WWYD? We're landlords

[Woahthehorsey]

To stop the derailing of another thread, I thought I would post separately.

DH and his brother inherited a house a few years ago. The plan was to sell it, split the funds and go separate ways. SIL was living in the house (she had been relatives carer, had inherited savings from relative and planned to buy so was staying whilst she bought).

BIL dragged his feet during the sale until it turned out that he'd got a secured loan on the property which he was now defaulting on and the house was going to be repossessed. The sale couldn't go through until the loan was repaid - because it wasn't a mortgage, it couldn't be repaid following the sale, and had to be repaid prior.

During this time SIL was diagnosed with cancer, which was terminal and she was unable to buy her house. To prevent DSIL needing to move out on her death bed, DH and I secured a mortgage and repaid BILs loan. BIL retained 50% ownership due to the legalities. It was a residential mortgage with permission to let because a family member was living in it. We were really really lucky to get the mortgage as the house is "non-standard construction".

DSIL died and we prepared to sell the house. Because the house is no standard, it's virtually unmortgagable (not completely so, but so much so it's really difficult) so is worth about half a brick built house it. Because of this, BIL realised he wouldn't get any money from the sale, as it wouldn't fully repay the mortgage so has refused to allow the sale. We're currently seeking legal advice, covid delayed it.

To repay the mortgage we got tenants in. BIL has legal rights to some of the rent, which he takes. The rent doesn't cover the mortgage and we also pay tax on it. We lose about £200 per month, which has been manageable so far.

Due to the mortgage situation and the construction we can't remortgage and the initial rate has expired and we are on a variable rate. This has now increased due to inflation/ all that shit and we're now losing between £300-400 per month. This is unsustainable. It's putting us financially in a really difficult place. We have a good income but high housing costs plus 2 kids in childcare. Much more and we're going to start getting in debt.

On the other thread I've been called some awful names for considering putting the rent up, but I don't see another option. Currently the rent is low for the area and rents generally have recently gone up in the area. We've not put the rent up in the 2.5years they've been there.

Options as we see it:

1. put rent up more inline with local rents. Tenant keeps tenancy, we don't go further in to debt. Continue the legal route with BIL.
2. evict tenants, pay full mortgage ourselves for a bit and hope loss of income encourages DBIL to sell.
3. increase mortgage on our house, buy BIL out at half current value, evict tenant, sell ASAP. We've tried to do this before but couldn't raise enough, we've had payrises since though.
4. default on mortgage, let property be repossessed, let bank kick tenants out.
5. (Poster on other threads preferred option) continue to lose money on the house but keep the rent low, risk getting in to very very significant debt, risk our own house/ security of our children.

Final option is evict tenants, get self build mortgage, raze property, build new house, sell. BIL wants to do this but we can't afford it and BIL is unable to get a mortgage. So it's a none starter.

So which option would you do?

Zero legal experience here and haven't read the full thread, could you move into the property and rent your own out? Emd the tenancy and sit tight until you finish the legal route? ideally BIL would accept half still getting the rent he is getting or failing that do it anyway and force him to stump up for legal costs to evict you?

Wtf has BIL retained 50% ownership when his illegal actions got you in this mess??

He should not be benefiting from any of the rent, and he should be shouldering all the worry about what to do next. What a stupid fuckwit he is.

I don't think you can just raise the rent, OP. It's a bit of a mindfield but not as easy as it sounds. The easiest thing is to evict and then raise the rent.

I would personally evict and then force BIL into a decision about selling. Who is the legal landlord?

@RealBecca

Zero legal experience here and haven't read the full thread, could you move into the property and rent your own out? Emd the tenancy and sit tight until you finish the legal route? ideally BIL would accept half still getting the rent he is getting or failing that do it anyway and force him to stump up for legal costs to evict you?

No, property is in a different county - would mean new job, new school/ nursery for the kids. Plus our house isn't currently rentable - only partly rewired, kitchen refit not completed etc. And we don't have the money to get it up to standard. I don't think rent would cover the mortgage either.

I wouldn’t default and would definitely put the rent up to as high as the market allows, it might be shit and MN always takes the side of the tenants but you have to put your family first, you’re not a housing association.

Have you considered demolishing and selling with planning permission for a new build? Obviously this depends very much on location and the local market but could that be another option?

@whiteworldgettingwhiter

Wtf has BIL retained 50% ownership when his illegal actions got you in this mess??

He should not be benefiting from any of the rent, and he should be shouldering all the worry about what to do next. What a stupid fuckwit he is.

Unfortunately it's a civil matter. We just want him to agree to a sale.

So you re-mortgaged to pay of BL loan? Surely then the rent should be used to cover the mortgage then you should take anything after that. Is his plan to take half after the sale or would he pay back what you have paid for him? How significant was the loan?

Option 1 for me. You are not a charity.

@NoPrivateSpy

I don't think you can just raise the rent, OP. It's a bit of a mindfield but not as easy as it sounds. The easiest thing is to evict and then raise the rent.

I would personally evict and then force BIL into a decision about selling. Who is the legal landlord?

They're on a statutory periodic, so we can raise the rent with notice given as long as it's in line with local rents and not more than once a year.

DH is the legal landlord.

You need legal advice not advice from a parenting forum

@WhoppingBigBackside

You need legal advice not advice from a parenting forum

As said in the OP, we're pursuing BIL through legal channels.

I'm asked Ng what others would do in this situation. The options listed are the legal routes we can take.

Is there an option to rent your existing house, and move into the inherited house?

Don’t pay rent to BIL - call it reimbursing you for the loan payments that you made for him. You may be able to get him to sell when he isn’t seeing any income from the property and at the same time, renting your house out means you have another income stream.

The numbers or location may mean that doesn’t work but it is worth looking into.

Alternatively, put the rent up and contact a lawyer so you can force a sale.

How did BIL secure a loan against the property? How is that possible unless the loan is also joint?

Hmm, sorry, I see that I missed some posts and that was already suggested,

Options as we see it:

1. put rent up more inline with local rents. Tenant keeps tenancy, we don't go further in to debt. Continue the legal route with BIL.
2. evict tenants, pay full mortgage ourselves for a bit and hope loss of income encourages DBIL to sell.
3. increase mortgage on our house, buy BIL out at half current value, evict tenant, sell ASAP. We've tried to do this before but couldn't raise enough, we've had payrises since though.
4. default on mortgage, let property be repossessed, let bank kick tenants out.
5. (Poster on other threads preferred option) continue to lose money on the house but keep the rent low, risk getting in to very very significant debt, risk our own house/ security of our children.

Final option is evict tenants, get self build mortgage, raze property, build new house, sell. BIL wants to do this but we can't afford it and BIL is unable to get a mortgage. So it's a none starter.

1 or 4. Definitely not 2 or 5. Maybe 3 but only if BIL agrees to a sensible value.

Think carefully about legal action against BIL - what do you actually want as a result? If you somehow forced him to give you his half of the house, does that solve your problem or would it still be making a loss after the mortgage?

I am frankly mind-boggled that he is taking half the rent so making a profit but you are paying the mortgage so making a loss?!? I know you said it is in a different country so the law will be different, but even so, how on earth did that happen??

With someone like that, it may be best to just cut your losses and walk away - let it be re-possessed. If it is in a different country, does that have any bearing on how it will affect DH credit rating? Are you even bothered about his credit rating if you are not intending to take out another mortgage or any more loans in the future?

Why is BIL getting more than 50% of the (net) rent? Because that's what's happening if he's not paying any of the costs. Can the rent be held so that costs are paid prior to distribution?

Go to court for an order for sale.

Put the rent up as much as you can, but make sure it’s done properly. You need to give them at least one months notice of the increase if it’s a rolling TA.

You have to put yourself first not your tenants and most people would do the same.

DH is the legal landlord.

If DH is the landlord why is he giving half the rent to BIL?
Are the tenants paying DH? If so, can he not just refuse to hand over BIL share? Or are the tenants actually paying two separate amounts to DH and BIL?
This is all so crazy.

Would the tenants be interested in buying?

@Woahthehorsey, fair enough but none of the suggested solutions are ideal.
On the other thread I've been called some awful names for considering putting the rent up, but I don't see another option.
This is because people will have opinions based on their own circumstances.

I'd go for 1. Put the rent up.
I'd definitely not go for 5.

Another option would be to sell the house through an auction.

I'd be calling BIL awful names

I don't think legally you are allowed to put the rent up by more than 10% (I might be wrong).

I would not be giving BIL any of the rent until the loan was paid off - I have no idea why you are giving him half the rent?
Let him take you to court!
If he hassles the renters that is illegal (renters have much more legal protection than landlords).

Or I would be hiring a hitman

Or maybe an arsonist

Take bil to small claims court?

Concentrating only on the practicalities of your situation, is t possible for you to:

1. Place a legal charge on the house in your favour equal to the amount of BIL’s loan you settled.

1. Get an interest only buy to let mortgage (using a mortgage broker) that pays off your current mortgage

1. Raise the rent to a level that covers your mortgage with some surplus allowing you to start decreasing the mortgage.

1. Sell the house

Best wishes OP.

Withold his "rent" until you get a legal resolution?

Just submit an order of sale to the court, you can do it yourself. Complete form N208 and submit it to the court.