Renting my property question.

hebron

I got left part of a house with my brother and have been trying to sell it. As it hasn't sold yet and my friend who has sold his property and can't find no-where would like to rent it from us. I have decided that I would not be prepared to take it off the market for less than 6 month rental from him as its not worth the hassle.

As I have never done this before or been in this position before; is there any thing I need to do to be able to rent to him, either legal or common sense things.
I would appreciate any advice. I am not worried about renting to him as he is honest and would look after my home but it might not be worth doing. Thanks for any advice.

garthdp

if you are going to rent it to a friend get all the legal things done eg inventory 6 month shorthold contract deposit rent in advance etc

.Treat it as a business then if something does go wrong your @rse is covered.

If he is a friend he will accept this as neccesary

00ec25

As above it is much safer to put this on a formal basis. You and the tenant will need to sign Assured Shorthold Tenancy agreement (AST) and then follow a very rigid process for issuing paperwork etc.

An AST is legally enforceable and has aminimum term of 6 months. It means that for the first 3 months neither you nor the tenant can terminate the agreement, ie tenant cannot move out without paying balance of rent. After 3 months the tenant can move out if he finds a replacement tenant, otherwise the tenant remains liable for another 3 months rent. After 6 months either the tenant or landlord must “serve notice” to leave/repossess

However, this is not as bad as it sounds provided he remains a friend and your relationship does not breakdown, in which case most of the paperwork and procedure is irrelevant since it relates to recovering possession where the tenant refuses to move out or has arrears – if that happens do it through a solicitor as one tiny slip up in the proscribed procedure means you could lose your house (but that's why you want an AST as a fall back so the process is set out and enforceable)

Depending on your circumstances you will need to
a) notify your mortgage company. It is rare for them to refuse permission but if the house burns down and you have not told them they will not be accommodating.
b) notify your buildings and contents insurance company and find out if they will continue to cover you. Otherwise you will need to change policy and get specialist landlord insurance (its not much more expensive than householder cover and again if you have not done so your claim will be rather difficult if the fire happens)
c) do an inventory (list and photos is best) including condtion and get it igned by both of you, he may be a friend and may not nick things but arguing over possessions can be very unpleasant

LEGALLY, and irrespective of whether you do formal paperwork, the mere act of taking rent payment from an occupant in a property which is no longer your sole or main residence means you are required to:
a) have an energy performance certificate (failure to do so is an offence with a £200 fine)

b) have a gas safety certificate (look at the HSE website under HSE . gov. uk / gas / domestic / faqlandlord)

c) declare the income to HMRC, if you do not already complete a self assessment tax return then you may be required to do so or they may agree an alternative with you if you have "simple" tax affairs

d) if you take a deposit, no matter how small, you must use a Deposit Protection Scheme, it is illegal for you to hold the deposit yourself and the fines are £big, read it up on the directgov website under TenancyDeposit

Welcome to the world of renting!!!
Go for it????

aah

use an agent. they will only take ten percent of the rent and you can claim tax relief on their charges. they wil advise you on how to make y our house safe and legal. who would not want that

(i am not an agent)

PasturesNew

hebron wrote: »

... is there any thing I need to do to be able to rent to him, either legal or common sense things.

120 legal things ....

david29dpo

Post 3 is spot on, excellent advise.

hebron

Thank you for your advice.
Would I have to get the shorthold tenancy agreement done through our solicitor?
And.
Where would I have to go for a deposit protection scheme?
I have already decided that I would only take 6 month rent of him upfront whether he stayed 6 months or not, other wise i would not rent to him.
When the 6 months is up is another thing.

Thank you.

seven-day-weekend

Try www.landlordzone.com for all sorts of forms, legal advice and help re gas certificates etc.

00ec25

as above, the AST is merely a set of formulaic words and these are now well established so little point in getting a solicitor to do this unless you want to put non standard/specific clauses in the agreement covering things which matter to you and only you can know about (eg shared access rights for driveways).

Buy the template document from one of the online sellers (such as landlordzone or many many others) or buy it from W H Smith. It is simply a document you and the tenant sign - the form explains when you have to get it independently witnessed (hint: neither should sign the agreement before the tenant takes "possession" in the legal sense)

can I respectfully suggest you use google a bit yourself, tap in deposit protection scheme and look at the direct.gov website generally for renting guidance, it is mostly self explanatory,

the deposit scheme (the Custodial Scheme is free) is explained here:
www . direct . gov . uk / en / tenancydeposit / dg 066380
(remove the spaces as I cannot post direct hyperlinks yet under the MSE forum rules as I have not posted enough messages to earn that priviledge)

do not confuse a deposit with rent in advance.

if you take a deposit (hint: no more than 2 months rent otherwise it is potentially "unfair") it will of course have to be returned when the tenant vacates, the rent is rent. The purpose of the Deposit Scheme is to protect the tenant from landlords who deduct unfair amounts from the deposit leaving the tenant with little or nothing given back.

one other point, the underlying princple of an AST is that you either agree at the outset a fixed term of the tenancy (hint: any period you want but never exceed 3 years) or no fixed term in which case it is a "periodic basis" but you as landlord cannot get repossession via a court until 6 months have passed. Given you intend to collect 6 months in advance make sure the AST form records that the rent is payable monthly (hint: weekly rents = further complications) as this establishes the basis of the periodic tenancy and also what happens at the end of any fixed term - if you do not issue another fixed term

You will need to decide what you are doing at least 2 months before the end of the 6 month period because under AST you, as the landlord, must give 2 months notice using specific forms (landlordzone has them) if you want repossesssion at that point.
I suggest you read up on periodic tenancy rules (hint: how the original AST sets out the frequency of when the rent is due, not when it's collected, matters) and decide if you want to do that, or issue another fixed period. How you get repossession after 6 months is very strictly set out in law based on fixed or periodic rules

I rather like this statement so please forgive me for using it: my liability to you for this advice is limited to the financial value you have given me for receiving it