Free Advice Column - 15/04/2009
15 Apr 2009
Switching homes
Q. My mother has had to go into a home permanently. We want to buy her house, sell our own, and start making improvements to her property. My brother and I both have power of attorney, and we wondered if it was possible to change the deeds over? We've had both houses valued, and our own is worth slightly more and is more saleable.
A. You will be able to use your powers of attorney (provided they are duly registered enduring or lasting powers) to accomplish this. However the price paid will have to be the open market value of the property since, if the transaction contains an element of gift, you would need approval from the Public Guardianship Office. If you are paying the full price the transaction will be fairly straightforward, but bear in mind that the sale proceeds will have to be invested by you and your brother on your mother's behalf. This will be taken into account by the local authority when they assess your mother's liability for her care home fees. Broadly, if someone in care has assets worth more than £23,000 any care fees which are not funded by the NHS will be your mother's responsibility. Discuss your plans with your solicitor.
Clean break?
Q. My partner left me four months ago, taking our six-year-old daughter with her. Our house is in joint names, and has equity of just £10,000. I have offered her £4,000 in settlement of any claim she has against the property but she won't discuss it. Will I be able to demand half the current mortgage payments from her?
A. Unless there is evidence that you and your partner's ownership of the equity was not intended to be equal she will be entitled to half the equity in the property whenever it comes to be sold. You may be able to claim half the mortgage payments from your ex-partner but it will be open to her to argue that she should be entitled to receive compensation in respect of your having had exclusive occupation. You need detailed advice from a solicitor.
Mother-in-law knew best
Q. My wife was left half the family home by her mother in her will when she died. Her father is still living in the house. If the house comes to be sold one day, will my wife be liable to pay tax on the proceeds since she doesn't live there? Would it be better to put the house into some sort of trust?
A. It's likely that your mother-in-law's will grants her husband the right to remain in the property during his lifetime. In that case your wife's share of the property is already in trust (a “life-interest” trust) and as a result she would probably not have to pay capital gains tax on any increase in its value. If on the other hand your wife has been left half the property outright then she may have to pay CGT at 18% (or the rate at the time) on any increase in the property's value since the date of her mother's death. It may be worth altering the will accordingly. In any case at least one half of the house is no longer available for payment of care home fees, for example, which could represent a huge saving in the event that your wife's father has to go into residential care.
Tenants won't pay
Q. I've had tenants in my house since the middle of January and I haven't had a penny from them. It's two lads in a five-bedroom house. My solicitor has given them two months' notice to leave but there's been no answer from them. I don't know what's happening there and I hear that furniture has been thrown out. What am I to do next?
A. I presume that your solicitor is using the accelerated repossession procedure in the County Court to evict your tenants. Despite its name, this could still take a while. In order to pursue this action there must be an appropriate tenancy agreement in force, and the tenants' deposit must be held in an approved deposit protection scheme. Evictions are carried out by the court bailiffs, who are empowered to use reasonable force. Even if you took a sizeable deposit and rent in advance it's likely that you will lose money on this. The only way to avoid this situation is to check your tenants' references carefully.
Sale bargain too snug
Q. We ordered a wood burner from a specialist company in the sales. They advised us which one to buy because we live in a semi-detached house, and told us that we would have to wait about several weeks for delivery. But when it finally arrived it didn't fit. They're saying it's not their problem and there's nothing they can do about it.
A. It's not clear exactly what advice you were given or why the wood burner doesn't fit. If the problem is a technical one which the firm should have known about you can almost certainly reject the fire as unsuitable for the purpose for which it was bought. In that case I recommend you see a solicitor if the firm won't budge. If on the other hand you simply measured up the fireplace wrongly it may be down to you to make the necessary adjustments to install the fire. If you bought a car that wouldn't fit in your garage, for instance, you could hardly blame the dealer.
Q. My mother has had to go into a home permanently. We want to buy her house, sell our own, and start making improvements to her property. My brother and I both have power of attorney, and we wondered if it was possible to change the deeds over? We've had both houses valued, and our own is worth slightly more and is more saleable.
A. You will be able to use your powers of attorney (provided they are duly registered enduring or lasting powers) to accomplish this. However the price paid will have to be the open market value of the property since, if the transaction contains an element of gift, you would need approval from the Public Guardianship Office. If you are paying the full price the transaction will be fairly straightforward, but bear in mind that the sale proceeds will have to be invested by you and your brother on your mother's behalf. This will be taken into account by the local authority when they assess your mother's liability for her care home fees. Broadly, if someone in care has assets worth more than £23,000 any care fees which are not funded by the NHS will be your mother's responsibility. Discuss your plans with your solicitor.
Clean break?
Q. My partner left me four months ago, taking our six-year-old daughter with her. Our house is in joint names, and has equity of just £10,000. I have offered her £4,000 in settlement of any claim she has against the property but she won't discuss it. Will I be able to demand half the current mortgage payments from her?
A. Unless there is evidence that you and your partner's ownership of the equity was not intended to be equal she will be entitled to half the equity in the property whenever it comes to be sold. You may be able to claim half the mortgage payments from your ex-partner but it will be open to her to argue that she should be entitled to receive compensation in respect of your having had exclusive occupation. You need detailed advice from a solicitor.
Mother-in-law knew best
Q. My wife was left half the family home by her mother in her will when she died. Her father is still living in the house. If the house comes to be sold one day, will my wife be liable to pay tax on the proceeds since she doesn't live there? Would it be better to put the house into some sort of trust?
A. It's likely that your mother-in-law's will grants her husband the right to remain in the property during his lifetime. In that case your wife's share of the property is already in trust (a “life-interest” trust) and as a result she would probably not have to pay capital gains tax on any increase in its value. If on the other hand your wife has been left half the property outright then she may have to pay CGT at 18% (or the rate at the time) on any increase in the property's value since the date of her mother's death. It may be worth altering the will accordingly. In any case at least one half of the house is no longer available for payment of care home fees, for example, which could represent a huge saving in the event that your wife's father has to go into residential care.
Tenants won't pay
Q. I've had tenants in my house since the middle of January and I haven't had a penny from them. It's two lads in a five-bedroom house. My solicitor has given them two months' notice to leave but there's been no answer from them. I don't know what's happening there and I hear that furniture has been thrown out. What am I to do next?
A. I presume that your solicitor is using the accelerated repossession procedure in the County Court to evict your tenants. Despite its name, this could still take a while. In order to pursue this action there must be an appropriate tenancy agreement in force, and the tenants' deposit must be held in an approved deposit protection scheme. Evictions are carried out by the court bailiffs, who are empowered to use reasonable force. Even if you took a sizeable deposit and rent in advance it's likely that you will lose money on this. The only way to avoid this situation is to check your tenants' references carefully.
Sale bargain too snug
Q. We ordered a wood burner from a specialist company in the sales. They advised us which one to buy because we live in a semi-detached house, and told us that we would have to wait about several weeks for delivery. But when it finally arrived it didn't fit. They're saying it's not their problem and there's nothing they can do about it.
A. It's not clear exactly what advice you were given or why the wood burner doesn't fit. If the problem is a technical one which the firm should have known about you can almost certainly reject the fire as unsuitable for the purpose for which it was bought. In that case I recommend you see a solicitor if the firm won't budge. If on the other hand you simply measured up the fireplace wrongly it may be down to you to make the necessary adjustments to install the fire. If you bought a car that wouldn't fit in your garage, for instance, you could hardly blame the dealer.
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