Social housing and inheriting a share of a house

[howdoesitworkthen]

I'm living in a housing association home and have an elderly mother.
She will leave the house about 500k to me and my sister.
My sister already owns a house and suggested we rent out our parents house as a retirement income.
I'm not sure if we could buy a home each if we sold and split.
How does this work if you have a housing association assured tenancy and inherit part of a property.

Lifetime tenancy right to acquire an HA property will get you max £16k off the asking price. If you got £484000 sat around in your back pocket to buy this place, you're laughing. Do remember to keep four or so grand back for legal fees - always more costly when buying this way.

If when the time comes and your mum has t succumbed to the sort of infirmity that is way beyond a family member looking after her (you). Such as aggressive dementia alongside the need for full time care (incontinence, immobility etc) - and the house is not needed for care fees.. then the only option is to sell and divide the value.

If your sister wants to be a landlord then she can buy something with her share and you can buy a family home with a good deposit and a very small mortgage.

I think you might be a but optimistic about how much money you would get for rent.

first of all there is inheritance tax. I know you say the house is worth £500,000 but no doubt your mother has other assets like cash in the bank or a pension. So the estate will have to pay 40% tax on some of it.

Then you and your sister will have to get the property up to legal standards for renting, perhaps put in a new kitchen and bathroom, redecorate, pay for landlords insurance and letting agency fees, which are about 12-15% of rent.

Tenants who are renting a property worth £500,000 will have high standards.

If you own the house 50:50 you will get the rent the same way and pay income tax on it. You need to save sone of the rental income for repairs and maintenance and any void periods or to cover rent arrears.

If either you or your sister have a job then the rental income might push you up into another tax bracket.

You and your sister will have to agree on everything that needs done to the house. As will your children and your neices / nephews / whoever inherits your share / your ex if you get divorced.

If you decide to sell it , you will need to pay capital gains tax on any increase in value .

TBH that’s a lot of hassle for everyone, potential to fall out . I would advise to sell it and buy your own place. there’s lots of tax breaks for owners that you wont get as a landlord.

I have a secure council tenancy, and I have inherited property which I now rent out. The council are aware and it hasn't affected my tenancy. The only time it would have affected it is if I'd inherited it before being given the tenancy. But as long as I'm occupying my council house, and not breaking any of the tenancy rules, the tenancy is mine for life.

Your HA might have different rules though I'd, so I'd get your tenancy agreement and take it to a property solicitor with knowledge of social housing. Or a CAB may be able to help.

Assuming that you and your sister do inherit an equal share of the house, I think it would be very risky to put the whole of the house in your sister's name. What happens if you don't have any tenants for a while and there is no rental income? Who will pay if expensive repairs are needed? If you have a disagreement, you will not have any rights to the property.

Under no circumstances should you sign it over to your sister. This is eventually your children's inheritance. Your sister is already trying to deny you the right to buy your own home. Depending on where you live, you could probably buy a house outright.

If one is going to inherit cash and a share of a property. It seems wild that one would still benefit from low cost / social housing?

You have right to aquire though it's the same thing just a lower discount.

Can someone explain to me how inheriting a HA House works, the idea that you should be able to rent it out as a retirement income just feels utterly wrong to me?

Is it the case that you can inherit the tenancy if you’re living there without another property when the tenant dies? Or did your mum buy it? I’m not sure I understand

Absolutely 100% do not do this. Even if you love and trust your sister do not do this. It also has tax implications for her. You are far better off selling the property at the moment (I am a landlord).

A HA would have no idea you had the house? When people have assured tenancies they are for life, you could inherit 100 houses and no checks would ever be made. Some HA have thousands of tenants, they don't and can't possibly check the finance status/ assets of each one. Keep your assured tenancy they are ike gold dust.

Well then your sister will have to let it be sold then, she has no more rights to what happens to it than you do. You don't have to do what she wants. A court would force the sale if it ever came to it.

This. 3 decades working in housing have taught me that people trying to game the system invariably end up worse off than if they hadn't. What happens if the HA TA does specify you can't inherit property, you try to defraud them by signing over the property, they find out, you lose your HA place and your sister dies intestate so the house goes to her children?

Believe me, things happen.

My suggestion, dig out your TA, spend some time with a lawyer, work out what the best way to preserve housing for you is. Whether that's staying where you are or buying. And don't become a LL just because your sister thinks it's a good idea. It;s actually a job, a professional job that people can mess up really badly if they don't know what they're doing.

I think you've misread.

The op lives in a HA house.

The op's parent owns their own house, which the op will jointly inherit with her sister.

I have received more than one email and/or phone call from a neighbour, relative, ex or others telling me so-and-so has inherited, won the lottery, is defrauding the system.

Sometimes it's a burning sense of justice, sometimes it's revenge, sometimes it's churlish. Sometimes it's really really nasty.

I'd always recommend people stay within the rules in housing. The more you veer away, the less the system protects you. LLs as well as tenants.

Could set the property up as a Ltd. With you and you sister as directors. That way the property is owned by the company and not yourself?

Got it thank you! A bit early in the morning for me.

OP tbh I don’t think I could ever advocate going into this kind of arrangement with a sibling. At any point in time you or she could have a need for the money in the house, but be unable to access it. How would you pay for costs to repairs etc if anything went wrong? There are other ways to invest the money which can provide a more straightforward return, I think you’ll regret this as you’ll both feel tied to an obligation that you would never otherwise have bought into together.

If you go on the deeds at any point after your mum dies you will lose the right as a FTB should you want to buy in the future

you would be far better off selling the house and pocketing the cash

being a landlord with your sister is a recipe for nightmare and falling out with her

if you put it in her name then she is the sole owner and you have given her 250k

seeing as people fall out over families not paying back £100 back - 250k is something a lot of people would easily fall out over 😂

you could possibly get your mum to write in the will that the house is to be sold and the money to be split

If your sister wants to keep the house
you get it valued and she can remortgage it to buy you out if she doesn’t then sell

if you go on to any benefits like UC the fact that you own half a house will make a main difficult for you if not impossible to claim any housing element of UC and possibly UC itself

OP I'd do the house up (if it needs it) and sell. Far better you have your own asset for your kids to inherit.

It becomes complicated as an inheritance asset from your kid's perspective if you keep the house and rent it.

Sounds like neither of you can really afford to keep the house. How will you maintain it and pay bills in void periods? Owning it would have an impact on stamp duty and mortgage if you moved in future. Sell it and use the money to your families's benefit. If you are in sh you may need to-consider if owning another property invalidates the terms of the contract. You cannot transfer it into your sister's name out of convenience unless you gift or sell her your share.

What? You've not heard of people not being able to afford to buy a house before?

Not very ethical if you retain your (subsidised) social housing. If you have a residential property you really shouldn’t take scarce social housing from someone who really needs it.

Do you still need the HA tenancy if you inherit the house? I don’t understand why you wouldn’t use the money to release the HA property to someone who hasn’t inherited a property? I understand the maths might not add up with inheritance tax/possible care costs, but if you are at the point of trying to “hide” the inheritance by putting it in your sister’s name (don’t) then it feels quite unethical tbh.

I do worry that my sister will make a lot of the decisions if I don't get clued up about all this, we don't live near each other and there's a big age gap almost a generation, she has a lot more money so I think she thinks she knows best being the academic one so I thought I'd get some opinions.
I personally think the best idea would be for her to sell her house and buy me out, she has said in the past she'd love to live in mums home and it die need any work and is only 100k or so more than hers so she'd be able to with her half.
She's very persuasive and my husband is against letting it out as it could be our opportunity to own a home.
I think that is probably what we'll do maybe I feel a bit pressured by her big idea.

It doesn't need any work not it die.