Joint tenancy agreement, 1 tenant has already moved out

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Joint tenancy agreement, 1 tenant has already moved out

    Good evening all,

    I wonder if I could get some advice on ending an AST tenancy in England.

    Originally a 6 month AST last Sept between my niece and her partner, I foolishly listed both on the AST as joint tenants and didn't list him as a permitted, there was no deposit paid.
    The boyfriend has now moved out and has a restraining order on him for physical abuse and they no longer talk.

    He has moved out of the property and it's currently only my niece living there. I believe that he has given her his keys back for the house.

    I've been advised to send them a deed of surrender to get the house back and put it in my nieces name only. I have no concerns if she can afford the house by herself,
    she can, and even if she couldn't, she could happily live there rent free, she is my family, they are currently only paying about 2/3 of what the rent should be.

    My main question is, If she was to serve me notice that she wants to leave next month, would this end the tenancy for both of them? Would I need anything from her partner that has already moved out? Looking on the shelter website it states that if 1 joint tenant gives notice, it ends the tenancy for both tenants. Would this need to go to court to end the tenancy for both of them if 1 had already given notice and I accepted it?


    #2
    If the tenancy has now become a statutory periodic tenancy, the simplest way to end it is for your niece to serve proper and valid notice, at the end of which the tenancy ends.

    From the sound of things, that might be overkill, as there doesn't really seem any chance of the partner coming back and claiming that the joint tenancy is ongoing, but it would remove any doubt.

    The day after the tenancy ends, you and your niece can start a new tenancy in her name only.

    If she is paying 2/3 of what the rent used to be, I'd make that formal in the tenancy agreement, otherwise she's technically in arrears, and it could cause an issue if she needs to apply for benefits.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Thank you so much for your reply. It's going to make me sleep a bit better tonight. I have accepted her notice to quit tonight and hopefully after spending the night at her mum's house on the 21st Nov, she can move back in on the 22nd Nov on a new lease in her name only.
      I just wasn't sure that we could legally do this, it does look a bit dodgy.

      She has only paid 2/3 of the normal rent since they moved in last year, she is not claiming any benefits and is in full time employment, but thank you for the concern. I only make her pay some rent so she knows that she has to pay bills. The last time she rented a house from me for a few years, I put the money to 1 side and it will be given back to her for a deposit on a house for her when she is ready to buy her own home. I never claimed it as income on my tax return, so hopefully not doing anything illegal. The boyfriend has a restraining order on him and 3 arrest warrants and is currently on the run. I'm really hoping that this will not have to go to court as I live overseas.
      Thanks again for your help JPkeates

      Comment


        #4
        Originally posted by Yorkie2020 View Post
        I just wasn't sure that we could legally do this, it does look a bit dodgy.
        There's no reason for her to move out, the tenancy ends when her notice does, there's no need for vacant possession.
        Even if the tenancy agreement says that vacant possession is required, you're hardly likely to enforce it.

        I never claimed it as income on my tax return, so hopefully not doing anything illegal.
        Well, that's tax evasion, which is definitely not legal.
        If the money is paid to a non-uk bank, it's not lawful for your niece either.

        I'd sort that out - you can be fined for each tax return it's missing from and the missing tax can be claimed with interest.
        What you're planning to do with the rent doesn't matter, it's income and it's taxable.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          jpkeates,

          Thanks for your view of it, I didn't see it as this as I have never seen the money, it certinly didn;t go into my bank account. This could turn out to be a very expensive mistake.

          It was given to her mum, who keeps it her safe as I had always said that I didn't want any money from her, she was welcome to live there rent free and that the money was to be returned to her when she bought her own house. we thought of it as a savings scheme for her to finally buy her own house, I may have made a very expensive mistake.

          Obviously, I've made a big mistake and it could cost me a lot in the near future. I'll mention it to my Accountant in our next tax return.
          It was never my intention to avoid tax, I was just trying to help my niece save for a deposit on a house and realize what it's like to have to pay bills. . As you said, I'm sure that HMRC are not going to look at it this way, especially if they can get more tax from me.

          I try to keep an accurate record and pay tax due every year. Apparently I have failed on this one. Will try to not ever repeat this mistake again.
          It is hard to know that helping family members out to save money is considered tax evasion.

          Comment


            #6
            If the "rent" is money paid to a relative as a savings arrangement, it's not rent, it's something else.

            The issue would be if there's a rental agreement which looks like a normal tenancy agreement, where two "tenants" are "renting" a property and a monthly "rent" is due on a date etc.
            That doesn't look like a formal family arrangement, it looks like a tenancy and the rent looks like income.

            It probably shouldn't be income and it probably shouldn't be taxed, because it isn't really a tenancy - it's an informal family arrangement.

            But the paperwork and reality look very different.
            Ideally, there shouldn't be any kind of tenancy, the niece should simply be a paying guest - which might be better for tax purposes, although might not have other non-taxabale benefits.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              Thanks for the info, There was never a tenancy agreement drawn up, as I had always said that I would not accept anything from her and she could live there rent free. I only accepted that she paid about 1/3 of the normal rent to her mum in cash, so as it could teach her that she has to pay bills on time and that it would be returned to her when she wanted to buy a house. All of the money is still in her mums safe, I have never seen it.

              I have never had any intention of keeping the money that she paid, but I know I will need to convince HMRC that this is the case.

              Her new joint tenancy agreement is all up to date tax wise and as it was a joint tenancy agreement, we will stick by it and pay tax on the income. I understand that the mistakes I made with my last rental agreement with my niece, may cost me a lot of money to resolve, I'll still try to help her out, but will run it all past my accountant the next time.

              Comment


                #8
                the only reason I have now accepted a reduced rent from her is that the property she is living in is a joint property owned by me and my wife.

                Comment


                  #9
                  Two points:

                  If the property is owned jointly with your wife, if there is income, it will be income for both of you (split half each). You can deduct business expenses from the income before tax is due.

                  I would run this past your accountant. The informal arrangement where a sum was passed to your neice's mother and there is no tenancy agreement sounds like a family arrangement not a tenancy and I don't think HMRC could suggest otherwise. As you have never received any "rent" I don't see how that could possibly be seen as income.

                  If there was a joint tenancy agreement while someone else lived there, that would probably be different, but, going forward, I would adhere to the loose family agreement. There's nothing to stop you having a perfectly sensible arrangement where your niece is essentially a paying guest - the monthly payment is far below the level that rent would be, the money isn't ever paid to you and is actually held on trust for the niece in any case. That isn't a rental arrangement and I don't think HMRC could see that differently even if they wanted to.
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    Thank you for the info. The house she rented from me a few years ago is and was solely in my name, I used to live there as a teenager and it's just around the corner from her mum. All of the money she paid went to her mum to be repaid to her for a deposit on a house.

                    The house she rented from us last year, and where she is currently living is jointly owned by me and my wife. As such, she and her ex partner have been paying rent and have an AST the same as any of our other tenants, but have only been paying about 2/3 of a normal rent in the area, that said, a couple of other good tenants are also paying way below market rent. (but for different reasons)

                    All rent received on this new property have always gone through the books as a normal tenancy and we have paid tax on all of the income, minus repairs. Everything we have made and spent on it has gone through our accountant for our tax return for the duration that she has been in the new joint property.

                    Looking at how easy it could be for me to fall foul of the taxman, everything from now will be on the books, she already has a small nest egg to go towards a deposit. Hopefully it will be enough for her to buy a house but at the moment, prices seem to be really inflated, so I don't want to push her into buying at the moment.

                    I've stopped buying rentals, as I think that prices have to drop soon and with the EPC's looking at going to a minimum of as C shortly, I do't see me buying any more unless they are already a comfortable C rating.

                    Comment


                      #11
                      Guess I've been very lucky this time. My niece has informed her partner that she is ending the tenancy and signing up for a new one in her name only and he is ok with it. She did point out that he will no longer be responsible for any more rent or bills when it's totally in her name.
                      JPkeats, thank you so much for your your help, I was dreading that this would end up going to court and taking a year to resolve.

                      Comment


                        #12
                        Yorkie2020,

                        In the opening post you said there was 6 month fixed term AST with both your niece and her now-ex-partner named as joint tenants. Now you are saying there was never a tenancy agreement drawn up.

                        With the benefit of hindsight it would have been better if you'd had your niece pay money into a HTB ISA or LISA so she could save up a deposit. Not only from the point of view that it would have been her savings and definitely not rent but because she could claim the bonus too.

                        Comment


                          #13
                          The 6 month AST is on another house that she and her partner are currently renting from me and my wife, where we are taking a reduced rent from her, the first house she rented was where the money was given to her mother to keep safe and to be returned.

                          Yes, in hindsight I agree that a HTB ISA or LISA may have been a better option, but I didn't think about it at the time. I believe that she had an ISA at the time and to be honest, I don't know much about them.

                          Comment


                            #14
                            Yorkie2020 If I've understood correctly, you should be fine.
                            The AST where rent was being paid to you and your wife is all accounted for and taxed.

                            The informal family arrangement predates that - money was paid to the mother who is holding it on trust for her and it will simply be returned at a future point.
                            As you have never received the income, you shouldn't be taxed on it, and it isn't really income for the mother either.

                            I'd suggest that it's held in a separate account, so there's no possibility of anyone benefitting from it by mistake.
                            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                            Comment

                            Latest Activity

                            Collapse

                            Working...
                            X