family living in his house. They’ve been living there around 5 years now and have 2 children both under 10. The couple are good tenants, pay the rent and keep the house in order. Their children attend the local primary school. They have often stated to the management company that this is their home and they want to stay in it long term.

GF wants to put a clause in his will so that the family can stay living there until the youngest child leaves home with the proceeds of the rent being put into a savings account to be given to his great grandchild when the house sells. He knows they will never be able to buy.

But he doesn’t know whether this is fair? And also whether the family might be a bit offended that he made provisions for him in his will when he’s never met them. He knows having seen all of his children struggling with rented places when their children were young that having a secure home for your children is very important.

Is HIBU? Or not?

Somebody will need to be the landlord surely? With all the legal obligations that come with that (even if it is managed by an agent). Is this a business that any of the heirs want to be responsible for long term?

I think it's a lovely idea but it could cause problems. As others have said, what if the house needs major repair, what if there's a problem with the tenants or the management agents? That responsibility is then passed on to his children.

The practicalities and possible scenarios need to be very carefully worked out if this were to go ahead.

If we have to have private landlords then I wish there were more like your grandfather though!

He would definitely need to specify an age of youngest child whether 18 or 21 or whatever. It’s all very well saying the two families will come to an agreement when it happens, but shit happens and it could end up turning nasty. I’d probably also want a clause to cover what happens if they can’t pay the rent. And obviously that if they want to move out they can do so, you’re locked in but they’re not.

It’s not what I would do. I would be worried about not being able to sell the house in a dire situation because of the tenants being in it and entitled to stay put. Does your grandfather or his family have vast savings to cover potential care needs in his old age? I would expect that the council would require a rental property to be sold to fund care before they stepped in.

And I’m speaking as a tennant who plans to stay long term in my current property. It’s a wonderful kind thing that your gf wants to do, I’m just not convinced it’s terribly sensible from a financial or worst case scenario POV

Who would own the house when he dies? If they owned a property already there could be all kinds of tax issues. What he's proposing is quite complicated and could have consequences so legal advice is the only sensible option if he insists. With a bit of luck all round he will continue to have a happy life for some years to come.

I think it’s ridiculous. He’s putting the needs of the tenants who can find another house over his own family.

Aside from the issue that the youngest may never leave home & the maintence of the property. Who’s paying that if it is going into a trust?
What happens if his daughters don’t want to manage a property that doesn’t benefit them for the next X amount of years.
Do his children need the money?

He's just generally thinking at the moment, and is open to discussion about it. I know he hasn't yet changed his will.

Not sure who'd be the landlord/lady we'd need to think about that I suppose.

I agree that there are too many if's but's and maybe's around renting the house when he dies, but it is extremely thoughtful and kind of him to think of it. What is the area like where the house is? Is it a good selling market - do houses often go for over the asking price. I wonder if he could potentially ask you his children to offer the couple first refusal to buy the property at a price they would be happy to sell for?

I think it sounds like a lovely thing to do in theory, but in practice I would wonder if he may potentially be doing somewhat of an unkindness to his family. What if one of them becomes ill or incapacitated and needs the money desperately? Are all his Grandchildren and children in homes of their own now? If not I think it would be better to think about setting them up because otherwise they might be in a rental moving every six months while this family of strangers sit pretty.

What about legally speaking too? What if the youngest never leaves home? What if their circumstances change? Say if the parents split and an unpleasant new partner moved in and caused problems? What if they decided they didn’t have to be quite such good tenants if they had a guarantee and started to be a nuisance? Would they be stuck with the tenants? What if they have another child in ten years so another decade is added on?

He’d also need to make sure some of the rent was set aside to maintain the property, not just give it all to the GGC. Otherwise his daughters would be stuck with a property for years and years which cost them loads but gave no value until some date in the distant future. If the property market crashed, for example, his daughters might spend more maintaining the house than they make selling it so could be left seriously out of pocket. I think it would be more realistic to split the rent between the daughters given that they will have the hassle of being the landlords, maybe one of them can pass her share to the GGC?

If I was in that situation I would talk to my daughters, express that wish and perhaps add it as a non-legally binding memorandum to the will. I think that creating a legally binding condition could potentially create extreme difficulties for his daughters in the future and he should not prioritise this families welfare above theirs.

Absolutely not reasonable or fair . Your mother and aunt inherit a house that they have to maintain for an unspecified period of time and can neither live in it or sell it, and they don't even have access to the income from the rent with which to do it. He should put his own family first.

I don't think he can do more than tell his daughters he would like them to continue renting it to this family. Once he is dead it is no longer his house and it's up to his beneficiaries to decide what to do with it. I would be suspicious that by telling the management company it is their home the tenants are hoping he will change his will (before anyone else says so I know I am a horrible suspicious person).

If there's nothing in the clause to say what age the youngest child must be when they need to leave the property they could be there forever! It's not fair to drag your mum into sorting that out.

In terms of housing there isn't many houses to rent in the area, but houses often sell for their asking price or just below.

As far as I know none of his daughters desperately need money but of course their financial situations could change. They're all in their late 50s - early 60s.

The issue would be the AST would need to be changed when your grandfather dies. A dead person can't be named as a landlord.

Also I am not sure how it would work serving notice to them. And if your gf needs to sell the property to fund his care at any point he might need to sell the property.

He could write a codicil is it? Stating that he wishes for the family to stay as long as is feasible but I think that is it.

Really silly idea, sorry
The family are responsible for their own life. He doesn't even know them and he's saddling his descendants with the responsibility to let to them for at least 12 more years.
What if the tenants stop paying rent? A court case to evict them will be potentially really complicated and expensive if he does this!

Perhaps the tenants could be offered first refusal on the house, with a 10% discount as there will be no estate agent fees and they have maintained the property etc.

I think it’s a great idea, but to save the potential complications could he sell the house with the tenants in situ while alive and leave the proceeds to his family?

Its a disaster waiting to happen. So many things will wrong.
What if they have more children, what if youngest never leaves house, what abut grandchildren living there, divorce, separation, rent rises?, major repairs, tenants refuse to ever leave, house price crash, increase mortgage rates / rent doesn't cover mortgage, family lives there for 30 years and claim ownership, neighbour disputes, airbnb, sub letting, new kitchens, new carpets, new windows, new everything etc, daughters need money and decide to dispute will, bad feelings destroy family relationships, lawyers/property manager will milk the fees as there will be no living owner and a nice pot of rental income to swim in, and a million other things you just can't imagine will happen. A lawyers dream cash cow.

When GF dies give the family a years notice.

All sounds very nice but an absolute disaster waiting to happen. What if the family have more kids? At the very least this creates an obligation for the gf family to become landlords with all the responsibility this creates, maintaining the property, covering the letting agents fees, etc. What about any future taxes on owning second properties, if the family move house they’ll probably have to pay additional stamp duty as owners of two properties, more taxes might come into play in time.they’ll need to file tax returns, what if they stopped paying rent. What rent increases could be put in place. The youngest child could live there forever - any agreement should have a long stop date, I’d say when (current) youngest child turned 16.

There might also be implications if any of the owners family needed to claim means testedbenfits.

There’s many reasons home owners have to move, when the family moved into a property owned by an old person it must have been fairly clear they were unlikely to be able to stay for 20 years.

Presumably the family could leave at any time? What if they divorce/lose their jobs and can’t pay rent.

Legal advice needs to be sought

No it’s bananas.

They haven’t been there that long.

Sitting tenants are a nightmare.

^ this

I think it's a lovely but very naive thought, honestly, in many years of experience as a landlord I'd advise against it.

Many good tenants can turn to bad tenants very, very quickly. I've seen it, and I'm always surprised. I think adding a clause like that (even if you could) is a nightmare waiting to happen.

Imagine the tenants are unable to pay the rent for a host of reasons, but still think they can legally stay because of the clause? It would make it incredibly complicated and costly to evict them.

I think in this case, those that are to inherit the house could reassure your GF that they won't sell it as long as the existing tenants still wish to rent it. Give him peace of mind.

Also, when you rent you know it's not as secure as owning. That's part and parcel of renting, sadly.

I think that's a lovely idea - he should speak and pay for a solicitor to fine tune the details and ensure it works / can't be challenged

It's a lovely concept but one fraught with potential complications.

The house will need maintaining and managing. Who in the family will do that and do they not deserve recompense for doing so?

The child leaving home - far too vague.

The family renting are good tenants - so far. What happens if they divorce for example and a new partner moves in whose not quite so house proud?

Your GP is thinking very kindly, but the gift he's giving to a family he has never met is also going to be a burden on his own family. Does he want them to inherit that?

Personally I'd strongly advise against this. However if he's insisting, then he needs robust legal advice, which may involve changing the terms of the tenancy.

If he wants to be kind then I'd suggest that he writes in his will a bequest to the family in question that would fund moving costs and a rental deposit on a new home (and potentially a longer notice period to find somewhere) - something that's a one off and not a long term burden on his family for the next 10 years or so.

3 words: Care home fees

He is assuming he will not have to sell his property to look after himself.

It's bonkers. Don't do it.

He needs legal advice on this one. It is unusual - and could cause all sorts of headaches for this inheriting the house. I agree that his stipulation about youngest child leaving home is too vague, and could be taken advantage off. Perhaps five years after his death to allow children to complete primary school.

He also needs to consider how rent increases will be applied during this period.

A good solicitor will talk through the pros and cons with him.