4 people are going to rent my house, can I sign the contract with one?

[dyangx]

Hi,

Four young people are going to rent my house. One has submitted all the documents I required for checking, but for the rest of the tenants, I either have received part or none documents for checking. But the one who have given me all the documents eager to move in tomorrow morning. Should I sign the tenancy agreement with him, while put another three on the contract as occupants? What kind of tenancy agreement I should use?
It's really urgent! Please help.

Dyangx

[JK0]

Hi,

Four young people are going to rent my house. One has submitted all the documents I required for checking, but for the rest of the tenants, I either have received part or none documents for checking. But the one who have given me all the documents eager to move in tomorrow morning. Should I sign the tenancy agreement with him, while put another three on the contract as occupants? What kind of tenancy agreement I should use?
It's really urgent! Please help.

Dyangx

That arrangement has worked quite well for a shared property I let in Battersea. I only have one contact for repairs, and he/she collects the rent from the other three, and pays the total to me. People have moved in and out, and they always find a replacement. They have not missed paying the rent once in nearly 13 years.

I don't take a deposit due to complication of people moving in/out. The agreement is a normal AST for the full (combined) amount of the rent. One is the tenant, and the others are permitted occupiers.

[hamilton]

That arrangement has worked quite well for a shared property I let in Battersea. I only have one contact for repairs, and he/she collects the rent from the other three, and pays the total to me. People have moved in and out, and they always find a replacement. They have not missed paying the rent once in nearly 13 years.

I don't take a deposit due to complication of people moving in/out. The agreement is a normal AST for the full (combined) amount of the rent. One is the tenant, and the others are permitted occupiers.

The complication with this set-up is that your one tenant is technically landlord to the other three, who are his lodgers.

Your tenant is liable to pay 40% tax on the rent he receives from the other three, above the rent-a-room threshold of just over 4k a year. It doesn't matter that he is passing the money straight on to you, it's still treated as his taxable income.

I believe he also takes on responsibilities for repairs and safety checks, and may require insurance. The property is an HMO, and may or may not require a license.

I am writing this based on advice I've received from knowledgeable posters to this forum, who I am sure will correct me if I'm wrong on any of the details.

[JK0]

The complication is that, legally speaking, your one tenant is himself a landlord, and the other three are his lodgers. He is liable to pay 40% tax on the rent he receives from them, above the rent-a-room threshold of just over 4k a year, despite the fact that he is passing it straight on to you. He also takes on repairing responsibilities. And the property is an HMO, and may or may not require a license.

Yes, but his payable tax would be £0 wouldn't it, as he makes no profit?

[hamilton]

Yes, but his payable tax would be £0 wouldn't it, as he makes no profit?

Unfortunately not! You would think that is the case, but it isn't.

The rent he pays to you is apparently not a deductible expense.

[JK0]

I'm sure my ground rents are deductible. Why aren't other rents?

[hamilton]

I hope someone will step in to tell me I've got it wrong!

[Snorkerz]

I can't comment on the lodger tax issue but I would say to the OP that if he signs a tenancy agreement for the whole property with just one person then he has only one person to chase if there are payment or damage issues. Is the prospective signee financially secure enough to handle such a financial burden or is the landlord exposing himself to an unenforceable debt?

[tim123456789]

Unfortunately not! You would think that is the case, but it isn't.

The rent he pays to you is apparently not a deductible expense.

no that is not right

It's right that he can't claim expenses when using "rent a room", but he can if he using "normal" accounting.