family problems are dictating that we have to move near my work, so 20 miles away. we ummed and ahhed about selling up, but love our house and want to go back there in a few years. my daughter has said she’d love to rent it while we’re gone. the house we’ll be renting is owned by my employers.

we’ve had our house rewired lately but im not sure if we have any proper legal duties if its just rented privately in the family. can anyone advise? is it as simple as just swapping houses and taking the rent from her each month and paying our new rent with it? mortgage will still obviously be being paid by us. do we have a legal duty to tell the mortgage provider? and will there be any effect on the fact that we are coming to the end of our fixed spell and going to be looking for another deal by october?

just curious as to potential problems. ive thought of a few but they seem easy to overcome.

thanks

Surely she’d just move in and transfer money to the bank account you’ll pay your rent from – why would you get anyone involved?

spose that’s what I’m asking, is it all perfectly legal, I don’t need to involve anybody else?

Either you’re renting it out, or you’re not. Minimum legal work I see (Englandshire)is Gas Safety Cert, Smoke Alarms, Energy Performance Cert, get agreement from mortgage lender. Whether you draw up a contract, if there’s a dispute it will be deemed to be an Assured Shorthold tenancy. Insurance, deposits etc are all optional. Your mortgage lender may disagree. What happens when the boiler packs up, etc?

She isn’t paying rent is she ….
She is paying for a maintenance man on a call out retainer….

And the mortgage co is lending on the basis that the person who borrowed the money is living there…

I rented my house to a family member when I was posted overseas. It became a massive hassle and was a mistake. I would not do this again. Never, ever, ever.

YMMV. 🙂

electric ,water,phone,internet, gas,council tax would all need to be in her name,just incase she did/would run up large bills
also home and building insurance is based on age and occupations of people living there.

DONT BOTHER, LOADS OF GREIF, and then what if she wont move out.

midlifecrashes +1

Your mortgage agreement (and almost certainly your building insurance, which the mortgage company require you to have) will have a clause somewhere which will say something along the lines of “I agree to notify the mortgage company/insurer/whoever if I’m not living at the property for a period of more than 28/35 consecutive days”.

Bingo – invalidated insurance and breached mortgage agreement.

Bingo – invalidated insurance and breached mortgage agreement.

The two are separate issues. You can take out landlords insurance without involving the building society.

Whether you chose to tell your mortgage provider is another issue. Personally I wouldn’t, as they’ll just want to whack you on some outrageous landlord’s mortgage rate. I can live with breach of contract for a year or so.

It’s more a sure fire way to fall out with your daughter. This is probably more of a concern than all the other ‘stuff’ mentioned….

What you going to do when she doesn’t/can’t pay the rent – kick her out?

My in laws are currently “renting” to their son (same house that we lived in for 4 years with no issues – just glad I took my name of all the bills), however he’s not paying rent or any of the bills citing he has no money, though he is working full time. They’re in a bit of a quandry with what to do. A massive hassle to be fair I wouldn’t bother, it would be best if you get non family to rent with a proper agreement etc. If she can get along fine renting elsewhere pay her bills etc., then maybe give her a chance further down the line.

Houses rented out are liable to capital gains tax – your “only or main residence” is exempt. If house prices rise during the rental, you have a tax bill to pay when you eventually sell. Also, if you’re renting it out, you’ll need a business mortgage, probably max 10 year term and probably a different interest rate.

Of course, if you continue to live there, and your daughter moves in with you, and you are away during the week working, that’s a different story.

I think as your not getting another mortgage you can keep it under the radar & just do it.

Why make it more complicated than it needs to be.

It’s more a sure fire way to fall out with your daughter. This is probably more of a concern than all the other ‘stuff’ mentioned….

thats one of the things i thought about, but gut feeling tells me itll be ok.

If she can get along fine renting elsewhere pay her bills etc., then maybe give her a chance further down the line.

What you going to do when she doesn’t/can’t pay the rent – kick her out?

she already rents out and needs to give a months notice. AFAIK shes never defaulted on her payments.
and ‘yes’ 😀 (id have to)

Of course, if you continue to live there, and your daughter moves in with you, and you are away during the week working, that’s a different story.

i like it 😉

thanks a lot chaps

much as i like the idea of leaving everything in my name and involving as few people as possible, im starting to think i may need to make it more official after speaking to more and more people. few more quesions if you dont mind…

You can take out landlords insurance without involving the building society.

whats the difference between landlords insurance and your ‘common and garden building insurance’? do both just cover your property in the case of damage?

if she were to default on any particular bill/credit card etc whilst in my property am i likely to suffer years of refused credit cos the property is on a blacklist?

im still leaning towards not telling mortgage provider. if we were to tell them, what are the implications? a new mortgage at higher rate? more tax paid for any reason, or just that capital gains thing that seems a load of hassle for not much difference (if my property was valued at say £5000 more when we return how much would we be likely to owe for instance?)

a mate who rents his house out has just emailed me his basic contract for me to use and swap details. are there good contracts and bad contracts? are any of them really worth the paper theyre written on if the lodger becomes difficult?

this all might sound like im having doubts about my daughter, thats not the case. im just still learning what i need to do and try and make a decision on how deep i go into this. i love my house and would eventually want to end up in it again, but accept its prob not gonna be possible for a year or two, who knows maybe longer. once bills, utilities, virgin etc have all been cancelled and names changed i know its a world of pain getting anything put back how they were as you never seem to deal with ‘commonsensical’ people these days, just robots and computers that say no! 🙂 so i spose im just thinking about making it as easy as possible to slide seamlessly back into life there at some stage.

more questions to follow as i think of them im sure 🙂

thanks

Capital gains tax – as far as I am aware (also in Scotland, so may not be the same)you only pay CGT if you sell the property immediately after renting. If it becomes your home again for a period of time (3 months?) then this doesn’t apply.

EDIT – I just used a contract off the internet, but I did tell my mortgage provider and insurance company.

what are the implications? a new mortgage at higher rate?

If you tell your mortgage company, likely yes.

more tax paid for any reason,

Your new rental income is subject to income tax although there are some deductions and if you have a non working wife there may be ways to reduce or eliminate this.

or just that capital gains thing that seems a load of hassle for not much difference (if my property was valued at say £5000 more when we return how much would we be likely to owe for instance?)

Captial gain is unlikely to be an issue unless you plan to let your house for a very long time and then sell it rather than move back in.

you only pay CGT if you sell the property immediately after renting. If it becomes your home again for a period of time (3 months?) then this doesn’t apply.

No it’s a bit more complicated than that but even so it’s still not likely to be an issue and with a gain of only £5000 you wouldn’t be liable anyway as the CGT allowance is £10000.

right, so unlikely i have to think about CGT. not liking the tax due on rent tho! if i rent my house out for £500 pcm, how much tax would i have to pay for instance?? my wife works part time btw.

if i dont tell mortgage provider, is my buildings ins null and void? what about landlords ins? do i need both or just one? and if its gonna be null and void is there any point having any??

also thinking if i kept it under the radar, and utilities in my name, id be taking the dd amount straight from my daughter alongside the rent. and as dd’s change, id amend the amount from daughter, no? bad idea?

complicated this renting lark innit :-/ (cue answer stating ‘not if you do it properly’) 🙂

We rent a house out. Are you planning to rent it furnished or un-furnished? Ours is un-furnished so we basically have buildings insurance ie no contents. We also have cover for things like damage caused by tenants should they want to strip all the copper pipe out the place. Also if furnished, items need to be fire safe. Only need a gas cert.

We had to tell our mortgage supplier as we were getting a new mortgage for a new house. Now on a let to buy and had to pay a price for this (so nice of them). Also have to pay tax on rent (imcome) but you can right alot off with fees, interest on mortgage and up-keep.

Not sure if i’d rent to family as you do call them all the names under the sun when the phone you up with a problem!!

Personally I’d do it officially. Chances of getting caught if you go under the radar are slim – consequences if you were to get caught ‘could’ be severe. Mortgage company could get arsey, insurance might get cancelled / declined – all of which have potential future implications. Plus there’s the often over looked aspect of tax avoidance and fraud (potentially and dependent on circumstances). If it were a toff / celeb avoiding tax or an MP flipping homes, how would you react to that?

You could always agree a rent at the low end of market rate for your daughter if helping her out is a primary aim here. You can use any profits from the rental (should there be any) to upgrade your home for when you eventually return thereby negating any tax liabilities. Not sure about your daughter’s job security but if she were to lose a job and claimed housing benefit there are rules I think that prohibit her from renting from relatives. That may be different if she’s already in-situ when she loses the job.

That said I have friends that flout all mortgage clauses even to the extent of converting a single house into flats and renting part of the property out. Unless you default, the mortgage company are not going to come looking…

Your mortgage will specify that you have insurance. If the house blows up and you don’t have any, you owe the bank a load of cash and would need to put right any damage to other peoples property.

If she runs up a huge heating bill over winter and she can’t afford it, are you going to pay it and keep her in or get your money and turf her out?

As others have said DO NOT DO.

My job is to design products to meet the needs of landlords, and as such I have been involved in research talking to landlords, everyone who started out by renting to family or friends said they would not do it again. Problems range from non payment of rent to neglect of gardens and as soon as you need to put those things right your relationship starts to break down.

If you do do it, consider that most landlords let unfurnished and with no white goods, becasue of the regulation and testing required. You wouldn’t want a fire on your hands because of a dogdy sofa or badly wired toaster?!

i understand that, and thats a big concern. 2 things tho. firstly we need to move near my work, so thats a given. and dont want to lose the house so we need to rent.
secondly my daughter wants to rent it as its perfect for her. id be some sort of b*st*rd to tell her ‘sorry, i know its ideal for you and the kids, but im gonna rent it to joe bloggs instead cos i dont know him’

and tbh at the moment it looks like it all fits together, so no letting agents, certificates, waiting to find people willing to rent it, and all the official bumph that takes ages and costs money.

EDIT: itd be pretty much unfurnished, again, compromising over some stuff we want to keep there for future and her wanting her own stuff in.

Landlords insurance.
Mine will pay if the property becomes inhabitable through fire , accidental damage
Will give me employers liablity if a tradesman floods the place
Will cover for malicious damage by the tennants
Contents up to £10k
Other smaller things like locks , lightning strike ,acts of terrorism.

Why not let it U/F to a 3rd party?
EPC , Pat test , Gas cert , 5l of magnolia ,smoke alarm(s) , CO alarm , Assured short term tennancy , inform Insurers, inform mtg provider, new locks + keys.
most estate agents will find a tennant for a fixed fee, then vet them for another fixed fee.

You can offset any profit against interest on the mtg and operating costs / repairs. big renovations that add value are not tax deductable.

and tbh at the moment it looks like it all fits together, so no letting agents, certificates, waiting to find people willing to rent it, and all the official bumph that takes ages and costs money

And just about everyone starts out thinking that when considering renting to family along with your other comments. They then learn…

That’s the trouble with experience, you need to have had it to enjoy the benefits of it. Hopefully, yours will be different….

Instead of starting a new topic does anyone have any experience of a mortgage lenders documentation stating you can rent the property out for 12 months for a set up fee of £100?

Is it normally straight forward to reapply for a second term or is it 12 months and no more? Mortgage term (1.2 above base rate) ends in Nov. 2015 so trying to not remortgage too soon before then and as I am about to be stung for £7000 in external works (as are the other 10 flats 😯 ) I am hoping to rent it out for 2 years to recoup the costs before I decide whether to sell or remortgage.

And just about everyone starts out thinking that when considering renting to family along with your other comments. They then learn…

That’s the trouble with experience, you need to have had it to enjoy the benefits of it. Hopefully, yours will be different….
yeah, i do realise that 😀 im having that conversation with myself right now, but still think its the only viable option we got for various reasons 🙂

I really can’t understand other people’s issues with this, unless none of them trust their children – although how many have children and grandchildren as you do, is probably pretty low.

And if you’ve the cash it’s a perfect way of passing money across with no tax implications – ie let her live there for free.

haha, cant really stretch to that mate, we’re skint ourselves and have to cover our new rent 🙂

more importantly how is son#1 ? Ignore if touchy subject atm .

not at all mate, hes half the reason we’re having to move 😀

hes back in the mental health unit now, couldnt look after himself in supported housing so social worker sent him back in there for his own safety. hes currently trying to get off the sh*t hes been taking, but its easier said than done :-/
boy 2 also trying to sort himself out a bit, but its all a bit too much for mrs expunk to cope with on her own while i work away. hence having to move next to work so i can support her more.