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?

Dont pay him, put the money he supposed to receive in an account. What can he do, take you to court, not likely. If he does you have that cash to one side, he can then explain why he thinks you should pay for everything. Put the rent up, sorry but you have to, market value only.

OP, so sorry to hear you're in this position. Would an option be to get planning permission for a new building and then market with the permission? Flatten the building so you sell a plot? Not sure how much those things cost? Alternatively, whilst nobody wants their rent to go up, you can't maintain this position and an honest conversation with your tenants about the rent increase is the only way forward.

Bloody hell. Judge Rinder?

@Xenia

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

Definitely do this.

@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.

Houses of non standard construction exist all over the country and there are no increased risks to the tenant.

Just so everyone is clear, there is no 'handing the keys back'. The ops liability does not end there. They can be pursued for any monies outstanding after the mortgage company has repossessed and sold the property, including all costs associated with it. If the sale of the property does not cover the expense, and it probably won't, they can put a charge on your other property and attempt an order for sale on that one so it's not an option.

The bil should be paid the rent net of all expenses. What you are doing is ridiculous, why would he negotiate its a win win for him.

Also there is no limit on the amount of times you can increase the rent, if it is with agreement of the tenant. You are only limited to 1 increase per year if you use a s13.

To be honest op, you don't seem to know what you're doing. You need a robust landlord and tenant solicitor or direct access barrister who can unpick it all and also deal with the application of order for sale.

1 & 3. Nothing wrong with charging market rate rent. Explain to tenants give them option, aware they may move out and you might also have to find new tenants.

Do whatever fucks over your awful BIL the most.

Building regulations absolutely do exist to keep people inside buildings safe. Where a building construction is sufficiently unusual as to be difficult to mortgage there is often (though not always) a risk of the property being unsafe to live in. Because often (though not always) things which present a financial risk to a home also present a safety risk.

I never said anything about “current” building regs because I know (having worked in the field) that there is no requirement to improve a building to meet current standards unless major renovation is being done. Only a very small proportion of buildings meet current building regs. The vast majority are still mortgageable.

I advised the OP to check insurance policies in case the non standard construction affects the payout and may leave her, and her family, liable for any injuries caused by the construction. Given the OP is confident the property is safe and properly insured that’s fine.

@Island35 I think you are getting closer but perhaps some nuance required if it would unjustly enrich the BIL unless the OP has the highest of ethical standards.

Stop giving money to BIL. Set aside the money you were giving him.

He's highly unlikely to sue you (he can't afford it). But, if he does, you have the money set aside anyway.

And definitely put the rent to a market rent. If the tenants leave you will find new ones (especially if you allow pets).

God, what a nightmare.

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.

I would explain the need to raise the rent in line with local rents to the tenants, giving them the option to stay at the raised rent - or not.

When I was renting, I would have appreciated that option, rather than having to pack up and move.

Good luck with all the rest. So stressful.

Sell it.
Nothing else makes sense.

@mumda

Sell it. Nothing else makes sense.

Have you read the thread at all 🤣 we want to sell, we've tried to sell, we are seeking legal rights to try again!

Its not unreasonable or unfair to increase rent to the market rate, the tenant has a choice they can stay or move on.

Not a legal expert, but I also think that you should not be passing half the rent to BIL, it should be half the profit after mortgage and costs are deducted. By the sounds of it his solicitor isn't going to be forthcoming in taking action against you.

@mumda

Sell it. Nothing else makes sense.

Really 🙄 ?

Put rent up to market rates, after telling BIL and talking to tenants. Offer to let them move out if they can’t afford new rent. If they move out, follow as for 3. Maintain insurance on the house until the day of closing. Owning property with siblings can be hell.

OP lots of people have asked why you continue to pay half of the rent to your BIL, but I don't think you've answered, just said that he's entitled to half, but bearing in mind that he's played dirty throughout all this, and is continuing to do so, why make his life easy, while he's making yours as difficult as possible? You've also been asked who the rent is paid to, again, no answer, how can you ask for advice if you don't answer questions? Tell him he get's his share of the rent, once the house is sold but for the time being you need it to pay the mortgage, and if he won't play ball with that, you'll hand the keys back and he'll get sweet F.A! Seems to me you've got to start playing hard ball. It's all very well to be taking legal action, but I don't think any court in the land would say that you have to pay him half the rent without first deducting costs.

How did he get the secured loan ? The house has never been in his sole possession so who signed the application form ? Is it possible he forged a signature (criminal act) if so he's guilty of fraud. Which because you and your DH are thoroughly decent people you are enabling him to profit from. I would seek legal advice and point out to the BIL that you're not going to sub him any more

@Speakuptomakeyourselfheard

OP lots of people have asked why you continue to pay half of the rent to your BIL, but I don't think you've answered, just said that he's entitled to half, but bearing in mind that he's played dirty throughout all this, and is continuing to do so, why make his life easy, while he's making yours as difficult as possible? You've also been asked who the rent is paid to, again, no answer, how can you ask for advice if you don't answer questions? Tell him he get's his share of the rent, once the house is sold but for the time being you need it to pay the mortgage, and if he won't play ball with that, you'll hand the keys back and he'll get sweet F.A! Seems to me you've got to start playing hard ball. It's all very well to be taking legal action, but I don't think any court in the land would say that you have to pay him half the rent without first deducting costs.

Indeed.

Op has been back after several people asked this, with no comment.

I almost get a sense of op being too nice or too stupid or simply wanting to play the role of the martyr when the most obvious leverage to force the BILs hand is there.

I also think the OP has either had poor legal advice, misunderstood legal advice or just ignored it in order to be nice.

Except the OP literally can not afford to be nice.

Strikes me Op and husband need to find some balls and be proactive and financially aggressive rather than be passive doormats in this. The brother bullies and the husband just rolls over.

I do wonder whethee thats been the dynamic in the relationship since childhood. The people pleaser who can't understand why people are sometimes just need challenging.

You’re making it far too complicated.

Stop paying him rent until expenses are covered.

Get the order of sale (you don’t even need solicitors for that - and you certainly don’t need to negotiate with his).

Then sell.

If it’s not going to be easy to sell with tenants in situ give them notice. If it’s likely to sell to another landlord don’t.

Yiou need to get a decent private client/probate solicitor. Surely the fact that BIL has already effectively ‘spent’ his share of the inheritance (apparently fraudulently by securing funds on a property which he didn’t actually own) needs to be set against his original entitlement via a deed of variation?

@FacebookPhotos- non standard construction is a term used to describe a property which has been built from materials other than a standard brick , this includes most houses which were built quickly after the war to combat the housing crisis and were essentially pre built in factories using concrete blocks , the houses were then erected on site using steel joists . These houses were originally only intended to last 25 years but of course most are still standing . They aren’t mortgageable because it’s considered that the houses will ultimately suffer structural damage due to degeneration of the steel/concrete mix but many are still standing with no issues over sixty years later . I live in a non standard construction property , cash purchase only and. Structural surveys show my house is still perfectly sound .
OP it sounds a nightmare for you - It’s a shame the we police won’t investigate your BIL as the loan was fraudulent, no decent loan company would have given him a loan secured on a property that was NSC and that he didn’t fully own - so just to clarify , you re mortgaged your own home to pay off HIS debt ? If so , you owe him nothing , put your tenants rent up (as much as is reasonable) and do not hand him over any rent money , what ever he still owes you Id have put as a charge on the house so he can’t get it in the sale .
Sack your solicitor and either get a better one or alternatively file your own notice to sell to the court

I say this as a tenant but if your rent is below market value and your rent doesn't cover your costs, you put the rent up towards market rent. If your tenants can't afford market rent for your area unfortunately that isn't your problem.

Is it one of those concrete cancer houses? I would put the rent up to market value & then get all rent paid to you to pay the mortgage. No way should BIL be allowed 50% of any sale value, you paid off his loan. Take out an interest only mortgage to pay the repayment one you currently have on the house & keep a record of how much you repay, BIL is only entitled to 50% - amount you paid off his loan, if you are feeling generous include 50% of the rent. Go down the legal route.

Can you stop all monies in rent to him and spend it instead on getting your solicitor to stall and string everything out for the next while? The double whammy on his pocket from no rent and an escalating bill from his solicitor could put him over a barrel where he has to sell because he won't be able to afford to continue defending his ridiculous position with solicitors with a hefty bill that he can't pay. Even if you should technically be paying that rent, it'll cost him money he doesn't have to fight it.