Renting my mortgaged house to family whilst relocating

retrocircles

I'm considering relocating 200 miles away. I have a mortgaged home & planned to allow my sister to live here. She wouldn't be paying me formal rent, only money as and when she could afford it (she recently split up with her partner & now lives alone & money is tight). The perks of this is if after 12 months I don't like my new location, I can come back. I will be renting in the new location to begin with. If I like it there I will sell my house here, possibly after 18 months or so.

What should I consider when renting to family? Should I make any form of contract? I trust my sister fully, so? Do I really need to notify my lender. I hate my lender & try to avoid all contact. I won't be changing my address, just re-routing my mail until we eventually buy in the new location.

I have cats & a lot of rental properties are 'no pets'. Should I offer a larger deposit to try to sway the landlord? (They are indoor cats & have caused no damage to my own home).

Landlords ask for references from previous landlords, obviously I don't have one, so what should I do?

I don't know if I've considered everything, but am trying to cover all ground possible.

VIGILANT22

First, you require permission from your lender.......

retrocircles

VIGILANT22 wrote: »

First, you require permission from your lender.......

To allow my SISTER to live there? I can have anyone I like living in my house in regards to family!

If it was someone I didn't know, fair enough... but I'm not going to go through the hassle of approaching my much hated lender for something like this.

Jowo_2

retrocircles wrote: »

To allow my SISTER to live there? I can have anyone I like living in my house in regards to family!

.

Vigilant22 is correct and is doing you a great favour in reminding you of your obligations which does actually apply to you, even though you feel it doesn't and have a beef with your lender. If you accept money from them and aren't living there, they become a tenant and permission from the lender is required. The fact that they are a relative is irrelevant.

In creating a tenancy, there are obligations for the landlord to comply with extensive regulations, including permission from the lender and insurer, a gas safety certificate on an annual basis if there's a boiler/gas appliances in the property.

also, if you don't charge a commercial rent in the beginning and there is no tenancy contract, and your sister later decides to claim LHA for that property, she could be refused on the basis that its a contrived tenancy.

it is much better to formalise everything to save misunderstandings and disputes. its fairly common on landlord forums for amateur landlords to find it backfires to rent their properties to friends and relatives on a casual basis. examples include relatives refusing to leave when the owner wants to come back, not paying the rent, damaging the property and so forth. having a business relationship (which is what a landlord/tenant relationship is) alongside a personal one is much harder to imagine as favours and slack creep into it.

go the landlordzone website to understand how to be a landlord.

Ditch_Crawler

I would be surprised if your lender would have any objection to your sister living with you as a lodger, provided that the house remains as your main home address etc. It may be that the mortgage deed makes reference to 'you and your immediate family' or some such phrase, and I think siblings are generally regarded as 'immediate family' - for the purposes of landlord/tenant regulations, I am pretty certain that a sibling in the house, as lodger, would be exempt.

If you are satisfied in your own mind that for the time being at least, your main 'base' will remain at your present address, and can produce evidence to that effect if asked, then, so long as no personal conflicts arise between you and your sister, I would think there shouldn't be any problem.

dc

Annisele

I don't think the sister would be a 'lodger' though.

Lodgers live in the same house as their resident landlord. The OP would be living somewhere else, so (if the sister pays rent) I think it would be hard to argue that the sister wasn't a tenant. The OP should check his agreement with his lender; that should shed some light on the issue.

I think that Vigilant22 and Jowo are right, and the OP does need permission from his lender and insurer. And I'd second the landlordzone recommendation; lots of good advice from experienced landlords on there.

ailuro2

If she's paying you any money you need to tell them.

It has legal implications.;)

nmbash

A friend of mine, rented to house to her sister because she was relocating. They had a formal tenancy agreement.

That did not go according to plan and they moved back to the UK. They gave the sister plenty of notice, but she refused to move and also stopped paying rent. They then had to rent something closer to home and pay the mortgage as well. It was very stressful for them.

They had to pay solictor fees, go to court etc before she moved. If you don't have a formal contract, I'm not sure what you could do if she did not leave.

I'm sure you and your sister get on fine, but you don't know what will happen in the future. She might find someone, who also moves in. Then what? He might refuse to leave.

If I was in your situation I would do a formal contract. I know my sister would also think that was the right thing to do.

Fire_Fox

If you take ANY money from your sister you will be legally classed as a landlord, you and your tenant will have all the usual rights and responsibilities. You definitely need permission from the lender to let the house to your sister as she will not be either your guest or your lodger as the house will no longer be your principle primary residence. Any income from the property will have to be declared on a tax return.

Fire_Fox

Ditch_Crawler wrote: »

I would be surprised if your lender would have any objection to your sister living with you as a lodger, provided that the house remains as your main home address etc. It may be that the mortgage deed makes reference to 'you and your immediate family' or some such phrase, and I think siblings are generally regarded as 'immediate family' - for the purposes of landlord/tenant regulations, I am pretty certain that a sibling in the house, as lodger, would be exempt.

If you are satisfied in your own mind that for the time being at least, your main 'base' will remain at your present address, and can produce evidence to that effect if asked, then, so long as no personal conflicts arise between you and your sister, I would think there shouldn't be any problem.

dc

Poor advice: you don't get to choose where your primary residence is, the council and/ or inland revenue have rules which dictate it. The OP clearly stated she would be relocating, pretending you still live there may be classed as mortgage fraud and may be classed as tax evasion.

Ditch_Crawler

Fire_Fox wrote: »

Poor advice: you don't get to choose where your primary residence is, the council and/ or inland revenue have rules which dictate it. The OP clearly stated she would be relocating, pretending you still live there may be classed as mortgage fraud and may be classed as tax evasion.

I disagree. The OP clearly stated that he/she was considering relocating, and would keep open the option to stay put if the trial move failed to work out.

Lots of people work in a different place from where they live, and, like you say, councils and IRC have guidelines which have to be satisfied. But no two cases will ever be the same, and careful judgment has to be applied in each case.

DC