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?

Terrible idea. Why is he more concerned with people he's never met than with his own family. My parent did something similar, so they could feel like a good philanthropist, it didn't feel good to me and I'm quite bitter about it years later.

the fact that the family have often stated to the management company that this is there home shows that they wouldn’t be in any hurry to move out

Indeed, Lifeofsmiley, but as we also see on here, tenants are constantly reminded that it's their home while things go well but that it quickly becomes the LL's problem when it doesn't ... even a mention of LL inspections all too often causes abject horror

And some of that's fair enough up to a point, but what are these (possibly reluctant?) LLs supposed to do if things get shaky and they can't even access the rental revenue to cover their own costs?

I think it's the worse idea ever....see all the reasons given by pp.
I actually don't think its generous or kind either.....he's passing on all the responsibility and work to his descendants, which he doesn't have to to a thing or have it affect him at all!
A much better idea would be to just keep the tenants in there as long as the tenants/the family want. If the inheriting family need to sell from whatever reasons they should be free to do so.
I think its an incredibly selfish idea, especially having the GGC gaining the profit while the daughters get nothing for all that hassle!

while (not which)

It sounds like an absolutely lovely idea, and very kind of your GF to be thinking of this family, however I feel it will probably cause issues and resentment somewhere down the line with at least 1-2 family members.
From what I've read on here and seen with friends who have gotten inheritance, money ends up bringing out the worst in people, and that's when other family members are benefitting, so for complete strangers to be technically preventing your family getting their inheritance sooner (possibly by many years), it could bring on massive issues.

Why doesn't you GF perhaps have it written up that the family get 12 months from his death to find an alternative home, this way they've got plenty of notice and have the time to look around properly to find a new suitable home, rather than just make do with the first thing they can get. Surely just a year extra won't put any of your family members out too much, but could really help this family out massively at the same time.

It's a terrible idea. Your gf is so sweet to think of such a nice thing. It's complicated. Lots of responsibility for the daughters as theyll be elderly 70+ landlords sorting out maintenance. How are they going to afford maintence, a new boiler, Windows, carpets etc. What if the tenants stop paying rent? This happened to a friend of mine, a lovely family rented her house for 5years, the husband lost his job so they stopped payments. When they were eventually evicted, they had smashed the house up out of spite. My friends insurance didnt cover the malicious damage so she lost alot of money including court fees. She was so upset because she thought they were such a nice family to begin with.

He’s a lovely man.

Imagine next door came on the market for £50 less a month.

Reckon this family works say “no let’s stay here - it’s paying his SA, let’s not give him the stress of reletting”?

No.

From a descendent landlord perspective (his daughter /grandchild) what if the youngest claimed to be a sitting tenant/ never left home? Just because gf has been extremely generous does not mean they will be unreasonable.

This is a very bad idea for all the reasons stated by PP's. He's never met the tenants and if he knew them he might not like them. Family should come first.

Could he leave them a deposit plus first option to buy? Or a year rent free while they save a deposit after his death?

Otherwise, very kind, but impossible practically.

Terrible idea. Many valid reasons already mentioned but some points that haven’t come up yet:

I’d be concerned about the possibility of undue influence or coercion by the agent on your grandfather. It seems extraordinary that he would come to this bonkers plan simply on the basis of the agent reporting a casual remark by the tenants. I wouldn’t be surprised if the agent were to benefit in some way from this arrangement. I’d be very cautious about the letting agent leading a conversation to something as significant as changing a will.

The plan could be seen as a charge or encumbrance on the property which would make it virtually impossible to sell even after the tenants left. The vagueness of “leave school” etc would make any solicitor advise a potential buyer to run like hell.

If the grandfather really wants to do something, why does it have to be via the will? Could he not simply draw up a lengthy rental contract with the tenants now? Get a solicitor to advise on this and the tenancy could continue beyond the death if needs be.

But all in all, it’s a crazy idea. If your grandfather has any sort of decent solicitor, she will advise him not to touch this with a barge pole. And your grandfather needs a decent solicitor.

A mate is a conveyancing solicitor. She was forever telling me about families contesting wills and winning, because wills are not legally binding. Immediate family eg children of deceased, are most likely to be successful. So grandad could think it's al tied up but the children contest what his will says and win. What barrister in their right mind would agree to this if it came to a contest between tenants and family?

It would mean that all three children need to co-operate together in maintaining the house - what happens if due to the stress of it they fall out. They might not see any of their actual inheritance. Owning the property might affect their ability to access benefits.

There is only one great grandchild but there might be more either before he dies or between his death and the sale of the house. Maybe even the sibling of the existing great grandchild 'big sister gets a lump sum from the rent on this house but you were born a few years later so get nothing.' Setting up sibling rivalry for the future. I would actually persuade him to just gift his possessions- momentos etc to be shared with his grandchildren and great grandchild. I think uneven wills are likely to just breed resentment.

Your grandfather sounds like such a lovely man OP.

My grandparents are in a similar situation - except they are technically the tenants. The owner of 'their' house had it stipulated in his will that they could live at the property until they both passed away or decided to move. It will then pass to his children. The only difference in their situation is that my grandparents don't actually pay rent, as use of the house came with a shop that they once ran. They are incredibly grateful for his generosity, view the house as their own, and keep it immaculate, regularly paying to have the boiler serviced/electrics checked and so forth.

Absolutely bonkers with huge potential to go wrong. I suspect his solicitor would STRONGLY advise him not to do this if he goes to make his will.

Nope - a solicitor would give objective independent advice and facilitate a way for this to proceed. It's achievable though not entirely straightforward.

I think people are being a bit harsh, op says he's thinking on it, so no reason to believe he has contempt for his daughters, or there's something going on.

What sounds like is going on to me is that your grandfather grew up in a world where lots of tenancies were secure and rent was controlled etc and he thinks that was a better system. Which it was. I think if he could just put something in place in their tenancy now, e.g. a ten year tenancy, that might achieve the effect he wants. Of course the tenants may not want that.

Nope - a solicitor would give objective independent advice and facilitate a way for this to proceed. It's achievable though not entirely straightforward.

Really. As a solicitor you wouldn't warn him of the pitfalls? just facilitate a way for it to proceed? Solicitors are in a confidential advisory relationship with their clients - they aren't simply computers that you program to do a job. If a solicitor in this situation didn't painstakingly point out the potential problems that could arise in this situation, I think he/she would not be doing their duty.

Or does your "objective independent advice" just mean the same as "I really would advise you to think again about this because it is strongly problematic for these reasons"

I also think it’s a lovely idea. But I don’t see how it would be achieved. I agree what has been brought up.

Additionally as the owners, you would all have to submit tax returns annually, the administration of which would take up a lot of the rent. Unless someone is willing and able to administer them.

The property will need updating. How does your gf propose his descendants change the bathroom or kitchen? Apart from the cost and difficulty changing them when tenants are in situ (you aren’t supposed to leave them with anything not working), who would pay, organise that and how on earth would you get consensus about when it is necessary to do it how much to pay out? We are talking about circa 15k to revamp a whole house - kitchen, bathroom, carpets, decoration etc.

Then you need 5 yearly electrical safety checks, annual gas safety checks and annual PAT tests on appliances. Then there’s legionella checks, not yet compulsory, and general repairs and legislation to comply with. Have I missed something out?

This isn’t a council house and he’s kind of expecting his descendents to act like the council. But with no powers or money behind them and effectively setting up a sitting tenancy.

How does he propose his descendants pay the death duties and solicitors fees? Can you all pay this? Has he made provision for this?

I assume that there would be a clause that if the tenants were to stop paying they could be evicted. But what about rent rises? How would you all decide if and when to increase the rent? What happens if the tenants can pay but can no longer pay market rent?

As I said before, this would then be in territory of sitting tenancy. A property with a sitting tenant, who cannot be evicted and pays below market rent seriously devalues the property. The owners of properties with sitting tenants understandably let the places crumble. I’m sure your dad wouldn’t want that for them either.

What your father is proposing is offering you a poisoned chalice for the sake of tenants, who in the event may be able to find another lovely 3 bed house just around the corner for the same amount.

Dh and I own a few properties. We have never chucked out tenants to sell and never intend to do so. However, this plan of your dad’s doesn’t sound as though it could work.

I think you (he) needs to talk this through with a will writing solicitor. The only way I see it working is by setting up a trust and appointing someone, who does not have an interest in the property as one of the trustees. I’d pity that person tbh.

Realistically these people are unlikely to stay in the house until their youngest child reaches 18. I’ve had a few long term tenants. The longest anyone has stayed is 6 years.

Lastly and as previously mentioned, the property may be sold to pay for his care home fees. This is all pretty immaterial. I do understand your dad probably has lovely memories of living in this home or another with his children growing up. But what he is suggesting is to the detriment of his children in place of a family of strangers.

I'm amused by the number of posters who think his family are "entitled" to the house or an inheritance. I don't think anyone is entitled to inheritance unless you've really put your own serious time or money into something and are "entitled" to some sort of repayment.

It is not his responsibility to provide a secure home for people he has never met. If it was his family it would be different.
To leave a potential 10 year headache for his daughters to sort out is disproportionate. Presumably they will be getting on themselves and will be kept out of their inheritance.

Shitty idea. It leaves his daughters asset rich but financially poor therefore fucking them over at every twist and turn.

I like your grandad a LOT.

I hate his plan for all of the above reasons. This is an absolute disaster waiting to happen.
Pp suggested a codicil setting out his wish that family be given long notice before termination of their tenancy (6 or 12 months) or first refusal as prospective purchasers etc. But that would be unlikely to be enforceable so it is simply his wish which the executor would have a duty to carry out - where reasonable. First duty is to beneficiaries and not to allow his estate to be compromised for them.
I am not a probate lawyer.
Does he have lasting power of attorney set up ? If not sort this out. If he should be in difficulty and no longer able to deal with his finances (and separate poa for health) then this is vital so that someone can deal with the oroperty and income and make financial decisions for him while still alive.
Good luck op. What a lovely man.

Gosh, I don’t think it’s a lovely idea at all. It sounds like GF is favouring one part of his family over the other. How do we not know that great grand daughter will actually be very successful and be able to afford a house in her own. How do we not know in the post-brexit world that the house will become affordable, how do we not know GGD will move to rural Scotland and be able to afford a huge house? It sounds like a recipie that will breed resentment amongst the family after his gone.

That’s not even touching the fact that the rental family are renters and this is the risk of renting. Money will hopefully eventually come to ggd when the time is right, once her GM has passed and then you, OP has passed.

Crazy crazy idea...

I think it's a wonderful, generous and kind hearted idea but fraught with difficulties. Better to say that the tenants should be given a year's notice, but can move out before if they choose. That should allow them time to find somewhere else. After all they found your grandfather's house.

It’s a lovely idea but fraught with difficulties. The value of the house could easily be swallowed up with trust fees and the family left with nothing bar the cost and hassle of being landlords.
Best thing for you to do OP is step away saying it’s such a kind thought but too complicated for me to advise on.