Zero rent agreement for daughter whilst a student

[misty68]

I am about to complete on a property, purchased for my daughter to live in whilst completing a nursing degree. Student halls are expensive and student accommodation isn't always of a great standard, so we've decided to buy, with the intention that she either moves out (we sell), she purchases the property from us or starts paying rent once studies are complete, or within 4 months of her leaving university - which ever is soonest.

My question is whether I should formalise this in a tenancy agreement, stating zero rent until one of the above criteria is met. I like the idea of having a structured agreement in place, but I don't want to create any legal or tax implications as a result. Has anyone done this before ?

thanks in advance

[jpkeates]

There are two schools of thought about this - one is that it's always best to be clear about who's responsible for what and what's been agreed and the other is that informal agreements within a family aren't best served by being formal.
A lot depends on how you are as a family.

An agreement that just records what you're agreeing to can be helpful so you each know what you're committing to, but if your daughter didn't keep to her side of the agreement or you, yours, what would you actually do in practice?
If your daughter doesn't buy the property, pay rent or move out when she leaves university, would you evict her?

[DPT57]

If you're daughter sub-lets part of the space to help towards bills, then you could face having to evict them if they refuse to leave. Without any paperwork to back you up, that could be difficult. I would suggest you take legal advice from a housing specialist solicitor before you act.

[jase222]

I would have thought you need the gas electric tested for a start, and I would speak to a tax accountant about cgt? And would the hmrc believe you never received any rent?

[misty68]

jpkeates - I'm new to forums and am not really sure if I'm doing this correctly, but I wanted to thank you for your response. I think you're absolutely right and rather than get her to sign a tenancy agreement, I'll just document what we've agreed. i.e. what we'll pay for and what she will be expected to cover and at what point she will be expected to pay rent etc. thanks again

[ash72]

You would have implications with your Insurance, mortgage, HMRC (as the rent your given isn't market rent) if this is a BTL property. It would be better to just rent it out normally and pay your daughters rent from this income that way you don't have any issues both financially and family related, as your don't intend to make any money from the property if you are giving it to her at zero but still need to comply with all your legal compliance aspects.

[jpkeates]

I'm new to forums and am not really sure if I'm doing this correctly.

You seem to be doing fine to me.

[islandgirl]

Just a question - what if the OP bought the property outright and let her live rent free (she covers bills from student loan etc) - would you need gas certs and elec checks etc ( I know you would do them anyway for safety but the question is do you need to comply with all the rental rules)

[DoricPixie]

If you're daughter sub-lets part of the space to help towards bills, then you could face having to evict them if they refuse to leave. Without any paperwork to back you up, that could be difficult. I would suggest you take legal advice from a housing specialist solicitor before you act.

If the daughter gets in a lodger(s) that is not the same as sub-letting.

[DPT57]

Well sub-letting is really a broad term and I was mainly using it to mean taking a lodger, but the point is the same either way. If the lodger/sub-letter holds over, then the paperwork will be important to getting a speedy eviction.

[DoricPixie]

It is not a broad term that covers lodgers though. A sub-tenant is a very different kettle of fish from an excluded occupier.

[DPT57]

I didn't use the term sub-tenant, I said sub-let, which is a term that is used widely, as is underlet, which is often qualified to mean either in part or as a whole.

[DoricPixie]

I know you said sub-let but having a lodger is not sub-letting. When you sub-let you end up with a sub-tenant, not a lodger. Hence why many mortgage lenders and insurers do not allow sub-letting but you can have a lodger.

[DPT57]

I found nothing in any of the following "definitions" of sub-letting which preclude the possibility of the owner/mesne tenant continuing to live in the property. In fact the CAB explanation actively considers it.
https://www.citizensadvice.org.uk/ho...ng/subletting/
https://legal-dictionary.thefreedict...com/Subletting
https://www.spareroom.co.uk/content/...aq/subletting/
https://www.propertymark.co.uk/profe...ubletting.html

[philrosenberg]

I seem to remember my buy to let mortgage and/or my landlords insurance explicitly prohibited family members or myself living in the property. Just something to note.