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?

Tbh I just can’t believe you’re renting out a property which doesn’t meet standard building regulations. Do the tenants know that?

Standard construction (using ordinary building regulations) exists to keep the occupiers of the property safe. Are you insured against the “non standard construction” causing injury to the tenants or their guests?

If I were you I’d issue an eviction notice to the tenants and apply to the court to force a sale. And check you’re properly insured.

Cant you just give it to him and fuck it all off?

Get solicitors to obtain a court order to for the BIL to agree to the sale and sell it at auction ASAP.

On your main house, do you have legal expenses insurance? If so, it would probably cover cost of pursuing BIL in court

Don't let lender repossess the property. It will affect your credit rating and you will lose control

HNRTT but the final non-numbered option of self-build with BIL seems heroically courageous given his track record.

As an aside before another suggestion - Who gets to decide what price the house will be sold and control the decision to sell, you, BIL or jointly?

If the mortgage is for more than the house is worth, why are you hanging on to it?

@FacebookPhotos before you accuse the OP of unethical behaviour and bearing in mind her family member previously occupied the property, are you sure that when the OP talks about non-standard construction, she isn't just talking about, for example, a post-war 'pre fab' that might be entirely safe and lovely for the occupier but not mortgageable because of the construction method? IME, such properties tend to be bought by cash buyers, for example commercial landlords, for whom the non-mortgageability isn't an issue provided the yield is sufficient and they have the funds.

Sorry rewind a bit - how did your brother in law manage to take a loan out on the house? Is there no fraudulent aspect to that?

I would withhold all rent from Bil until you have a legal solution. If that fails I would cut your losses and default on the mortgage so that a repossession or sale is forced and Bil gets nothing.

Get a court order to force the sale - its quite straightforward.

Can you auction house off??

[quote Zilla1]@FacebookPhotos before you accuse the OP of unethical behaviour and bearing in mind her family member previously occupied the property, are you sure that when the OP talks about non-standard construction, she isn't just talking about, for example, a post-war 'pre fab' that might be entirely safe and lovely for the occupier but not mortgageable because of the construction method? IME, such properties tend to be bought by cash buyers, for example commercial landlords, for whom the non-mortgageability isn't an issue provided the yield is sufficient and they have the funds.[/quote]
This is exactly the situation.

It's perfectly safe and perfectly legal for us to rent out.

It wouldn't meet current building regs, but any house older than about 5 years won't as they change, doesn't make them unsafe.

@londonmummy1966

Get a court order to force the sale - its quite straightforward.

It reads as straightforward, but having tried to do it, it isn't.

@Rewritethestars1

I'm a bit baffled by this actually. How your so far into this mess is crazy. I get you were trying to help sil out and its lovely but in doing so you have sunk your whole family into huge debt. Why did sil not inherit part of the house if she was live in carer. Who's sister is it? Is it bil ex? Then you paid a loan back that bil likely took out fraudulently? Maybe you should look at a change of solicitors because sounds like the legal advice you have been given is not great.

Sister in law inherited savings, which was roughly equal to half the value of the house.

We've had more than 1 solicitor.

It reads as straightforward, but having tried to do it, it isn't.

It is a straightforward process.

If you have the same legal guidance as you did when you mortgaged to pay off his debt I’d advise you to change. Order of sale is a straightforward process.

This has been asked a few times OP and is relevant. How did your BIL manage to borrow again the property is the first place?

To answer some questions:

• we don't know how BIL took out the loan. It was fraud of one form or another but the police aren't bothered. The loan company was dubious and has since folded/ rebranded itself.
• we can't just sell it/ auction it/ sell with tenants in. The value means there'd be pennies left after tax, mortgage is paid, estate agent etc and BIL will not walk away with nothing. He thinks we should wait until it goes up in value (it won't) or various other scenarios.
• we've tried to push through a sale but BIL is stopping it by continually raising appeals, bothering estate agents etc.
• we can't just walk away, we have to repay the mortgage on it. We can't just pull that out of thin air.
• currently, BIL has to agree to the sale price, which he isn't.
• if we default on the mortgage we'll ruin DHs credit rating risking us being unable to remortgage our own house when the fixed rate is up.

So he's not paying his share on the upkeep of the property? Document, and bill him.

To whom is the rent paid? Your DH who then repays your BIL or both your DH and BIL. If its your DH alone you are being far too charitable. Take out his bills from the rent you are getting directly.

I doubt that legally he can say he's owed it, if you can demonstrate that the money is going on expensives on the property. You only get profit AFTER you've paid your expenses.

If you've fully documented this, it undoubtably be harder for him to challenge - especially as he's already defaulting on his legal expenses. He would need to go legal to challenge you, and I think you can make an assumption that he won't.

If this reduces what he's getting from the rent, its less worth his while. Indeed if he's playing silly buggers with his own legal fees, you could try and call his bluff and withhold the rent completely. If he already can't pay his legal bills, how does he go legal on you?

This might give you the leverage you need to either cover all the losses you are making OR force him to finally give it up and sell the property.

It might bit of a gamble to play, but it could force his hand.

I think your strong hand here, is that he looks like he's in financial trouble too. Its his weakness, and if your DH is the sole landlord on paper or in terms of the financial arrangements, thats your strength.

@JustLyra

It reads as straightforward, but having tried to do it, it isn't.

It is a straightforward process.

If you have the same legal guidance as you did when you mortgaged to pay off his debt I’d advise you to change. Order of sale is a straightforward process.

We'll try again.

@FacebookPhotos

Tbh I just can’t believe you’re renting out a property which doesn’t meet standard building regulations. Do the tenants know that?

Standard construction (using ordinary building regulations) exists to keep the occupiers of the property safe. Are you insured against the “non standard construction” causing injury to the tenants or their guests?

If I were you I’d issue an eviction notice to the tenants and apply to the court to force a sale. And check you’re properly insured.

Very few houses meet current building regulations because they change continuously. Hardly anyone in the country would be able to afford housing if it had to be continuously updated to meet building regulations everytime they changed.

"Standard construction" doesn't exist to keep occupiers safe. It's merely what is customary and known to the financial system so they can more easily quantify their financial risk.

I suspected as such, OP, just wanted to reply so that you weren't accused unfairly of being an evil landlord jeopardising the safety of your tenants if that wasn't the case.

It sounds like you have a lot on and have tried to do your best in what sounds like challenging circumstances and unconscionable behaviour by your BIL.

Would you need BIL's agreement to sell the house or just need to give him half the proceeds after clearing the mortgage?

Good luck.

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!

Surely this is the obvious solution?

He owes this money, so of course he should forfeit his 'share' until he's paid off what he owes. There's no moral issue for you there in the slightest.

Legally, if he wanted to chance his arm anyway, to get what is not rightfully his, firstly, he would have to pay the legal charges, which it sounds like he doesn't have the funds for at all; secondly, if he did take you to court, you would be able to state your case and force into the spotlight his fraudulently-obtained loan, which forced you into your current position.

Stop gifting him any more of your money under his ruse that it's 'his share'.

As for him 'not getting any money' from the sale of the house, hence his reluctance to sell, he will very much get his share: it's just that, as his current balance is negative, his share will take it back up towards zero - but relief from debts is every bit as much 'getting your share' as those who have no debts and thus end up with a credit balance after their share.

Why is bil being paid the rent before expenses are taken out??

We own properties with others and all of them the expenses are held back Inc mortageges and profit paid out from what's left...

Id start doing this immediately and if he disagrees he can take you to court.

Hmm I'd be looking deeper into that previous loan company. Police might be interested but they must have been regulated at the time? FCA or FOS might be a course of action. Long shot perhaps though.

I'm sorry your BIL is behaving like this. You are limited with the property being non standard.

If it were me I would put the rent up and not pay BIL anything. What will he do?? Force a sale?

Also put rents up to market value. You're not a charity. The people in these forums are redic that they think landlords should go bankrupt and lose their homes rather than heaven forbid increase rents. It's redic. This is a capatalist country. You need to take care of your family first not total strangers.