Guaranteed rent | With a partner the same age as my children, who could inherit my house?
House rules: can an age difference of a generation – or marriage – affect who the family home is passed on to? Photograph: Alamy
Q Following my divorce, I have been living with a partner, who is just over 20 years younger than me. I’ve bought a house, which is in my name. I paid cash and there is no mortgage on it. My partner was only in a position to contribute a small amount (2% to 3%) towards buying the house, but contributes significantly towards its upkeep and improvements.
Because of our age difference, it’s highly probable that she will outlive me, so the question I would like to see explored is what is the best way to deal with issues regarding inheriting the house?
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My children are of a comparable age to my partner. Is it appropriate to write a will that divides the house between my partner, my children and my grandchildren in equal thirds? I would like to ensure that my partner is free to continue living in the house for at least five to 10 years after my death if she chooses to do so.
There are two situations I wish to avoid. One would be that my children could claim absolute ownership of the house while my partner gets nothing, which might be possible if we do not marry. The other situation is that my partner could claim 100% ownership of the house, my children and grandchildren might receive nothing, and eventually her children would benefit from the value of my house when she died. This seems a possible scenario if we were married.
What sort of arrangements have other people made with regard to inheriting property when there is an age difference of roughly a generation in a new relationship? Does it make any difference if we marry or remain co-habiting? AT
A I suggest you consult a solicitor and get a will drawn up as a matter of some urgency. Even if you already have a will, it is unlikely to reflect your current wishes regarding who gets what.
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If you don’t already have a will and were to be run over by a bus, one of the two situations you wish to avoid could be realised.
Without a will, on your death your current partner would receive nothing because you are not married to her. Assuming that your estate would be worth more than £250,000, the intestacy rules – which come into play when someone dies without leaving a will – say that your children would get everything, divided equally between them.guaranteed rent
The situation would be different if you made your current partner your wife. But even then, if you died without a will, the rules say that your wife would get only all your personal property and belongings, the first £250,000 of your estate and a life interest in half the remainder. The other half would be divided equally between your children. What could not happen is the other situation you wish to avoid, whereby your current partner, as your wife, would be able to lay claim to full ownership of your house. Marriage does not bring automatic inheritance of everything by one spouse on the death of the other unless there is a will saying that’s what should happen. The age difference between you is irrelevant.
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In your case, you don’t want your current partner to inherit everything, but as you do want her to inherit at least part of your estate, you need to make a will otherwise everything will go to your children. If you want her to be able to carry on living in your house after your death, it is possible to leave her a limited interest in your estate which could mean, as you suggest, the right to remain in the house for a certain number of years, or alternatively, the right to live there until her death or marriage to someone else.
As to whether it makes any difference if you marry or carry on co-habiting, it does and it doesn’t. The big difference is that if you marry, anything your wife inherits under the terms of your will is free of inheritance tax. This is not the case if you don’t marry. However, if you make a will, what your partner stands to inherit is not affected by your marital status because you determine what your will says.
Marriage does have one big effect on someone’s will in that it revokes it entirely.So if you think you might marry later ask your solicitor to insert a special clause into your will to prevent it from being cancelled by marriage. Otherwise you will need to draw up a new one once you are married.
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Guaranteed rent | UK advertised rental prices stable but London sees first rise for four months
London saw average advertised residential property rents increase for the first time in four months, up by 0.26% between week two and week four in April, new data shows, which was a bit of a surprise. The average advertised rental price stands at around £2,182 per month in the capital with further improvements expected, says the report from Move with Us.
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Increases in the London rental market are important as it is a determinant of the national average and has recently performed not very well. Average advertised rents in the UK currently stand at around £966 per month, following a 0.49% fall in April. However, the data shows that last month was the fourth month of relative stability in the rental market with rents changing by no more than 1% between December 2012 and April 2013. This stability is also reflected regionally with average advertised rents changing by less than 1% in nearly all regions.
The North East and East Anglia saw advertised rents increase with East Anglia continuing on a steady path of price growth with an increase of 0.13%. The North East, on the other hand, appears to have recovered from a four month fall in rents with a 2.02% increase in the latter part of April. The total increase for the month in the region was 0.16%, as prices fell by 1.86% in the first two weeks.
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Most regions saw average rental prices fall this month though the majority of these decreases were less than 1%. Wales saw the most significant decline with the average price falling by £22 in April to £638 per month. Average advertised rents also reported falls of 1.51% in the East Midlands reaching a low of £623 per month. In both regions these decreases continue a sustained trend of falling prices that started in December 2012.
Overall, it appears that average advertised rents in Great Britain will continue to fall, though a possible recovery in the London rental market could push average rents up in the coming months. ‘Overall, average advertised rents have not changed by a large amount. However, there are several regions such as Greater London and East Anglia that could potentially see continued upward changes in advertised rental prices by the end of the quarter,’ said Robin King, director of Move with Us.
‘However, recent data has demonstrated that the residential sales market is improving and media reports show that mortgages are more readily available which is likely to be bolstered by the government’s new Help to Buy scheme. These factors mean it is likely we will see an adjustment in the rental market and a move away from renting as purchasing property becomes more accessible,’ he added.
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guaranteed rental income is what we do | Is this why you can’t buy your first London home?
A very interesting story from the evening standard, as average rents in the capital reach a record high, an investigation reveals estate agents are targeting wealthy investors. Joshi Herrmann reported the original story
According to the articla, in the summer of 2011, at an internal presentation by the directors of a London estate agent, the staff were told about a strategy that promised to improve the bottom line. The company was facing an unfamiliar situation. The post-crash rentals boom had seen the lettings department offloading properties in hours and lining their pockets with fees, while their counterparts in sales struggled.
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The strategy announced would brilliantly turn the new market conditions to their advantage. A former employee has told the Standard that the directors instructed their agents to target the small but growing group of wealthy investment buyers with their for-sale properties. This would allow the firm to take its usual sales fee then rent out the property for the buyer and manage it on their behalf — turning properties they would once have sold to families and young professionals into long-term cash cows.
Alex Weekes, 26, was until last year an agent at the firm, Ludlow Thompson — a major property player which claims to have let and sold £1 billion worth of property in London in 2012. Buyers chasing popular properties have long suspected that they are being outfaced by wealthy investors for the homes they want. But Weekes’s story, and investigations by the Standard, can reveal that agents have responded to the booming rental market by making investment buyers a conscious priority over ordinary buyers looking to own and occupy.
“They showed us why it is better to sell to landlords who you can then rent the flats or houses for,” says Weekes. “The idea was that we would manage the property, which gets higher fees and means we know when it is going on the market again. It worked really well, I know that there were more properties to instruct.”
Weekes says his former colleagues at other London estate agents had been told to pursue the same strategy and the Standard understands that Ludlow Thompson is by no means the only firm now making a special effort with investors.
At Ludlow, Weekes says the policy was announced in front of the whole company, including managers from both sales and lettings. Was it a novel idea to him and his colleagues? “Yeah, it was,” he says, “it was a policy that we hadn’t even thought of.”
That may be because it was a plan very much of its moment. After the downturn began in 2007/2008, hard-to-come-by mortgages and nervous sellers meant the numbers of Londoners renting rose sharply. More than a quarter of Londoners rent from private landlords now — in 1991 the figure was 14 per cent. And last month came news that rents had risen eight times faster than wages (7.9 per cent up on last year) to record levels, with the average monthly rent now at £1,106.
The rental boom has enticed investors into the buy-to-let market again. The number of investor-buyers has increased by 30 per cent in the past four years according to Ed Mead, a director at Douglas & Gordon, which he says “certainly would not specifically target investor landlords”. And the Council of Mortgage Lenders says buy-to-let mortgages accounted for 13 per cent of all mortgages outstanding at the end of last year.
This is not the first time the buy-to-let market has boomed but the combination of that and hugely inflated prices offered agents like Ludlow an opportunity they weren’t prepared to miss.
“As far as the public were concerned, everything was exactly the same,” explains Weekes, who wrote a book after he left Ludlow called How to Beat Your Agent: A Complete Guide to Residential Property Letting.
Part of the agents’ strategy was to offer big discounts on management fees. “So we said ‘If you buy a house from us and let it out through us we will give you five per cent off our management fee [of 17 per cent]’,” says Weekes.
The most useful service they provide for investors, though, was “off-the- record” calls to give them a head start when a property hadn’t yet been listed. Timing is everything in a market characterised by scarce supply and plenty of overseas interest with ready money and lawyers in tow.
Weekes says: “Unofficially if they [the sales team] knew something was going to come on the market the agent would call the [investment] landlord and say, ‘Look, I’ve got something coming up but it’s not on the market yet’. ”
This account was confirmed when the Standard posed as a potential investment buyer and called one of the company’s branches earlier this week. We asked if it gives advanced notice to investment buyers. “Yes of course,” replied a sales agent. “So if we’ve gone out on a valuation and are 80 per cent sure that it’s going to come on, then we can inform you about that ahead of time before it’s actually on the web portals.” Before ordinary buyers? “Exactly, yeah.”
Thinking he was talking to precisely the type of buyer the firm goes after, the agent revealed: “Both me and my other colleague, we have 10 investors we deal very closely with,” clarifying that “they would be like our priority buyers”.
He went further, saying that investors, whom agents often favour for their known buying credentials, could have an advantage over other bidders if several offers have been made. Would that happen? “Exactly, yeah, and it’s better for the company as a whole.”
He even admitted that the firm can begin the lettings process before the sale is complete: “It’s not unheard of for people to start doing viewings if the property is vacant between exchange and completion, so when you do complete you have no void period straight away — we can do that all in-house.”
A Foxtons agent also confirmed on the phone that for investors with a “close relationship” with the firm “we will be sending you properties before they are put on the website”.
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The law states that “you must not discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property because that person declines to accept that you will (directly or indirectly) provide related services to them”, and says discrimination includes “giving details of properties for sale first to those who have indicated they are prepared to let you provide services to them”.
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