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?

Op some of the stuff on here is so wrong. Why don't you ask to transfer this to Legal, there are a few lawyers on there who give sound advice.

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?

Option 1.
🤣🤣🤣🤣 for option 5.

Your BIL is a real piece of work. You repaid his loan on the house, and he is still taking rent even though you're paying the mortgage? Selfish asshole does not begin to cover it.

Option 1 is probably the safest for you.

Re 2: would BIL agree to a sale following loss of income or would he happily just take out more loans against the house and leave you and your DH in the hole so long as he's lining his own pocket?

Hate to say it, but you are going to have to figure out how to exert considerable pressure on him and quickly, or the greedy self-serving bastard is not going to budge on this.

Sorry but your decision making throughout has been really poor. Speak to a solicitor and TAKE THEIR ADVICE.

no solicitor could have advised you to take out a loan for your brother initially. Or to give tenants lower than market average rent and refuse to raise it.

Why do you keep making such poor financial decisions? Just get proper legal advice and follow it this time.

@bluedodecagon

Sorry but your decision making throughout has been really poor. Speak to a solicitor and TAKE THEIR ADVICE.

no solicitor could have advised you to take out a loan for your brother initially. Or to give tenants lower than market average rent and refuse to raise it.

Why do you keep making such poor financial decisions? Just get proper legal advice and follow it this time.

When we took out the mortgage we got a solicitor to write up that BIL would only get half of any profit after the mortgage, fees etc had been settled. BIL then refused to agree to sell because there was going to be no profit. We got a court order, but BIL fought it which has taken time.

When we started renting out the house it wasn't below market rent particularly - it was the local housing allowance rent, which is 90% of the average rent. Rents have gone up the LHA rate hasn't. Because we were fixed term for a period it didn't matter so much as our mortgage didn't go up and they've been good tenants. The rents in the local area have shot up in the last 9- 12 months. They've only been on a periodic for about 5 months. When they didn't ask to renew another year we thought they were planning to move so thought we'd put the rent up for the next one's if we got any.

We've followed all legal advice received and changed solicitor.

Why do you have to give BIL half of the rent ? Surely his share should be after expenses.
Can you hand the property over to the mortgage company ?
I'm thinking you might be better off trying to walk away

@brainhurts

Why do you have to give BIL half of the rent ? Surely his share should be after expenses. Can you hand the property over to the mortgage company ? I'm thinking you might be better off trying to walk away

We can, BUT it's entire possible that the sale by the mortgage company wouldn't cover the costs they incur plus the mortgage left. And we would be liable for the gap. Which would place our home I jeopardy. Plus it would seriously impact DHs credit rating and we may be unable to remortgage our own home.

Thanks for cleaning it up , I still don't understand why BIL is entitled to rent . Surely he only gets his share of rent after the mortgage is paid .
How quick do you realistically think a sale would take if you terminate the lease

2 or 3. Just remember you can’t increase rent more than a certain amount for current tenants. Your bill is a wanker.

How is BIL being paid the rent money?

I agree - I don't understand why he gets share of rent before mortgage paid. Is that because mortgage is in your name?

Complete nonsense. A solicitor advised you to take out a mortgage on a property that your BIL had placed an illegal loan on in order to stop your SIL from having to move out though she would have been dead soon anyway?

Sure they did.

More likely your DH (who seems pretty weak and pathetic from this telling) came up with this ridiculous idea and you went along with it.

Put up the rent if you like but it makes no difference. If the tenants leave you could easily get a set of tenants who won’t pay then what will you do? Can you afford to receive no rent for the eight months or more that it will take to actually evict someone? You are playing with fire here.

I suggest instead of seeing yourself as some sort of benevolent overlord you see yourself as what you are: one (more) poor decision away from losing everything. You are not doing your tenants a favour, they have all the power.

Also stop giving your BIL the rent. He’d have to take you to court for it. FFS, what is wrong with your husband? He’s useless.

Stop paying BIL his part of the rent , you have already said you think he can't afford his solicitor so how will he get the money from you .
Put the rent up so it covers the mortgage, it will at least give you financial security.

@bluedodecagon
You are a very nasty person.

A solicitor advised you to take out a mortgage on a property that your BIL had placed an illegal loan on

I didn't say that. I said we got a solicitor to draw up a document so we didn't have to pay BIL half the sale amount.

And he has already taken us to court to stop the sale and challenge the force of sale.

EddieLizzard the mortgage is in DHs name, therefore is DHs expense. We can't legally take DHs expenses out of BIL rent. The rent that is paid to DH and BIL (to a letting agent) is separate to any expenses. So let's say we pay to fix the boiler, we can bill BIL for half, but have to take him to court for none payment and a court order to take it out of rent owned to him.

Anyway, I've spoken with tenant today and drafted the new contract. I felt awful but they were actually really understanding. I obviously didn't go in to detail. We've agreed it'll come into effect from their April payment, so 2 month's notice and if they changed their minds and moved out before that it was obviously fine.

@brainhurts

Thanks for cleaning it up , I still don't understand why BIL is entitled to rent . Surely he only gets his share of rent after the mortgage is paid . How quick do you realistically think a sale would take if you terminate the lease

To get rid of it we'd probably take it to auction, so it'd be 4 weeks.

Re why he gets rent, read my response above. Basically it's like a business having to pay employee's salary regardless of whether it makes profit or not.

@Lineofconcepcion

Op some of the stuff on here is so wrong. Why don't you ask to transfer this to Legal, there are a few lawyers on there who give sound advice.

I'm not really asking for legal advice - I'm paying for that! I'm just venting/ asking what others would do.

I'm starting to understand. Glad you have upped the rent .
I presume now the mortgage will be covered.
It's a bit of a gamble terminating the rent , your BIL may sell as he has no income but equally he may still sit on it .

Anyway, I've spoken with tenant today and drafted the new contract. I felt awful but they were actually really understanding. I obviously didn't go in to detail.

Oh, good for you. Step by step. You sound such a kind and thoughtful person.

I’m a landlord. Are you rent collection or full management? You’d be better off financially with full management so the LA liaises with your bil re bills and expenses. Or have your dh tried and he won’t engage?

If your DH is the landlord, why is the rent paid to both BIL and DH? I'd have the rent paid to DH only and set it off against everything BIL owes you. Let him take you to court - I doubt he'll want the expense and bother.

Absolutely id up the rent
My family comes first
You're tenants arent paying the going rate why should your finances be at risk because of it
If they don't want to pay it and move out you should be able to get someone else in easily enough

What a poisoned chalice youve got there

In your shoes I would honestly offer BIL the whole house. Cut your losses, hand it over to him, walk away.

He will feel like he's won, but you know it will inevitably sink him.

Anything else will be ugly, protracted and costly. Get rid of it

1 and 3. You need to change this whole thing.

You're in a difficult position and you have already been good, in my opinion. Please don't post on MN about this. I would look to your solicitor. You do not need the affirmation of a bunch of strangers, the vast majority of whom will never be in a situation even remotely like this.

What happened to all of Sil's money? You got the mortgage so she could live there. Would her beneficiaries see you lose your home as a result of you helping her?