renting my step-mum and dad's spare house... please help me!!

[Butterflyface]

Ok, knowing that DH, I and the kids are busting out of our flat, and that we're finding it hard to sell with all our stuff in it, my mum has managed to convince my dad that it makes sense for us to rent his small 3 bed house that he's been using for his business for the last 20 years. It is time he retired, the business hasn't been making any money, and so the house has essentially become his pottering shed. This way seems to make sense to everybody - this way, my parents get some regular income from the house, without having to sell it, we get somewhere to live that, although it's small, will be on the ground floor and so we'll have a garden and a dining room, as opposed to having one big lounge/diner, which I hate.
The problem is, is that they want us to do it up, and then when we've sold the house we're both putting money into an extension.
DH and I are concerned that if we're going to be putting money into an extension, and if we're going to be accepting it in a state that most agencies wouldn't accept (garage roof leaking, taking sinks out etc) that we really shouldn't be paying market rental prices for it. Do you think we'd BU to insist that we deduct whatever money we paid to decorate it off the rent?
Of course, not having sold the house, we're hoping that emptying the place will attract a buyer quickly, but can only think of taking a mortgage holiday for 3 months, and then renting. Are we being foolish? We're almost completely sure that my DSM would defer the rent, but obviously we'll be paying 2 lots of council tax, won't we? Arrrrghhghgh - they only said we could rent it two days ago, and it's already doing our nut in!

My honest opinion is I would steer clear. This sounds like it will get complicated very fast, and you don't want bad feeling building up on either side.

However I'm not you and you will know how your family behaves etc.

Is the house part of their property or at a different address? I think that affects the council tax, but yes I would factor that you will be paying 2 lots of CT, if your flat is unfurnished you can get a discounted rate.

I don't think it is fair to chrge you full rate if you are doing work on the property. Even strangers who are LLs often offer reduced rate in return for improving the property.

I really wouldn't be putting money into an extension unless you are going to have a legal claim on the property. Remove the fact it is your family, think of them as any other LL. Yes you will be prepared to write off a few tins of paint etc but to walk away from an investment like an extension is harder to swallow. Do you intend to buy this house from them? Or rent long term or move somewhere completley different when your flat is sold?

It all depends on how much money we're left with once we've sold the flat. It is a completely separate property from their house, so it's not like they'd be living with us, but it is just down the road! We've already said that we'll have a tenancy agreement etc, and although we would never be able to buy the property from them, we did say that we'd write in that the percentage amount we put into the extension would be what we'd walk away with if we left. Although I'm not sure how they'd pay it other than by selling the house.
It's a lovely house, but v small, so we would really need to extend it. But then, although our flat is huge, it's up 3 flights, and my mobility means I'm stuck inside. (Hence the excitement about the garden.)
Being an only child, I'm also kind of assuming that they'd be leaving me at least this property.
We have thought that if our flat doesn't sell, at least if it's empty, we can rent it out straight away, but we really don't want to be ll's!

I guess there's just rather a lot of information we have to go through together yet!

You will be able to get your flat sold, its just a waiting game, and maybe worth lowering the price a bit?

If it will improve your lifestyle with you being able to get out more, then a bit of a compromise is worth it.

Why don't you talk to your parents again and say propose paying X under market value for the house with the understanding that you will do it up, spending Y per month on repairs and decoration.

I would see how it works out, and if it is going well then assess how you want to approach the extension.

It may also be worth a discount for you in that your parents will not be paying agents fees etc.

That first thought was the kind of thing I was thinking - saying we'll pay £600 and spend £200, but I'd not thought of the agency fees! Maybe I should do some research myself!

My mum did say we need to go up there and have a look as well! Thank you, oreo!

Another possibility - how about renting a storage unit for a few months and decluttering to help a sale? It's less drastic than pressurising your Dad to do something he may well be reluctant to do. Even asking them to store some of your declutter to help you sell your flat. It sounds a big leap from your Dad agreeing to retire and then allowing you to move in at market rate rent AND help fund a future extension from the potential sale of your flat. Why on earth would you do that unless you were planning to live there long term? Or had the money to spare to help your parents out (which I guess is not the case). If you can get somewhere else nicer at the same market rate, I'll do that - sounds much less hassle! TBH, it sounds as if you can't pay both rent and mortgage - so storage rental is the answer. I don't think I would advise asking for a parental favour of rent free living - they would have offered that already if they wanted to go down that route.

I would suggest what myron has said, or rent their house for a few months instead of a storage place but use it as storage...

Once you sell your flat you know how much money you have and perhaps if you wanted to live in that house and extend it you could legally have a share in it etc with the understanding that at some time in the future they may have to sell to give you your share IYSWIM.