Short Term Rent for Friends...then sell them the house!

Fudgie

Hi

We have had our house up for sale for some time now with no joy, but have found a place we want to move to.

We do have savings to put down as a deposit on the new house, but need to sort our current house out.

My sister and fiance are currently away travelling but she has suggested that when they get back after Xmas she would rent our house out for 6-12 months, get her cash sorted out and would then buy the house from us. This would allow us to get a new property and pay the mortgage on our current house with my sisters "rent".

If we rent to family/friends do we need to become "landords" and do the whole tenancy thing. Or can we just let them live there and pay us the mortgage costs. We would tell our Mortgage provider what we are doing. Effectively we would have 2 residential mortgages for 6-12 months and then sell the property.

This would allow us to move and get a sale of our current house in the bag later next year. If we have to do a buy to let it will be pretty expensive and a lot of hastle just for letting my sister live in our house.

Any help appreciated.

BitterAndTwisted

If you rent your property to anyone, be they strangers or family, you automatically become landlords with all of the legal responsibilities that entails.

Also, you will have to declare the rental income on your tax-return but the interest on the mortgage and repair expenses can be offset against it.

Join a Landlords Association so you know what you might be getting yourself into.

Mixing business with family and friends can be disastrous and I would advise against it tbh.

missile

Be very cautious lending (or renting) to family and friends is a sure fire route to trouble.

As soon as she moves in she will have tenants rights and you could be in deep !!!!!!.

hazyjo

Tread very carefully. What if what they offer is way under what you want to accept? If it's not selling now, they're not going to want to pay top price for it and will probably want a deal.

Would they stay renting if they decided against buying it, or would you turf them out? What if one of them lost their job, or if they couldn't afford to pay rent for a while? What if they can't get a mortgage? If they're away travelling, do they have jobs to come back to? What if... ah, there are 1000 what ifs. I'd advise against it. If you rent it out, you need to be a LL with your head, not your heart, especially if you have a new mortgage relying on the rent payment from your old place!

Jx

gfplux

Please be very, very careful. Your sister has no idea what she will feel like when she gets back to the UK. She may want to go travelling again.

G_M

Recipe for disaster. Beware. Yes you're a landlord, need mortgagee's permission, change your insurance, declare income for tax, need gas safety certificate etc etc.

And you need to be a business person, not a relative. If rent stops will you evict? If purchase falls through, will you continue to rent to them or try to sell (with tenants in place!!!) on open market again. SOOOoo many problematic possibilities.

Rent privately if you must, not to relatives.

Eton_Rifle

I think the chance of your sister actually buying your house is very slim.

She might really mean it now and move in with the very best intentions but once inside, she'll gradually find all kinds of things with the house that don't quite suit, then she'll cast an eye on other houses for sale and before long it will be 'would you mind terribly if I didn't buy this house, I've found something perfect for us and it's in the right catchment area so I really have no choice etc etc ...'

If you are prepared for this, that sooner or later you will probably be dependent on strangers for the rent money then do go ahead.

poppysarah

You have not sold yours because of ...?

Price? Don't assume your sister would want to pay the price it's on at.

Hammyman

Fudgie wrote: »

If we rent to family/friends do we need to become "landords" and do the whole tenancy thing. Or can we just let them live there and pay us the mortgage costs. We would tell our Mortgage provider what we are doing. Effectively we would have 2 residential mortgages for 6-12 months and then sell the property.

This would allow us to move and get a sale of our current house in the bag later next year. If we have to do a buy to let it will be pretty expensive and a lot of hastle just for letting my sister live in our house.

Any help appreciated.

You become landlords whether an official arrangement has been made or not. Without an official tenancy agreement in place, they are in a very strong position when you try to get them out and it could take 18 months or more if it got sticky.