Would things be different if you paid a rent?
Yes, but it has to be a market rate with payments going to the new 'owners' who may pay income tax on it (depending on their income etc from elsewhere.) Regular accounts will have to given to HMRC as with any rental property, and there should be a proper tenancy agreement.
From a tax point of view, in UK you can gift up to £325K (that's the nil-rate for IHT) without tax, but if you give away anything over that value there's a 20% lifetime capital transfer tax to pay. If you gift the full 325k you have to wait 7 yrs and a day before you can make any more gifts to children, other than the annual allowances, that's £3kpa or slightly more on marriage.
Although this can work well, if the owners were to go bankrupt, get divorced, or one/both die, there could be a real problem because your tenancy would have to end. I once had a case where the parents had given half a house to a son, and when my client divorced him he had to include the value of his share of the house as part of his assets, much to his fury. Heh heh!
Extreme case, but if your children died and left their assets to their children, and they were under age 18, there could be even more complications.
Personally I'd not relinquish control of any assets, but cover a potential tax bill with life assurance written in trust, as this would pay out without waiting for probate, to the named trustees. Same if you need longterm care, let them have the house and replace it with cash from a life policy.
