My Rental Income

duckandcover1

Hello,

Now I know this is not going to be what some or you agree with and I am not happy with it either which is why I am trying to sort it all out.

Last May I had a sudden change of circumstances leading to me having to move away with my job. I proceeded to rent my property out including a lot of the furnishings. I did make sure I obtained a Gas Safe Cert

Now here is where I am learning I haven't done everything correctly.

1) I did not obtain consent to let from my mortgage provider (what problems could I experience here, and how do I got about obtaining that bearing in mind it has been let for 15 months?)

2) I haven't declared my rental income with the HMRC (this is my biggest concern, and I need to sort this straight away) am I likely to be charged a penalty? And how do I go about calculating what I need to pay tax on? Tenant was found via an estate agent but I manage the property so do not pay them any fee.

3) the property is leasehold and I haven't mentioned anything to the person who owns my freehold. What do i do?

What do I need to do, if the property has been let for so long without consent to let should I risk them declining me permission and cause me problems?

I have a very good tenant and am lucky to have him.

My home insurance is just about to expire, and I will change to a LL insurance policy (all last year it wasn't but I wasn't aware until I started seeing the direct line adverts)

I can post figures on here if needs be of the costs I paid to the estate agent, for the gas safe certificate, the ground rent, and the house insurance, plus figures for rental income and mortgage payment and interest rate

Thanks

Duckandcover1

Guest101

There are some very clever people on here who will know alot more about this than me, but you are running a lot of risks on what seems to be a house of cards athats started to wobble.

My main concerns would be HMRC, technically you are and have evaded paying tax.

but others will have reasons why the other points you have raised are also of concern.

Just purely out of curiosity, why didnt you obtain consent to let and so forth? Did you just not know of such things?

The insurance would also concern me, as if theres any problems now, your insurance wont cover you

duckandcover1

Thanks for your reply

Yeah I agree, HMRC is my biggest concern, I certainly don't want to be evading tax (I know I am currently, but want to stop that ASAP)

House insurance was stupid as well, but currently looking for quotes for landlords insurance so that should be sorted this week.

I just naively didn't know about the consent to let etc, it is only when I started looking at paying tax that I opened a can of worms of all the things I am doing wrong.

My property has better than 75% LTV as it had a 25% deposit and have paid the mortgage for 4 years (I don't think it's reduced much in that time if at all)

SuzieSue

I think you will be ok with HMRC as you started renting out the property in the last tax year and you do not have to declare it until 31 January 2014 if you do it on line. So you just need to ring them and ask them for a self assessment return.

You should ask your mortgage company for consent to let. There is no need to tell them that you have already started letting it out, just ask them what you need to do if you had to move for work and whether you could rent out your property.

PasturesNew

Tax, if from last May, isn't due yet. Just get a form and fill in the figures for May 2012-April 2013, you've until end of October for paper-based and end of January 2014 if you register for online filing and do it through the Internet.

theartfullodger

Immediately (NOW - yes, NOW!!!) get landlord insurance..

Why, why waste money?? Well, currently if, say the place burns down & 2 visiting grandchildren are 'orribly damaged (dodgy wiring say..) as you are not covered for landlord insurance not even the re-build will likely be paid out - so, you still need to repay the mortgage, no property left & HUGE claim for whatever... You'll be bankrupt & then some...

Please: Join a Landlord association & do a course - then you might realise the risks you are running...

Kynthia

duckandcover1 wrote: »

Hello,

1) I did not obtain consent to let from my mortgage provider (what problems could I experience here, and how do I got about obtaining that bearing in mind it has been let for 15 months?)
Some people don't bother and it isn't illegal as far as I know as long as you didn't buy the property with the intention of letting it out with a residential mortgage. Yes it is the right thing to get consent and you are breaking the terms of your contract with the lender. What you could do is ask for consent 3 months before the end of the tenant's current contract. Then if you don't get it you can issue your tenant a S21 to evict them at the end of their contract.

2) I haven't declared my rental income with the HMRC (this is my biggest concern, and I need to sort this straight away) am I likely to be charged a penalty? And how do I go about calculating what I need to pay tax on? Tenant was found via an estate agent but I manage the property so do not pay them any fee.

This is very bad, however depending on your timings you could be okay. If you declare your income by completing the online self assessment then you have until 31st Jan 14 to declare income earnt in 2012/13.

3) the property is leasehold and I haven't mentioned anything to the person who owns my freehold. What do i do?

Do you know whether your lease prohibits renting out the property as this could be a massive problem if it does. If it doesn't I still think you could have voided the building insurance as they often need to know if any properties in the building are let. However it also might be fine, particularly if other properties in the building are let. Just write a letter to the freeholder informing them that the property is currently let out and please send any future correspondence to your current address (as you don't want to miss anything important).

My home insurance is just about to expire, and I will change to a LL insurance policy (all last year it wasn't but I wasn't aware until I started seeing the direct line adverts)

Is this contents insurance as doesn't your freeholder arrange buildings insurance?

I'm not an expert so the above is my opinion.

G_M

Goodadvice above.

1) Mortgage lender. Establish if they are likely to grant CTL if asked. Somelenders never do, some usually do, andsome fall in between. Which is your lender? If CTL is likely I would come clean and ask. If you know they'll say no, start shoppig around for a BTL mortgage, and switch

2) Complete a paper tax retun by Oct 1st to cover rent earned from April 2012 - April 2013. You are within the required timeframe,so noproblem. Learn about tax deductable expenses etc. (see link below)

3) Read your lease!

Now read the post below, and ALL thelinks within it!

New Landlords (general information for new or prospective landlords)

duckandcover1

Brilliant, glad to hear I am not in hot water with the HMRC, I will sort that online this month

duckandcover1

theartfullodger wrote: »

Immediately (NOW - yes, NOW!!!) get landlord insurance..

Why, why waste money?? Well, currently if, say the place burns down & 2 visiting grandchildren are 'orribly damaged (dodgy wiring say..) as you are not covered for landlord insurance not even the re-build will likely be paid out - so, you still need to repay the mortgage, no property left & HUGE claim for whatever... You'll be bankrupt & then some...

Please: Join a Landlord association & do a course - then you might realise the risks you are running...

Thanks, I will do that now, and will look into the course.

I never considered the landlords insurance to be a waste, I know how useful it is so will make sure that's sorted

duckandcover1

Kynthia wrote: »

I'm not an expert so the above is my opinion.

Kynthia,

Thanks for your reply. I respect your opinion and as it doesn't seem to be illegal, I would rather not tell the mortgage providers given that I have a very good tenant, who wants to stay in the property until he retires and then may not be able to afford it, and also he has asked to do some work on the garden to improve it and also to paint the walls if the paint starts looking tired.