Please help family and rent

[limeandwater]

Lurker of ten years plus, and looking for some anonymous and honest feedback.

Approx 5 years ago sister split from husband. On the surface they lived a very nice life, but long story short her ex had mortgaged everything against his business and they lost the lot and were left with nothing.

My husband and I are fortunate enough to have a number of properties. We let her and her two kids stay in one of our houses and used words to the affect "it's yours rent free for as long as you need it."

She met a man approx two years ago who we like and is good to her and the kids and 3 months ago she asked if he could move in. We said yes - but presumed rent would follow.

To give you some non specific info the man in question earns approx 60k per year and rents out the flat he was living in for £1600pcm which I imagine would more than cover his mortgage. They live a nice life if that matters. Holidays, meals out, etc.

We are in South East and the 3 bed house she lives in would rent at approx £2800 per month. My husband thinks its cheeky that no offer of rent has been made. He doesn't want or expect market value - and in fact would probably only want about half.

I agree with him, it's a bit cheeky, but then think back to our wording 5 years ago.

My husband is a lovely man and never gets angry, but last Sunday we went out for Sunday lunch and we split the bill. I could tell tell he was annoyed and asked him what was wrong - and he stated "he lives rent free in our property, he could have got lunch."

Who is right and what do we do?

I agree with @Birch101 that you’ve been incredibly generous towards your sister.

But frankly, she’s taking the piss now. She’s able to only work three days a week because you and your DH are subsidizing her and now with her partner moving in and renting out his flat, they’ve really got money to spend because you’re enabling them.

After five years of your support, it’s time for her to take control of her life, isn’t it. I’d be honest and say that you and DH can’t continue with the current rent-free arrangement. From x date, you’ll be charging this well-below market rent for the property. Give them a couple of months to decide whether they want to stay in the property or make other arrangements.

Fair enough. But three months ago the OP should have put things in writing. It would of course make her formally a landlord.

Without saying he can but we need rent paid then they will both assume all is okay.

Was your sister not embarrassed when her boyfriend didn't pay the whole bill?

This is an unbelievable set up. One can only assume that you are extremely wealthy and the loss of this rent over the last 5 years, hasn't had any impact on you at all.

Your sister has taken this piss and clearly feels entitled to using your property as she pleases, now seemingly finding herself a like minded CF to also take the piss. Perhaps your sister believes you will give her the house!

Your husband is clearly quite saintly to have gone along with this for 5 years. No wonder he was angry over the bill-splitting.

You say it's different for family , and that your sister is your best friend so this won't get legal.

I dare say there is a few posters wincing at this comment, who have had to have VERY difficult conversations with close family members that are taking the piss, which I'm sorry to say your sister is.

This fellah probably can't believe his luck and would have laughed out loud when he realised he didn't have to pay any rent, saving thousands every month. I bet he couldn't wait to move in and cash in on his flat.

To not even stand to lunch is a true demonstration of his character, and your sister doesn't come out this looking very good either. She knows full well they are living the life or riley off the back of your generosity. The reason she is only working 3 days a week is because she doesn't have to pay rent.

Now, this may all be fine with you because ' Family' , but don't kid yourself on that they are amazing people who will be embarrassed when you point out the ridiculousness of this situation.

You initial offer was in different circumstances. She has benefited hugely from that.

Her situation has changed. She has a partner who earns money. It is entirely unreasonable for them to continue livinh rent free in your property. You have been extremely kind so far but this cannot continue. You are also risking damaging you relationship with your sister because resentment on your side will build up and there might be a big fall out at the end of it. This is perfect time to change the set up as new situation is still, well, new.

You say her partner is nice but i would have reservations about this person if he thinks it’s ok for him to profit for the set up. I’d lose some respect for him. But perhaps he is unaware your sister is living in your property rent free?

You DH is totally justified in getting annoyed over splitting the bill btw. You are saving them thousands every month, the least they could do is to pay for that meal.

Have a chat with your DH and agree on way forward and rent you want to charge, then have a chat with your sister about the fact the situation is not the same as it was 5 years ago and you are expecting the rent and draw up a legal agreement.

But the sister ASKED, she didn't assume anything. She asked if he could move in and the OP okayed it with no mention that the offer did not extend to this man, so on that basis it was a fair assumption. If the offer didn't extend to this man, and if that's so bleedin obvious, then why did OP not bring it up then? If the answer is that she's bad at talking about money with her sister, which seems to be the case, then that works both ways, and this is entirely a comms issue. Hopefully it will get addressed and all be sorted today.

Without a formal tenancy in place this could become messy. You can allow someone to live in a property rent free and paperwork free but it is not good practice. HMRC would take a double look too.
And if they dispute the arrangements then the property owner may find they have to go through legals to sort.

This is not about communication. It is about money.

Have you thought about selling the property to them especially as you don’t have need of an income from it.

@Monty35 What would HMRC be looking for if someone’s been living in a property rent-free? There’d be no taxable income that the landlord was hiding, for example.

No it’s not fault - any decent person wouldn’t expect a 2.5k monthly present indefinitely. They are spongers!

The pussyfooters are out in force today. What's wrong with the direct approach? 'I'm glad your life is so much better now and by the way, we need the house back.'

You say you're cool with subsidizing your sister to the tune of over £150k over the years.

Has it occurred to you that maybe your husband isn't so cool with it now? That may be he feels like a chump because your sister is living in one of your income producing homes for free and has moved a partner in and still hasn't offered to pay anything? They won't even buy you guys a fucking lunch. That's such a a dick move.

It sounds like your sister doesn't really appreciate this free house and has become entitled. And now you get to support the live in too.

Time for a come to Jesus with your sister.

Your poor husband.

He is paying for someone else’s cocklodger.

Cocklodger by proxy.

Time is up. They can find the £35000 a year to rent somewhere else.

Agree with this.

I think I am a bit like you OP and would have assumed an offer of rent would be forthcoming since the boyfriend moved in. I know if it was me in that position, that is what I would do. The offer to rent it indefinitely was pretty obvious to help a sibling out after the split of her marriage whilst in financial turmoil. This is now not the case and it needs to be discussed.

I agree with your husband, they should have 100% covered that bill.

Id speak to your sister and say from next month rent will now be due at X amount as she now has a partner living with her. You said she could use it rent free, not that she could move on and have a partner move in and he gets it rent free also. If she doesn't agree then Id be asking them to leave.

I don't think they would be able to afford it.

@limeandwater Your sister needs to start working more than three days a week if she wants to maintain her lifestyle, doesn’t she?!

Honestly OP, she’s making a mug of you-perhaps she wasn’t when she first split from her ex, but she is now.

As she should be. What a lovely sister and brother in law you have both been but after 5 years and moving another man in, she has made no effort to offer anything.
I would ask her plans are going forward and long term for accommodation. She is the female equivalent of the aptly named cocklodger and has taken advantage of your generous nature. Can't believe they both thought it was ok not to even offer to pay for your meal. Your husband was right to be upset

Plot twist… is it possible that your sister is already charging her partner rent, having conveniently left out the fact she lives there for free?

That would potentially explain why her partner (who lets assume for a moment is a really nice and decent man) didn’t feel the need to pay for lunch and didn’t feel awkward about splitting the bill.

Right Sis,
now that you are happy and settled, which i am thrilled about, we think it is time for you and partner to start paying some rent. We aren’t asking for market rent but you will need to start paying something; when you first moved in that was a different proposition and circumstances have changed. As you know property management is our business and livelihood and the house you live in is not generating currently.

Hi OP,
As this is your sister and you don't need the rental money particularly you could consider offering her a private mortgage to buy your house.

In a private mortgage basically your sister's payments buy the house from you paying a person rather than a bank.

I don't think there is normally any tax payable on the receipt of the payments as she would be paying you to buy your asset but if you charge interest tax would be due on that. Not sure how the property being a business might affect that.

Capital gains is due when you dispose of a property as I'm sure you know. It is due on the rise in the value of the property when you bought it to when you sell it even if you sell it under value or gave it away.

You would need a legal agreement and the property after being put in your sister's name would have a first charge registered against it (like a bank does when there is zero mortgage) to protect your money.

As you are in an awkward situation where you want to help your sister but feel like it is beginning to take the piss - so worth thinking outside the box.

If the house was worth 500k and you charged £1500 a month (no interest) it would take around 28 years for your sister to pay for the house in full.

You don’t need to sell it for ‘best’ market value, just what they can afford. You’ll not be losing money as currently you own a property that you’re receiving nothing for.

This, he's now making a saving by living in your investment rent free!!!!!! Speak up.

Just talk to her about it. Say that you think if her partner has moved in and he’s getting rent on his own place it’s fair that rent starts being paid on their current house. Remind her that you obviously bought the house she’s in to generate an income (maybe mention uni fees) and whilst you’ve been happy to help her, it hasn’t been doing this and obviously him moving in and keeping his own income has changed things. Obviously if she’d rather move out with him that’s fine too.

The new partner does potentially sound like a CF though so don’t be surprised if she ends up back with you!