Does a rent-free arrangement make her a tenant?

Reply to the comment left by Kizzie at 22/01/2025 - 14:04
The arrangement seems pretty clear to me. The council would have no chance proving they should be entitled to 'her' home when she doesn't actually own one.

Thinking about it, I would charge your father’s friend minimum amount as rent as evidence you are the registered proprietor of the property in your own Will in the event you predecease or the occupant leaves.

This may also mean compliance with landlord legislation.

Better that then the hassle if the property is regarded as a gift to the occupant.

A visit to a tax specialist?

Will states rent free for life. Agreement signed by us both says rent free for life. There are also terms in there to cover such events of her going into care. I have also placed property alerts with the land registry in case her family try to sell it (I do that on all my properties) Property inspection today reveals an immaculate abode that has recently had its boiler serviced. Already seen a tax specialist, a financial advisor ,an estate planner and a solicitor.
No one can anyone answer the question of Is it subject to the housing act or not?

The Will is the legal instrument here, along with the Deed ov Variation of the Will, nothing else, and she is in essence a remainder man (life tenant). The property passes to you on her death or being moved into permanent care. Social Services cannot take an interest in the property as she does not own it. In the interim the property is owned by the Trustees of the Will and on either of those 2 events the property will pass to you. She is responsible for all repairs and maintenance and has actually signed a contract to that effect. You don't have to do anything other than sit back. Should you die before her then the property will eventually pass to those named in your own Will. It does not come under normal landlord/tenant regulations.

Housing act 2004 remainderman

“If unsure about their responsibilities a remainderman should seek legal advice to understand their obligations under Housing Act”

Hi Paul,
My dad looked into this when making his will - he wanted for, whoever passed first (him or my mum), the family home would be transferred to myself and my sister with the surviving spouse living rent free. This was advised against by his solicitor as, in the unlikely event either my sister or I went bankrupt the house would be seized and the surviving spouse would be homeless.
You are not a landlord in the normal sense. We did not look into this further.
However, I'm not sure if you're in Scotland or otherwise. If you own your own home (separate to the one your dad's partner lives in) I believe here in Scotland you may need to pay second home property taxes (LBTT) as you effectively own 2 properties. Also, when the property becomes vacant you will then potentially be liable for double the council tax payments for this property (as it's not your only or main residence) until it is sold or otherwise - most council areas in Scotland now charge this.

To all intents and purposes she is an owner/occupier for her life time as she was left a life interest in the property and generally all that goes with that. The terms are usually that she maintains the property.

@Heather your solicitor is correct, there is no need to transfer the house on first death and it would be unwise. Simply ask for the surviving spouse to have a life interest. This prevents them remarrying and leaving it to someone else

If the house is sold during her lifetime there would be no CG tax to pay on the proceeds as it is her main residence.

To answer the comment about it not being the only such arrangement, of course not, most wills are done like this for couples. The only difference to the norm might be that you purchased the property, usually it would be the marital home, but it makes no difference

All those of you who say this might be a tenancy and to do this or that, it is absolutely not and nor is it a second home. For the life time of the occupant it belongs entirely to her, and nothing else needs to be done. I am sure if she needs help then you will offer it. If maintenance is an issue then that is another matter as she has an obligation there but you say not. With regard to possible care costs, that is tricky as the home was purchased for her. If she had been in residence before your father's death then her half would be taken into account but your father's half not. You really need professional advice on that. My surmise would be that it could used for her care as it was bought for that purpose but I don't know.

Paul if you look at my reply, youll see I was not questioning the validity of the agreement, but pointing out how it might become subject to the housing act as you were asking.