Rental Price Advice !!!!!!!!!

ilovemyfs

Dear Fellow MSE experts. I need some help and advice please.

My wife and I have just retired and are off travelling for a few years.

We have sold our home, and bought 2 smaller ones with the proceeds.

A 2 bed for 135K (end terrace with garage) and a 3 bed for 150K (end terrace). BOTH on the same estate

We are going to rent them to our 2 grown up children, at a reduced rate, so we have an income, and they have somewhere to live, and at a lower rate than normal so they can save for their own deposit for a home.

Rental for the 3 bed would normally be 695 ish and the 2 bed 600 ish)

What do you all think would be a fair housekeeping price for them to pay us ?

I was thinking 2 bed - £350 and 3 bed - £425

I just want to be fair, so we get an income, they live cheaper than normal rental, and thus they can save for their own home

This MSE community is fab, so im hoping for some advice !

Thanks all in advance !

BitterAndTwisted

It doesn't matter what we think, it's what you and your children think which is important. In my book, any reduction on the market-rate is a gift worth having.

How much of an income is this rent going to be once you've declared it to the Revenue? Even though you are renting to family you will be acquiring all of the same legal responsibilities as a professional landlord would. I sincerely hope that you've acquainted yourselves with them.

robatwork

I think 2 bed £350 and 3 bed £425

Shelldean

the only problem I forsee is if your children ever need to claim housing benefit.

ognum

What is your final plan for these houses, are they going to be yours or belong to your children?

If you plan to give them to your children maybe you should share ownership with them and that would mean you would not have all the landlord issues. You would though have to declare the income from your share.

No one can tell you if what you are doing is 'right'. How do you know the children will put the money into their house fund and not squander it on booze, fags and parties? How would you feel if they did?

You are making a kind gesture, you know if you can afford it, your children should be very grateful.

G_M

What a ridiculous question!

Sorry, ilovemyfs, but if you want to charge anything other than market rate, it is entirely a personal matter.

how much income do you want?
how much help do you want to give the kids?

We don't know!

I assume there is no mortgage involved? If so, there may be consent issues.

I assume no benefit claims? If so, there may be eligibility issues.

I assume you know about declaring tax?

And as you will be abroad I assume you know about the HMRC (Non Resident [= overseas] Landlord Scheme)

And I assume you know about all your other legal responsibilities as a LL?

dodger1

It depends on what income you need. If it was me and I still had enough savings and a reasonable pension I wouldn't charge a penny and simply give them the properties, so as I said it depends entirely on your needs.

ilovemyfs

Golly ! They are basically just living in mum and dads house/s. Housekeeping from children is not taxable. I was hoping for some figures from others who have done the same, but seem to have gotten the 3rd degree on law, eek ! Its not rent, just housekeeping ! thanks anyway......

princeofpounds

They are basically just living in mum and dads house/s.

No they aren't. If you are not resident, they will be tenants and you will be their landlord, even if you are relatives.

I'm not aware of a legal definition of 'housekeeping'. Certainly not on the HMRC website anyway.

The reason people get so 'legalistic' is that great gestures like this are fine until someone falls out. Then it quickly becomes a whole different situation.

Of course this is very unlikely to happen, but you need to be aware of the risks in whatever you do.

As for what would be the 'right' rates, it's all down to what you want to achieve.

Presumably you and your wife have a minimum income in mind for travelling, so that's one hard limit for you. Anything between that and market rent is basically subject to 'negotiation'.

Personally I'd be thinking about renting it for near market rate and saving the excess for them.

If you rent the properties out at well below market they will have no incentive to leave, even if they have enough money to buy somewhere. Plus they may well not save the cash you are implicitly subsidising them with.

Yorkie1

ilovemyfs wrote: »

Golly ! They are basically just living in mum and dads house/s. Housekeeping from children is not taxable. I was hoping for some figures from others who have done the same, but seem to have gotten the 3rd degree on law, eek ! Its not rent, just housekeeping ! thanks anyway......

You are not resident in the properties, and you are receiving an income from the people living there.

That makes you a landlord, whether or not you had thought of yourself in that capacity. It is irrelevant who the tenant is. It also means that the income you receive is rent and not just housekeeping.

Someone has already posted the links you need to be aware of re. a landlord's duties and the non-resident (i.e. abroad) tax situation.

Jimby509

You and your wife need to think about how much you need to have incoming from these properties to sustain your lifestyle. You then need to think about how much cash your children need to save to each month in order 'save for their own deposit for a home'.

Once you have worked out what the above figure is you will have your answer.

As the MSE community does not know what the above figures are we cant give you a realistic figure to charge your children per month.