renting my house to my friend

johnnyren

hi this may have been covered elsewhere in the site but any help and advice would be appreciated. for the last 5years my friend has been staying in my flat, and giving me money towards the mortgage.
its a very relaxed agreement, we havent bothered with a lease or anything for the last few years.
i moved away for work reasons but still get my mail sent to the lat, as i said were pals and its all relaxed,
however he tells me the bank were at the door asking about our arrangement, how much he pays ect, now i realise i was meant to inform the bank he was staying there, i gen didnt know i was to do that,
before i go in and see them, am i in serious bother? please help, getting a bit worried here

Emmzi

well technically they could ask for immediate repayment of the mortgage as you have breached the terms of it

It is fae more likely they want to put you on a more expensive buy to let product and make sure you have proper landlord's insurance

you do have a gas safety certificate, don't you?

tbs624

If you buy a property on a residential mortgage then you need the Lender's consent to let the property - pleading ignorance doesn't alter that fact. There is a greater risk for the Lender when a property is tenanted which is why BTL mortages carry a higher rate of interest and why those Lender's who to offer CTL will usually (a) place strict limits on the let and (b) make a charge for giving that consent.

Essentially, you have breached your Lender's Ts and Cs.However "relaxed" you think your arrangement may be, you are not living there, someone else has occupancy and they are paying you rent. You will have to get on and "fess up" to your Lender and ask what they would like you to do.

There are other concerns though:

Does your insurance company know that you have a tenant in place? If you have failed to notify them that (a) you are no longer resident and (b) the property is effectively let to someone else then your cover will be invalidated. These are "material facts"

Who has been listed on the electoral register as being resident at that address for the past 5 years?

Have you complied with the gas safety regs by having an annual check/certification of all gas appliances in the property?

Have you kept appropriate financial records and declared your rental income to HMRC? Even if you make no profit you still have to declare this "unearned income".

johnnyren

my friend has been on the electoral register at the address, and no the insurance company dont know, as i said we did a lease about 5 years ago, but nothing since, i basically havent did anything.
i will go in and see what the bank say. as for the hmrc situatiom, will the bank act on that or can i start doing that myself ? this is a nightmare

Slinky

The bank were at the door? Since when did people from the bank ever call round at customers homes?

johnnyren

i did think it also strange, but thats who she said she was from

skintandscared_2

Did your friend not ask to see some formal ID? They just stood there and discussed their finances with a complete stranger?

Is your friend on any benefits? It may be that the person was investigating their financial situation as an individual, rather than their situation as your tenant? But it all sounds very odd!

The only person who turned up at our flat was a debt collector looking for my cousin. He was asking financial questions but we just refused to answer. Do you have any debts that someone could be chasing by going to your home?

theartfullodger

johnnyren wrote: »

hi this may have been covered elsewhere in the site but any help and advice would be appreciated. for the last 5years my friend has been staying in my flat, and giving me money towards the mortgage.
its a very relaxed agreement, we havent bothered with a lease or anything for the last few years.
i moved away for work reasons but still get my mail sent to the lat, as i said were pals and its all relaxed,
..........

Ah....


You moved away & no longer live there?? If so friend is now tenant on an AST, you can't get them out without a court order & bailiffs carrying them out.. i.e. no, he ain't a lodger no more!!

Relaxed agreement?? Hope it's market rent rate as HMRC may otherwise decide to tax you at what the rent should be... (you do of course declare your property income to HMRC...)

Oh, and you have Landlord insurance ?? (otherwise not covered if it burns down..) and gas safety cert. & EPC etc. etc. etc. etc???

If the Bank are checking up (no, I didn't believe it was them but someone else perhaps..either..) then assume HMRC, lender, local council etc etc.. Lenders are advised when names change on electoral roll btw..

Cheers!

tbs624

Regardless of the likelihood of the Bank sending someone to do a spot check the OP clearly needs to sort out the formalities involved with letting a property out.

OP - rather than worrying about what may happen just get on and ring your lender, your ins co and and then ring local HMRC office (Google PIM (property income manual) and SA105 and related helpsheets and gather together any receipts that you have related to the letting.

You say

johnnyren wrote: »

..., as i said we did a lease about 5 years ago, but nothing since, i basically havent did anything.

which is slightly different to how many would interpret your OP

johnnyren wrote: »

for the last 5years my friend has been staying in my flat, and giving me money towards the mortgage.
its a very relaxed agreement, we havent bothered with a lease or anything for the last few years.

However, if the property is in Eng or Wales and you say you "did a lease about 5 years ago, but nothing since" , then it's likely that you started with an AST (assured shorthold tenancy) and that this then became a statutory periodic agreement once the original contract expired. This means that all the original tenancy terms apply except for those on "determination", ie how the tenancy may be ended ( one month notice from T, two from the LL)

DannyboyMidlands

I think that the bank might be the least of your worries. I'd be more concerned about HMRC chasing you for 5 years worth of tax evasion or the benefits office investigating claims that either of you have been making.

may_fair

Translation: "for the last 5years my friend has been [STRIKE]staying in[/STRIKE] renting my flat, and [STRIKE]giving me money towards the mortgage[/STRIKE] paying me rent.

[STRIKE]its a very relaxed agreement[/STRIKE] I don't know anything about my statutory legal obligations as landlord, [STRIKE]we havent bothered with a lease or anything for the last few years[/STRIKE] the tenancy is now periodic after the fixed term expired.

i moved away for work reasons but still get my mail sent to the flat, as i said were pals and [STRIKE]its all relaxed[/STRIKE] I've been evading tax on the income,
however he tells me the bank were at the door asking about our arrangement, how much he pays ect, now i realise i was meant to inform the bank [STRIKE]he was staying there[/STRIKE] that I was subletting the flat, i gen didnt know i was to do that, because I didn't bother to read my mortgage terms and conditions
before i go in and see them, am i in serious bother? please help, getting a bit worried here"