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    • IsThisUserNameTaken
    • By IsThisUserNameTaken 9th Jul 17, 7:27 AM
    • 29Posts
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    IsThisUserNameTaken
    Live in landlord definition, alternatives?
    • #1
    • 9th Jul 17, 7:27 AM
    Live in landlord definition, alternatives? 9th Jul 17 at 7:27 AM
    Am looking for options, and have no idea where to start looking. Slight context; I'm a lone parent of a child under 5 and am not working due to caring responsibilities. I have seen a few suitable looking jobs come up but not in the area. I hope to relocate but need to sell here too. I'm looking for an interim solution of renting out my house to subsidise my rental costs, which would allow me to start work, while waiting to sell my house and buy something more permanent in a new area.

    I was looking at the rent a room scheme and becoming a Resident landlord, to give the most flexibility, but I am so out of my depth I don't know what my options are or where to start looking.

    The definition of live in landlord is confusing me, I don't know whether I could qualify; any place I could afford to rent would be in the league of a bedsit/studio flat, I have pets, everything here where I live now. In terms of where I expect to sleep the most, well that would likely be the rented accommodation, though as it would be so tiny, I can't see us actually spending much time there, I'm not sure I'd sleep in either place even 50% of the time. I'd like my existing home to count under the rent a room scheme and for me to be considered a live in landlord in the ideal scenario, but no idea whether I'd meet the criteria. If not, can anyone point me in the right direction to find out about options please? I'm looking for a short term solution really.
    Last edited by IsThisUserNameTaken; 09-07-2017 at 7:44 AM.
Page 2
    • IsThisUserNameTaken
    • By IsThisUserNameTaken 9th Jul 17, 9:57 AM
    • 29 Posts
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    IsThisUserNameTaken
    So your issue is whether to rent the whole house through a normal ast until you can sell and buy locally when you know you want to stay there long term, or whether to keep the house as yours, maybe to come back on a regular basis (so that your daughter can see her dad?) and therefore only want to rent one room whilst the rest is still available for you, in which case, you want to know whether you can do that avoiding an ast?

    As said, you are going to struggle declaring this as your main residence from the way you describe it. Wouldn't be easier to rent the whole house anyway? You'll get more rent and even if you have to come back regularly, would be cheaper to stay in a hotel during your stay. There is then maybe the issue of storing some furniture if you want to move somewhere smaller until you can buy?
    Originally posted by FBaby
    I'd get a lot more if I rented the whole house. My mortgage lender will only allow me to rent the house out for up to one year, I'm unclear as to contract lengths with tenants, but because my mortgage lenders won't allow over a year I cannot cross that threshold, and that's why I was looking more to live in landlord. I have literally no idea how long it takes to sell, though a couple of houses in my street have taken about a year, I'm in a semi-rural location. I perhaps would have preferred to rent longer term to give me time to actually see the reality of relocating to a new area and to give me time to find a house that would really work for us once I knew the area better, or return if that was a viable option.

    I don't know anything really about tenancies, it might be that there are obvious solutions that I'm missing, I genuinely don't know where to start looking, so was hoping that people here would offer insights, which there definitely have been really helpful ones.
    Last edited by IsThisUserNameTaken; 09-07-2017 at 10:00 AM.
    • Tiners
    • By Tiners 9th Jul 17, 10:04 AM
    • 223 Posts
    • 222 Thanks
    Tiners
    How are you going to lose £30,000 on the sale?
    • Cheeky_Monkey
    • By Cheeky_Monkey 9th Jul 17, 10:47 AM
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    Cheeky_Monkey
    What part of the phrase 'live in' don't you understand?

    In order for the person renting a room in your house to be a lodger rather than a tenant, you must be permanently living in the same house. Any other scenario, like the one you're suggesting, would mean that they would be a tenant. It's that simple.
    • IsThisUserNameTaken
    • By IsThisUserNameTaken 9th Jul 17, 1:03 PM
    • 29 Posts
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    IsThisUserNameTaken
    How are you going to lose £30,000 on the sale?
    Originally posted by Tiners
    It's an estimate, but if the job starts in September, it would need to be a very quick sale, I think £30000 is a conservative loss for the timescale needed. I cannot afford to both rent and pay a mortgage, so either need to have sold the house in order to pay rent/buy something else, or have a lodger so I can afford rent.
    • Tiners
    • By Tiners 9th Jul 17, 1:46 PM
    • 223 Posts
    • 222 Thanks
    Tiners
    It depends what this £30k reduction represents as a percentage of your perceived house value?

    I can only repeat what I've said previously, ANY house in ANY part of the UK will sell quickly and easily if it has a sensible and realistic asking price... it's only a ''slow market'' for overpriced houses with greedy deluded vendors.

    I live in North Wales, certainly not an area perceived as 'hot market' but I've seen 3 houses all sell in less than a week this month alone.. all 3 houses were just realistically priced and certainly weren't at giveaway bargain prices
    • 00ec25
    • By 00ec25 9th Jul 17, 1:57 PM
    • 5,558 Posts
    • 4,952 Thanks
    00ec25
    I was looking at the rent a room scheme and becoming a Resident landlord, to give the most flexibility, but I am so out of my depth I don't know what my options are or where to start looking.

    The definition of live in landlord is confusing me, I don't know whether I could qualify;
    Originally posted by IsThisUserNameTaken
    My daughter would of course come with me. It would mean renting something small, I can't afford anything more, I can't see us using the place as more than a base, but although not great in the short term, longer term it might be worth it.
    Originally posted by IsThisUserNameTaken
    you will not qualify for the Rent a Room scheme and if you try to claim the £7,500 tax free allowance that would be tax fraud.

    there is no single definition of resident LL for tax purposes (we are not talking about the right of the occupant under housing law). Whether the property qualifies as your only/main home is primarily based on the "matter of facts" and has been subject to numerous legal cases testing specific circumstances.

    the bottom line is each case is judged on its own merits. If you want a link then read this:
    https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4001

    "When the taxpayer has more than one home
    Whether a property is an individual’s only or main residence at any time in the basis period is entirely a question of fact. You should look critically at any claim for rent-a-room treatment for second homes and holiday homes. Normally we would expect the main residence to be the property that is the taxpayer’s home for most of the time. In other words, where friends and correspondents would expect to find the taxpayer.

    ...

    The main residence test for rent-a-room is a purely factual one: has the residence actually been the main residence at any time in the basis period? The judgement in Frost v Feltham [1980] 55TC10 gives some indication of the matters that are relevant in considering whether a property is a main residence."




    some of the factors considered are:
    • Most of their possessions are;
    • Where their family lives, if they are married or in a civil partnership;
    • Where they are registered with various organisations such as a bank, GP or an insurance company;
    • Where they are a member of clubs and societies.
    • If the individual has children, where they go to school;
    • At which residence the individual is registered to vote;
    • Where the individual works.
    in your case you will be living and working 250 miles away for most of the time. Your kid will be with you and may (or may not) be in school where you live but she sure as heck won't be left alone at the property which you want a "rent payer" to live in.

    you will not be able to claim the occupant is a lodger as you will not be a resident landlord in your main home, it will no longer be your main home. They will be a tenant and you will need to let it as an Assured Shorthold Tenancy (AST).

    As you wish to return to that property on occasion you obviously cannot grant exclusive occupation of it to your tenant. therefore your AST would be of a specific room with the right to access common parts of the property which will be shared with you. That does not make you a resident LL, it makes you a LL of a shared property

    read everything on GM's excellent guide to what you need to know and do to become a LL:

    http://forums.moneysavingexpert.com/showthread.php?t=5180214
    Last edited by 00ec25; 09-07-2017 at 2:06 PM.
    • IsThisUserNameTaken
    • By IsThisUserNameTaken 9th Jul 17, 2:14 PM
    • 29 Posts
    • 0 Thanks
    IsThisUserNameTaken
    What part of the phrase 'live in' don't you understand?

    In order for the person renting a room in your house to be a lodger rather than a tenant, you must be permanently living in the same house. Any other scenario, like the one you're suggesting, would mean that they would be a tenant. It's that simple.
    Originally posted by Cheeky_Monkey
    I'm a teacher, likely would be working 4 days per week. If you now factor in holiday time and weekends, I'd need to be in my work place home less than 50% of the time, though certainly it wouldn't be realistic to commute 250 miles each way. My own home is a house, the work base would be the cheapest flat that would accommodate us adequately, I can't see myself choosing to spend more time than needed there. I'd have been sleeping in both places a fair proportion of the time is my guess. I don't know what proportion of the time I'd have to have spent in my own home? do I have to sleep in my own house more than 50% of the time?or spend more hours in my home than the other? Or more than 50% of the hours available in the year in my own home? As it happens, it's moot, because as a previous poster stated, it would cause issues with getting my daughter into a local school, so it's a no go for me, but that's why I was questioning it. It didn't, and still doesn't seem black and white to me.
    • IsThisUserNameTaken
    • By IsThisUserNameTaken 9th Jul 17, 2:17 PM
    • 29 Posts
    • 0 Thanks
    IsThisUserNameTaken
    you will not qualify for the Rent a Room scheme and if you try to claim the £7,500 tax free allowance that would be tax fraud.

    there is no single definition of resident LL for tax purposes (we are not talking about the right of the occupant under housing law). Whether the property qualifies as your only/main home is primarily based on the "matter of facts" and has been subject to numerous legal cases testing specific circumstances.

    the bottom line is each case is judged on its own merits. If you want a link then read this:
    https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4001

    "When the taxpayer has more than one home
    Whether a property is an individualís only or main residence at any time in the basis period is entirely a question of fact. You should look critically at any claim for rent-a-room treatment for second homes and holiday homes. Normally we would expect the main residence to be the property that is the taxpayerís home for most of the time. In other words, where friends and correspondents would expect to find the taxpayer.

    ...

    The main residence test for rent-a-room is a purely factual one: has the residence actually been the main residence at any time in the basis period? The judgement in Frost v Feltham [1980] 55TC10 gives some indication of the matters that are relevant in considering whether a property is a main residence."




    some of the factors considered are:
    • Most of their possessions are;
    • Where their family lives, if they are married or in a civil partnership;
    • Where they are registered with various organisations such as a bank, GP or an insurance company;
    • Where they are a member of clubs and societies.
    • If the individual has children, where they go to school;
    • At which residence the individual is registered to vote;
    • Where the individual works.
    in your case you will be living and working 250 miles away for most of the time. Your kid will be with you and may (or may not) be in school where you live but she sure as heck won't be left alone at the property which you want a "rent payer" to live in.

    you will not be able to claim the occupant is a lodger as you will not be a resident landlord in your main home, it will no longer be your main home. They will be a tenant and you will need to let it as an Assured Shorthold Tenancy (AST).

    As you wish to return to that property on occasion you obviously cannot grant exclusive occupation of it to your tenant. therefore your AST would be of a specific room with the right to access common parts of the property which will be shared with you. That does not make you a resident LL, it makes you a LL of a shared property

    read everything on GM's excellent guide to what you need to know and do to become a LL:

    http://forums.moneysavingexpert.com/showthread.php?t=5180214
    Originally posted by 00ec25
    Thank you so much for the details. I had realised that it was a no go, but it's useful to know what the rules are for future
    • dionysia
    • By dionysia 9th Jul 17, 2:18 PM
    • 63 Posts
    • 131 Thanks
    dionysia
    It is possible to have your main home as somewhere other than the place you stay most nights, but there's no fixed legal definition. The question arises in a number of different tax and benefits issues in particular. Case law has set out some general things to consider when deciding which is your main residence (see for example here. Probably you'd be caught at some point by someone like HMRC (on whether you have a right to the Rent a Room relief), one of the councils (on where you should be paying council tax and whether or not they have a duty to provide your daughter with a school place), or a court (your 'lodger' taking you to court to claim AST rights). And then they would tell you, on the facts of your particular case, where your main home is for the purposes at hand. So it's high-risk.

    The other thing that makes your proposal pretty worrying is that to make the sums add up, you're relying on your tenant/lodger paying rent. If they stop paying but won't leave you're !!!!!!ed, not only because you can't afford it but because you then can't get rid of them without the question of whether you're live-in or not coming back up (see here - you can forcibly evict a lodger but not a tenant).
    Last edited by dionysia; 09-07-2017 at 2:21 PM.
    June 2017: owe £16,818.
    • G_M
    • By G_M 9th Jul 17, 2:36 PM
    • 42,269 Posts
    • 49,098 Thanks
    G_M

    Edit: haven't got my head round how to quote other people's posts in my reply, hence the responses being unclear as to whom I'm replying to sometimes.
    Originally posted by IsThisUserNameTaken
    Under each post there is a big button marked: "Quote".

    click on it. Then add whatever text you wish either above, or below, the quote.
    Last edited by G_M; 09-07-2017 at 2:41 PM.
    • G_M
    • By G_M 9th Jul 17, 2:40 PM
    • 42,269 Posts
    • 49,098 Thanks
    G_M
    "In your head" it may still be your main home.

    But in law, it would not. Your home would be where you live most of the time. Near your work

    You would be leaving a 'tenant' in exclusive occupation of your property, so he'd have all the legal rights and protections of a tenant, not least with an intitial 6 months security from eviction, and 2 months notice thereafter.

    you also have to declare the rent for tax. and comply with a raft of laws and regulations.

    Plus many buyers will not be interested once they find a tenant in occupation, even assuming your tenant allows them in to view (he may not!).

    ths idea is a non-starter.
    Last edited by G_M; 09-07-2017 at 5:22 PM.
    • IsThisUserNameTaken
    • By IsThisUserNameTaken 9th Jul 17, 2:45 PM
    • 29 Posts
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    IsThisUserNameTaken

    ths idea is a non-starter.
    Originally posted by G_M

    Yup - agreed!
    • IsThisUserNameTaken
    • By IsThisUserNameTaken 9th Jul 17, 2:57 PM
    • 29 Posts
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    IsThisUserNameTaken
    It depends what this £30k reduction represents as a percentage of your perceived house value?

    I can only repeat what I've said previously, ANY house in ANY part of the UK will sell quickly and easily if it has a sensible and realistic asking price... it's only a ''slow market'' for overpriced houses with greedy deluded vendors.

    I live in North Wales, certainly not an area perceived as 'hot market' but I've seen 3 houses all sell in less than a week this month alone.. all 3 houses were just realistically priced and certainly weren't at giveaway bargain prices
    Originally posted by Tiners



    I'm sure I misunderstood this post of yours from last Sunday then.

    [/SIZE][/B]


    That's how it always seemed to be in my area, the ones I thought were over priced seemed to sell quite quick whilst the ones that looked more reasonably priced seemed to hang around.

    I think buyers have some kind of 'Emperors new clothes syndrome' when it comes to houses... the more expensive one must be the better house, because, well it's more expensive!

    Things have changed now though, nothing seems to be selling, over priced or not.
    Originally posted by Tiners
    Last edited by IsThisUserNameTaken; 09-07-2017 at 4:15 PM.
    • saajan_12
    • By saajan_12 10th Jul 17, 1:29 PM
    • 996 Posts
    • 672 Thanks
    saajan_12
    As other posters have outlined, between your daughter’s school location, infrequent visits to the house (not every weekend) and your work location, you cannot call the house your main residence so be a ‘live in landlord’ with a ‘lodger’. However the following options are available:
    1) rent short term and sell house, then buy in new location chain free.
    - I understand this would be tight with the rent + mortgage, but in the short term are there other ways you can save up? Try asking your lender if they can do a mortgage payment holiday. This way you can scope out the new location and be in a position to buy chain free. Why do you think it would take so long to sell? If the market price is really £30k less than you were hoping, that’s a hit you’ll have to take sooner or later.

    2) let house out to tenant and rent in new location.
    - This will likely earn more rent than a lodger renting a room. You can claim back tax on the interest portion of mortgages.
    - However note you will be continuously liable for rent even if you let house has a void or the tenants get into rent arrears
    - Landlord responsibilities (e.g. repairs, deposit protection, gas safety certs) are onerous enough without living 4 hours away.
    - This is tax inefficient as you pay tax on the rent income but don’t get any relief on the rent you pay (even if you think of it as offsetting)
    - Your 12month limit is likely the max Consent To Let your lender will offer on the current mortgage. However, you may be able to change it to a Buy to Let interest only mortgage to continue this arrangement longer term.
    • IsThisUserNameTaken
    • By IsThisUserNameTaken 10th Jul 17, 8:43 PM
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    IsThisUserNameTaken
    Why do you think it would take so long to sell? If the market price is really £30k less than you were hoping, thatís a hit youíll have to take sooner or later.

    .
    Originally posted by saajan_12
    Thanks for the really detailed response. It is really useful to have others around as a sounding board and for varied experiences/views. The £30K hit was really an estimation as to how much I'd have to drop the price if I needed to complete within 8 weeks. I was hoping that there would be some way of affording the transition in the short term, but you're right, as you and other posters have said, there are so many other responsibilities involved that under the circumstances, I think it would be too much for me at this stage.
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