Subletting Rooms

ChopperST

Hi All,

Just after some advice / experiences.

My wife and I have just bought our forever house and the month after she has lost her job. Fortunately there is overtime at my work for the foreseeable and we have some funds to see us through.

We bought our house to start our family in and with the long term in mind so were are in the fortunate position of having 3 spare double bedrooms (1 with ensuite).

We are considering subletting these rooms to bring in an income and would welcome any experiences people have had good and bad prior to taking the plunge.

Have spoken to mortgage lender and house insurance and they are happy for us to go ahead but will only allow 2 tenants...

Werdnal

Just to correct your terminology, you are not actually subletting. This usually means letting a property that you current rent, to other tenants.

If you are living there as "live-in" or resident landlords, you are taking "lodgers" and they will never be tenants.

You will have to declare the rent they pay you for tax to HMRC but you are allowed a tax-free amount under the rent-a-room scheme - Google it!

This additional income will also need to be declared against any other benefits you currently receive.

You need to ensure you have a lodger agreement in place between you and your lodgers. They have very few rights and security of tenure like tenants on an AST renting a whole property do, but a written agreement is mutually beneficial as you all know where you stand. Standard agreements are available through reputable online sources or even high street retailers like WH Smiths.

Kynthia

Tenants are legally very different from lodgers with many more rights. So unless you intend to grant them 'exclusive occupation' of the rooms (which I would imagine your mortgage lender would NOT be happy with) you should understand what rights you are granting.

There are forums specific for residential landlords which are worth a look. You'll also need to ensure that you understand the tax position as usually all income (not just profit) needs to be declared to the HMRC. However if you have less total income than the rent-a-room allowance of £4250 a year then you don't need to declare it. If you take in more than this and complete a self assessment form, you'll need to decide whether the scheme or deducting expenses is the best method for you.

ChopperST

Thanks for the replies and correction of my terminology.

I already self assess for various investment income and extra work I do on a self employed basis so the tax return isn't an issue.

We are thinking of trialing things short term with one of my wife's friends who has split up with their partner to see how things go.