Questions/Advice on renting to a family member

Tra77

I'm in a position wherby I'm buying another (larger) property and keeping my existing (smaller) property. I've had letting agents round etc and was initially going to go down this route using their 'fully managed' service. Now, my sister and her partner (they are not married) have expressed an interest in renting from me, looking at the costs I could give them a reduced rate (as I wont have to pay agents fees) and still have enough/the same amount to cover mortgage payments plus extra and I'd be doing them a favour (bigger, better property for same cost as they are renting now).

Is this allowed? would my sisters partner be deemed as family (even if they are unmarried) and do I have to declare this to my mortgage company and if so why / what difference does it make as long as I'm making the mortgage payments each month?

Do I still need to have an epg done and gas certs (obviously I would get this one covered for my piece of mind regardless) by law?
Note: House she currently rents now has no certificates, checks in place!

Would this still be classed as taxable income in the same way as if I was letting via an agent?

Any other advice/info appreciated.

Obviously if I can save us both money then great but at the same time I don't want to be unknowingly doing anything that could/would be classed as rule breaking!

00ec25

Tra77 wrote: »

Do I still need to have an epg done and gas certs (obviously I would get this one covered for my piece of mind regardless) by law?
Note: House she currently rents now has no certificates, checks in place!

Would this still be classed as taxable income in the same way as if I was letting via an agent?

you will need an EPC - it is required whenever a building is being let "where energy is used to condition the indoor climate"

the gas is also clear cut: if you rent out a property then you are required by law to get a gassafe safety check done irrespective of who the tenants are

it will be classed as taxable income and you will need to declare this to HMRC yourself. (Also if not already aware, please remember that you can only deduct the interest element of the mortgage payments, not any capital repayment element, when establishing what is your taxable profit)

VIGILANT22

[QUOTE=Tra77
Is this allowed? would my sisters partner be deemed as family (even if they are unmarried) and do I have to declare this to my mortgage company and if so why / what difference does it make as long as I'm making the mortgage payments each month? QUOTE]

Letting to family is sometimes a question on the app....Some mortgage lenders are ok with letting to family ....

Sammy85_2

00ec25 wrote: »

if you have already approached an agent with a view to lettuing the property then the EPC is a grey area since you are required to have one if you market a property, however, if you have not signed up with an agent and have found a prospectiove tenant without having done any explicit marketing yourself then the grey bit kicks in meaning you may not necessarily need an EPC

Sorry to correct you but...

You need an EPC regardless of whether it has been marketed (i think you may be confused with HIPs there)

An EPC is required for any building being let or sold if it had a source of heating/cooling within the building. (please see EPC stuff on direct.gov.uk for further guidance)

Tra77

VIGILANT22 wrote: »

[QUOTE=Tra77
Is this allowed? would my sisters partner be deemed as family (even if they are unmarried) and do I have to declare this to my mortgage company and if so why / what difference does it make as long as I'm making the mortgage payments each month? QUOTE]

Letting to family is sometimes a question on the app....Some mortgage lenders are ok with letting to family ....

Why do they ask this?

Tra77

Sammy85 wrote: »

Sorry to correct you but...

You need an EPC regardless of whether it has been marketed (i think you may be confused with HIPs there)

An EPC is required for any building being let or sold if it had a source of heating/cooling within the building. (please see EPC stuff on direct.gov.uk for further guidance)

Thanks, I'll take a look.

00ec25

Sammy85 wrote: »

Sorry to correct you but...

You need an EPC regardless of whether it has been marketed (i think you may be confused with HIPs there)

An EPC is required for any building being let or sold if it had a source of heating/cooling within the building. (please see EPC stuff on direct.gov.uk for further guidance)

oops - I stand correctled - I was thinking of HIPS

VIGILANT22

[QUOTE=Tra77_Why_do_they_ask_this?[/QUOTE]

As a rule, buy to let properties are not regulated by the Financial Services Authority.

In accordance with FSA rules ..properties where 40% or over is occupied by the mortgage holder or a member of their family mortgages are regulated.

Regulated mortgages have to be dealt with in a different way to unregulated normal buy to lets, so lenders could not treat regulated mortgages as unregulated mortgages.

The same goes for a mortgage broker, if you are using one they should treat this as a regulated btl...Don't worry, in fact it is better for you more protection....

I guess you may find the odd mortgage adviser (still some rogue's around) who would tell you not to disclose this...If you have that experience don't use them....plenty reputable lenders will allow btl for family....:)

G_M

You need to check with your mortgage provider and insurance company. It depends what they class as 'family'. The fact that there is a tenancy agreement (whether written or just verbal) may make a difference to them too. If rent is being paid, a tenancy exists.

Personally, though, I'd advise against this. Renting to family/friends can lead to horrendous problems.

If an un-related tenant gets made redundant and can't pay the rent, you can evict them. If your sister/partner...... (or they split up/whatever), will you evict her? If so, how will that affect your relationship? What will the rest of the family think of you? And if not, what happens to your mortgage?