Buying a Property – a Financial Deputy’s Perspective

When you’re a financial Deputy, buying a property is more than just supporting your client to find the right house and instructing a conveyancer.

Court Authority

Always check the Deputy Order before you encourage P or their family to start looking for a property to buy. You do not want to find you need Court approval after they have fallen in love with their dream home.

Many standard Deputy appointment Orders prohibit the purchase of a property. You will therefore need to make an application to obtain authority to buy and that can take time.

Managing your clients’ expectations as to potential timescales involved in obtaining Court authority is therefore important.

Whilst it may be unavoidable, commencing a property search without authority to buy could well place the Deputy in a position where they are simply not able to proceed and therefore at risk of a transaction falling through.

Some Orders providing authority to buy may also specify the address of the property being purchased and the budget approved to cover the purchase price and associated costs (buying and adaptation costs for example). It will be necessary to seek a variation to this Order if that particular purchase cannot proceed or that budget proves insufficient – this will add further delays and costs.

The more comprehensive your supporting statement and evidence, the better chance of obtaining the Order you want in a timely manner.

You might want to consider exhibiting the following evidence to your statement where it is available / appropriate:

• Expert evidence from the litigation – accommodation and care experts reports for example.
• Schedule of Loss / Counsel’s Advice on Settlement.
• Advice from the financial advisor on the affordability of the purchase in the context of P’s other financial needs.
• Evidence of P’s wishes and feelings in relation to the proposed purchase.
• Views of the family.
• Evidence from the case manager / occupational therapist supporting the proposed purchase.
• Evidence from a property finder as to properties available in the relevant location and the budget required to meet P’s needs.
• Capacity assessment – this could be essential where P’s wishes and feelings do not align with those of the family or experts.

Joint Purchase

It is important you consider the wider implications of purchasing a property jointly on P’s behalf with a family member or partner. What is appropriate now may well have adverse implications in the future.

Purchasing a property jointly with a family member (for example parents) who is contributing towards the purchase price to enable a larger property to be purchased, may appear to be a sensible solution now but what are the implications in the future?

At some point P might want to live independently of that family member. That transition could be a challenging one, where the co-owning family member does not want to move or where P does not have the resources to purchase the share of the family member.

Where the joint purchase is with parents and P also has siblings, you may find those siblings then become the co-owners on the death of the parents. That could well prove a challenge in the event P has insufficient funds to purchase their share or they do not wish to sell it.

Relations between P and the co-owner may also breakdown.

These scenarios become more problematic where a significant sum has also been spent adapting the property to meet P’s needs. There may simply not be the funds available to undertake another expensive set of adaptations in the event a sale becomes the only option to resolve to problem.

In the scenario where P is a child, one option to consider would be for their parents to retain the former family home (in the event they owned one) as security for their own future or as security for any other children. This will provide them with an alternative option in the event P wishes to live independently of them in the future.

In some cases, co-ownership may be the best option for all concerned. It is however important there is a clear and honest discussion at the outset regarding potential problems to ensure everyone is aware of challenges that may arise and what your obligations as a Deputy may be in those scenarios. Transparency in communication is key.

Declaration of Trust

Where there is a joint ownership, a Declaration of Trust Is essential. You will need to consider:

• How the co-owners’ share in the property will be calculated in the future – will this be a percentage or a fixed sum for example.
• Where P is funding expensive adaptations / renovations – how is that reflected in their interest in the property?
• What contribution will each party make towards the maintenance and running costs (utilities, council tax insurance etc) of the property.

Any co-owner should always obtain separate legal advice before they sign the Declaration of Trust. Court approval is required before P’s funds can be used to meet the costs of legal advice for a 3rd party (Re: ACC [2020] EWCOP9 – para 57.5).

Interim Rental

You may need to consider how your client is best supported where their current home does not meet their needs and there will be delay in buying and adapting a property for them. Their current home may not be fully accessible; it may not provide sufficient space for care and therapy and may be a barrier to their independence. Renting a property as an interim solution could be an option. Indeed, for sizeable adaptation projects, an interim rental may well be required for a period exceeding 18 months.

Consider the need to obtain Court approval where the Deputy is executing the tenancy agreement on behalf of P.

Budgets

What can P afford? What do they need? Where is the compromise?

It is rare for this to be without challenge, especially where the purchase involves significant property adaptations.

It is never too early to involve the financial advisor and to work through various scenarios / financial forecasts considering the long-term sustainability of the property budget in the context of P’s other financial needs over their lifetime.

Below are examples of expenditure you need to consider.

The obvious ones:

• Purchase price
• Legal fees including searches, Land Registry charges etc
• Survey(s)
• Stamp Duty Land Tax – consider separate tax advice depending on the property.
• Removal / packing charges
• Furniture / soft furnishings / lighting
• Decorating costs
• Property finder

Likely additional costs for property adaptations:

• Building costs
• VAT – consider the need for expert advice.
• Professional fees:
  
  • Project manager
  • Architect
  • Quantity surveyor
  • Occupational therapist
  • Planning consultant
  • Construction lawyer
  • Assistive technology
• Equipment
• Garden
• Contingency, contingency, contingency!

Additional costs where there is an interim rental property:

• Rental property finder
• Tenancy agreement – legal advice
• Rent / deposit
• Adaptation / reinstatement costs
• End of term redecoration / carpet cleaning
• 2 x moving and packing costs
• Storage costs

Timescales

Do not under estimate how long significant property adaptation works can take.

It could easily be nine months after you have found a property to buy before building works even commence when you allow sufficient time for:

• An architect / occupational therapist to consider suitability of the property.
• Quantity surveyor to consider likely costs of the building works.
• Financial advisor to consider affordability.
• Plans to be drafted, amended and approved.
• Property purchased.
• Planning application made and hopefully approval granted.
• Tender process.
• Construction contracts to be issued, amended and executed.

Decisions, Decisions and More Decisions!

Where a property requires a large amount of adaptation work, this will likely involve a vast number of decisions for P and their family. These decisions will include paint colour choices, tiling, lighting, flooring, kitchen and sanitary ware etc for multiple rooms.

Many of the families we support do not have the time to visit kitchen showrooms etc at short notice or spend endless hours online researching options. They may already be overwhelmed with significant caring needs for a loved one, need to support with multiple clinical appointments etc.

As a Deputy it is therefore imperative you ensure P and their family are properly supported throughout this process and the architect and contractor understand these challenges and provide appropriate notice of all decisions to be made. Ideally a schedule of decisions should be agreed at the outset and support put in place with those decisions where necessary.

A case manager is usually invaluable during this process and can be an extremely important resource to ensure P and their family receive the support they need and understand what decisions must be made and when. They can also be key to ensuring P’s voice remains central to the decisions and is not lost in the ‘noise’ of a busy building project.

Litigation

Where you are buying and adopting a property during the course of an injury litigation claim and property costs are being funded by an interim payment, it is important as a Deputy you work very closely with the litigation team.

What expert evidence do they have concerning P’s accommodation, equipment and care needs? Are they able to disclose this to you?

Is the property budget limited to the interim payment or is there an opportunity for future interim payments to be obtained? You need to understand how much is realistically achievable and what the likely timescale is for further interim payments.

What other expenditure does the interim payment need to cover? Care, therapy, equipment etc.

Where the funds may not be sufficient to cover the entire cost of the purchase and property adaptations, are you able to consider a phased approach to the building works? Can part of those building works be undertaken at a later stage – following receipt of a further interim payment or following settlement of the claim for example.

Managing a purchase where there are significant property works during the course of litigation can be far more challenging. You need to work very closely with the litigation team, understand the evidence being presented and any likely challenges on property related expenditure and you must keep a very tight control on the budget and ensure you provide the litigators with sufficient notice where funds are running low.

As with everything good planning, preparation and the right team is key.