Renting out most of home whilst away leaving me one room and Garage for my storage.

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    Renting out most of home whilst away leaving me one room and Garage for my storage.

    i'm leaving the UK for a while. I want to rent out my home to a (distant) family member who i completly trust. When i rent out the home i will keep exclusive use of the Garage and one of the three bedrooms to store all my belongings. This is rather than getting a sea container for storing them and so saving me £80pcm. I have discounted the rental accordingly. I'm completly new to the rental game so am completly out of my comfort zone. I think what i'm doing is called a "licence" and isn't actully like proper renting. Am i to presume doing this give the tennant less rights, not that this will be an issue. I would obviously like to insure the buildings and also contents and i would imagine i can just name the family member on the insurance as living at the address and give them authourity to act on the insurance should anything happen. Since we are all family i dont think i'll fall into any mortgage problems or insurance as its just like going away and leaving my aged mother in charge of the house whilst i'm away? You could loosely call it board and not rent. However i don;t expect to be back home for a good long while.

    #2
    No, if you are not living there (as you won't be) and if the new occupant is paying you rent, you will almost certainly have created an Assured Shorthold Tenancy (the most common sort of rental arrangement).

    You should have a tenancy contract drafted by a solicitor/legal drafter which makes clear that the three rooms are not demised to the tenant but that s/he will have exclusive possession of the rest of the property for the duration of the tenancy. It will set out how much the rent is, and the arrangements for paying it. On no account should you go off aboad leaving the arrangement 'loose', or based on your trust in your tenant. The chances are it will all be fine, but having it in writing and legally sound makes your position much more secure, both while you are away and when you get back.

    Although you are renting to family you must still comply with all your statutory repairing obligations and have a gas safety certificate in place before you rent. You'll need to change your insurance to a LL policy and ensure you have permission to let from your mortgage provider.

    It won't be a case of 'board and rent' as 'board means meals and you are presumably not proposing to fly back on a regular basis with meals on wheels for your tenant! The licence to which you referred is a lodger's licence but your tenant will not be a lodger.

    It does not sound as though you plan to take a damages deposit from your relative, but if you do, you must protect it in a scheme. Just ask if you need more info about that.
    'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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      #3
      Also worth bearing in mind that upon your return, you can not just 'throw them out', you will need to seek possession in the legal way - and if the tenant doesn't leave voluntarily (they don't have to) that will involve a court process - which is time and £s.

      If access to the rooms you want to retain use of involves crossing the property you have let to the tenant, then again, you can not rely on being able to access these rooms whilst the property is let. I am guessing the garage may have access from a lane (fine) but if you need to access it over the drive or garden, then as above, access is not guaranteed. It would be wise to incorporate a right of passage over the let property to your areas, but that in itself is not enough - if the tenant says 'no' then you would need a court order to enforce that right.

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        #4
        Firstly, your mortgage has been set up on residential terms, meaning you must be resident, otherwise its void. Insurance similarly, on terms that you are living there, not a relative. Many will accept absences of 30 days maximum only. Tell them both of the change of circumstances - worst that can happen is you find mortgage company could recall the loan and your insurance wouldn't pay out in event of a fire, flood etc. Please think carefully about this as in either of these circumstances you could lose your home! And don't casually think they will never find out - many government agencies like council tax, DVLA, electoral roll etc, share each others records, and will note changes of names, addresses etc, which make it all the more likely these days!

        I would second the advice above. You are letting, not living there yourself, in fact totally out of the country. You therefore need to draw up a formal tenancy agreement to cover this contract. There are numerous instances related here of casual family letting arrangements which have gone seriously pear-shaped, wrecked relationships and cost a lot of money to put right. Verbal, casual agreemtns have a habit of being forgotten or conveniently changed at a later date. How would your relative deal with breakdowns or repairs whilst you are away and who would pay? As a LL (and that is what you will become even if you do not think so), you have an obligation to maintain the property at your expense. You also need to agree in writing how any damage caused by the tenant is put right at the end - were you planning on taking a deposit from them?

        Charging rent during this period and being outside the UK, you will have to arrange for someone (probably the tenant) to pay your tax bill for the rental income. You do understand you have to declare rent to the tax man don't you? Similarly, you need to abide by gas safety regs and get an annual safety check done and certificate provided.

        You may think you have this all tied up under your casual, friendly, arrangement, but please do not do this unless you are prepared to get it all signed and sealed first.

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          #5
          My I suggest you get a book form the library or bookstore with a title like "How to be a Landlord". Make sure it is a recent edition (no older than 2009). Amazon do them for less than a tenner (delivered) and it will be a superb investment. Of course, this forum will always be able to fill in the gaps for you

          Comment


            #6
            Originally posted by tweetyduck View Post
            . I want to rent out my home to a (distant) family member who i completly trust.........

            . Since we are all family i dont think i'll fall into any mortgage problems
            Oy vey already! The triumph of hope over experience.
            I offer no guarantee that anything I say is correct. wysiwyg

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              #7
              Thanks very much for the info. With regards to tax there should be no liabiblty as the rent isn't enough and it wll be split between myself and my wife. We will have no other income in the tax years this will take place. With regards to the mortgage i can just pay that off if the get troublesome over it. Undersatnd on the insurance and the access requirements.

              As i intend on staying away for 6 months and then possibly extend for six months and so on. So i will know with about 3 or more months that i'm due back. Can i ensure without court action that they should leave? Whats the notice i would need to give normally?

              I suppose i should get that book. The problem i have is i'm renting it out for cheap and don't really want to mess around with all this and an agency wouldn't do it ( i think) as i only want 50% of the normal rentable value. I'd rather get a low rent and a tennant i know is goign to look after my home. You could call her a house sitter and shes willing to pay me to do it !

              Comment


                #8
                It is not up to you to decide whether the rent is an issue for HMRC. It is income and you MUST declare it, even if ultimately there is no tax to pay. They decide not you.

                Regarding notice, it is 2 calendar months, but there is no "notice to quit" as such (even though this term is often used). You issue notice that you are seeking possession. Once this expires (2 months after issue), you are then able to seek court action to evict. This can sometimes take a couple of months to come to the top of the list, depending on the workload of your local court, then they grant a possession order - if that is , your documents of notice (usually called an S21) are correct down to the final dotted i and crossed t - any discrepancies whatsoever, the judge will throw out the case and you start over. If tenant still refuses to budge, you await attendance by court bailiffs (maybe another month if you are lucky!).

                Doing it on the cheap and through someone you "know" is going to look after it (how do you know?), does not allow you to avoid the legal obligations of becoming a Landlord, and being overseas complicates it further as you are not on the doorstep to handle any crisis yourself!

                Comment


                  #9
                  You can not collect rent unless you give the tenant an address in England or Wales where thay can serve legal documents on you.

                  It is not really a case of 'wanting to mess around with', it is a case of 'the law says you must'.

                  That includes things like doing certain repairs - you can not just leave them to the tenant to organise, even if he claims he is willing to do so.

                  Comment


                    #10
                    This site will help you find your way through the non-residents' LL scheme. Basically you have to complete a form on which you declare the income you expect to receive and the outgoings you expect to have to pay for. If the balance is less than about £500 pcm they allow you to be tax-exempt.

                    http://www.hmrc.gov.uk/manuals/pimmanual/pim4800.htm
                    'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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                      #11
                      I'll look into getting a full managed landlord package then since i'm not going to be here. I presume that meets the criteria for serving of legal documents ? They wlll also likely look after the repairs etc. the problem i have is all this is cutting back on my income as i wanted to do it for her at a good price. She can't afford any more than £300 and the rentable value is ~£500 plus.

                      And the reason i know she will look after it is that shes my wifes step mother. So its pretty assured there will be no issues.

                      What do fully managed packages usually cost? Is it a percentage of the rental value usually ?

                      PS for informations sake. Its the responsabilty of the tennant to take tax off where the landlord is not resident and for them to pay it to the IR. As i'm not liable to pay any tax in these (when absent) tax years i can just ignore it after telling them (IR) that i don't need to pay anything as its not enough ££ and i'm not here. So as i said. I don't need to worry about that. Does help having a wife who works in the Tax department.

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                        #12
                        I am suprised that your wife agrees that it is up to the individual to decide what tax is due. Give the figures to HMRC and let them decide. I am not sure if your wifes employment could be compromised if you were charged with tax 'problems'.

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                          #13
                          And the reason i know she will look after it is that shes my wifes step mother. So its pretty assured there will be no issues.
                          If we had a pound for every time someone has come on this forum and vowed that they will never rent to family or friends again because it began beautifully but ended in tears....
                          What do fully managed packages usually cost? Is it a percentage of the rental value usually ?
                          Yes, typically 10-15% and yes, the agent's address would be acceptable for the serving of notices. (You might need to impress on him the need to act upon such notices though - or at least inform you of them!)
                          'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

                          Comment


                            #14
                            you'd be a rich man........or woman.
                            shes a fastidious clean freak so it wil likely be in a better state than it is now.

                            Do you think the agent will get shirty as i want to under charge for it ??
                            Any other big costs i should be aware of. Insurance i think? Sould i get appliance cover for the fitted kitchen stuff ? anything else ?

                            Comment


                              #15
                              The link below is a guide for new landlords. Make sure that you've got everything covered.

                              http://england.shelter.org.uk/get_ad...ing_a_landlord

                              Also some mortgage companies will not allow you to rent to a relative, so check that as well.

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