advice needed, renting to brother

jamielyn

I have decided to move into my boyfriends house, leaving my 2 bed flat empty, it is currently on the market and i dont expect it to sell, im not going to give it away at a stupid price , so im considering renting it to my brother and his girlfriend for 6 months, my mortgage company want £125.00 for advising them of this change, im not yet sure if they will increase my rate. I intend to keep it on the market and my brother is happy to proceed on this basis. What i am concerned about is my mortgage company refusing because its a family member, i am prepared to do a tenancy agreement ( also required by mortgage company) but i dont feel the need to use an agent as they are both in full time work, my mortgage company dont insist on an agent being used. What i also dont feel i need is a deposit from them. Could anyone provide me with any advice on how to proceed, i know if i dont declare it my mortgage company could increase the rate by 1 %, i will do all the necessary things a landlord should do ie gas check, electric check, my boyfriend and i have been together for five years and been in seperate propertys, it just seems like the best option whilst we are unable to sell the flat, i dont see why i should knock £15,000 off the asking price just to be rid of it. Also ref insurance , its ex council leasehold, whilst i dont need their permission to rent it, they wont comment on insurance. Any advice, reassurance, information gratefully received.

Keep smiling. x

TTMCMschine

jamielyn wrote: »

im not going to give it away at a stupid price

Today's stupid price - tomorow's market value.


Anyhow - i rent from a family member, but it isn't official. Been here for over five years, leave July. Gas checks get done (repairs - no worries), etc. They pay contents ins, because most of their stuff still here.

edit - just realised maybe you think the stupid price is too high and you're waiting for the value to drop to a more sensible level. In which case i agree - people are trying to sell their houses for stupid amounts of money. They forget how over-inflated they've become in the last few years. I'm so pleased you've realised.

jamielyn

TTMCMschine wrote: »

Today's stupid price - tomorow's market value.


Anyhow - i rent from a family member, but it isn't official. Been here for over five years, leave July. Gas checks get done (repairs - no worries), etc. They pay contents ins, because most of their stuff still here.

edit - just realised maybe you think the stupid price is too high and you're waiting for the value to drop to a more sensible level. In which case i agree - people are trying to sell their houses for stupid amounts of money. They forget how over-inflated they've become in the last few years. I'm so pleased you've realised.

Price of 2 bed flat at £80,000 already reflects the market situation, i dont think its overpriced at all, one up the road is priced at £100,000, i have received one offer of £60,000, there needs to be a balance of being realistic , which i think i am and being very fortunate not to give in to those seeking unrealistic bargains. I am very grateful for the position that i am in.

tbs624

jamielyn wrote: »

... im considering renting it to my brother and his girlfriend for 6 months, my mortgage company want £125.00 for advising them of this change, im not yet sure if they will increase my rate. ..... What i also dont feel i need is a deposit from them.

Always an interesting one renting to family and friends. Say 3 months down the line your brother and his GF split up, he moves out and his GF stays behind and refuses to pay you rent and/or damages your property? You may regret not having had a deposit. If you do take a deposit you will need to comply with the tenancy deposit law and scheme register it, giving the Ts a copy of the scheme's prescribed info.

You need a proper tenancy agreement in place that protects both you and them and, as you say, you will need a gas safety check & certificate. You will need LL insurance cover - if you join a national LL association you can get a reduction on the premiums as well as having access to good advice (membership fees tax deductable)

You also need to declare to HMRC and keep proper records of your rental income & expenditure, even though you probably won't make any profit. Note that you can only offset the interest portion of your mortgage repayments

jamielyn

tbs624 wrote: »

Always an interesting one renting to family and friends. Say 3 months down the line your brother and his GF split up, he moves out and his GF stays behind and refuses to pay you rent and/or damages your property? You may regret not having had a deposit. If you do take a deposit you will need to comply with the tenancy deposit law and scheme register it, giving the Ts a copy of the scheme's prescribed info.

You need a proper tenancy agreement in place that protects both you and them and, as you say, you will need a gas safety check & certificate. You will need LL insurance cover - if you join a national LL association you can get a reduction on the premiums as well as having access to good advice (membership fees tax deductable)

You also need to declare to HMRC and keep proper records of your rental income & expenditure, even though you probably won't make any profit. Note that you can only offset the interest portion of your mortgage repayments

Thank you what helpful advice.

terryw

Have you thought about taking brother and girlfriend in as lodgers? This would save money for both of you and cut down on a lot of the potential problems outlined by tbs above. After all, if a buyer does appear, brother of not, all sorts of things could occur to avoid you being able to give vacant possession if you have tenants.

Just a thought

terryw

Geenie

I wouldn't take a deposit myself if family. I let a house for 12 months last year to long standing friends, and didn't take a deposit for that either! But in truth, I didn't have a mortgage company involved, so it may be different. Pitch the rent at a reasonable level to your brother and keeping the bank happy with payments coming in, as not charging enough can cause problems sometimes when letting to families.

Inform insurance company, as you need a different one when letting.

jamielyn

My brother is aware that i am trying to sell and is respectfull that if a buyer should materialise he would leave as soon as possible, my estate agent has been honest and confirmed that unless i drop the flat price by £15,000 he doesnt expect an influx, i have priced the flat rent competitively so its fair to all parties, but as he is family i dont want a deposit , this is beneficial to us all and i obviously feel more relaxed rather than risk anyone else renting it, tbs did raise an interesting point about the posibility of them splitting up, both sets of parents live within 5 minutes so i dont think a non paying sitting tenant would be a problem and everyone seems to be supportive of this, but it is something i could enclose within my agreement with them, i dont want to take them in as lodgers, no one wants to be a gooseberry and im keen to move in with my partner, all your advice is appreciated, i feel very positive about this