Renting and council tax

lilclaire

Hi everyone, I really need some advice!

My patner and I have been looking for somewhere to rent, and we wanted to rent privately (reasons being we are temping and recently my partner has been doing freelance work and only has accounts for the last 5 months so on paper our incomes dont look great so agencies are put off...) I found a house for rent that the owner was renting out on a room by room basis (3 bed) while he works abroad, now we have said that we would like it for a minimum of 6 months which he is fine with. He said he only wants £400 a month (to cover his costs abroad, which he told us he isn't planning on returning to the UK and that us renting for a longer term would be benificial to him) and that he will pay the council tax. Now this I am wondering if it is ok to do and is it in fact legal?!

It seems that its a really good deal for a couple looking for their first place to rent but I am not sure if its going to be 'above board'? He said something about needing to of owned the house for at least 7 years to save on tax(thats how I understood it, can anyone correct me?!), so wants to keep everything in his name...

Any advice would be much appreciated!
Thanks
<confused!>

Gorgeous_George

Sounds like wants use the rent a room scheme to avoid being taxed on rental income. No reason why you shouldn't go for it IMO.



gg

lilclaire

Thanks GG

So theres nothing 'dodgy' about renting in this way? As it would suit us cost wise!! I just don't want to get into any sort of trouble somewhere along the line...

He also said that utility bills would be kept in his name and we would just give his sister (who lives 10 mins away from the house) money for gas electric etc rather than having the bills in our name...

Again, is this ok to do?!

Gorgeous_George

I'm sure somebody will correct me if I'm wrong.

I think it's dodgy from the LL's end but you are in the clear.

Essentially, you are renting a room (or more) and he just doesn't happen to be there. It might be seen as tax evasion but only the LL would be guilty.

https://www.landlordzone.com forums would be another source of info.



GG

btloptingout

No not dodgy at all....You are essentially lodgers in his house.

LL is allowed a certain income from lodgers before paying tax (it used to be something like £3,600)....as he is earning £4800 from you he may be liable to a little bit of tax....but that's his responsibility.

One downside is that you have less rights in this rental than you do in either a AST/periodic tenancy. But then again you have a heck of a lot of flexibility to move on too.

I'd go for it, sounds like a decent solution to your needs.

Edit: He should be paying full council tax and not claiming a single persons discount (25%) but once again that's his responsibility.

lilclaire

Ooh thansk very much, you have put my mind at ease!

So basically, so if any authorities were to get on anyones back it would be the LLs not us? He said he would draw up a contract that would gurantee us the property for a minimum period of 6 months, I was happy with this as it would give us some security - is this good? What sort of contracts should I be looking for? I assume he will just get one off the net?!

Thanks again, so many questions!

Rick62

And it will still be the LL's principle residence in the UK, so why shouldn't he remain as the named person for council tax and utilities? Sounds fine to me.

thesaint

There is nothing wrong about what the landlord is doing.

Although he may draw up a contract, I thought that if you are lodgers, you have no right to stay in the house if it is his principle residence. If it went to court(worse case scenario) is a judge going to force you both to live together if he returned unexpectedly with nowhere to live?

lilclaire

Yes I see what you mean, he did mention the following though:

He said he would stay at his sisters if he were to come home at any point, as apparetly he has stayed there in the past before. He originally bought the house to rent out and lived with his girlfriend. He had tenants in, presumably as 'proper' rents as he said he charged them £500pcm..

They then split up and he moved into his sisters until the tenancy was up and then moved into the house. He then got work abroad and decided to rent the house out on a room by room basis (but now we said we wanted to rent the whole house for 6 months+) and is planning to stay abroad for the forseeable future.

Think thats the whole story now! But basically you are saying its worth going for it...?!

thesaint

If you trust what he says then go for it.

One thing though if everything is in his name, are you going to need utility bills to provide proof of address e.t.c in the next 6 months? If you are temping, lack of bills may be another negative mark against you.

Good luck

silvercar

the only risk is your landlord could move back in and could evict you at relatively short notice. he may also have the right to let other rooms ie are you guaranteed sole occupancy?

All these risks could be addressed in the contract you sign.