Renting part of the granny annex

Bacon_Boy

Hello!

We're looking at letting a room to a lodger. We'd like to keep it as a lodger type arrangement but I'm not sure if we can.

The house has a small bungalow at the bottom of the garden which has a bed room, kitchen, lounge and bathroom. It all runs off the same meters as the house and shares the same drive as the house. Access can be gained by the small gated path that runs down the side of the main house. It wouldn't really be possible to sell the bungalow on it's own.

My question is can we just rent out the bedroom and specify that the rest of the rooms are shared and part of our residence and therefore keep it as a lodger agreement? My reasoning is for the mortgage conditions.

Also can this fall under the governments lodger program with the £4200(?) tax allowance? We want to bless someone with a cheap but very nice place to live and keep the part of the building warm with it paying for itself.

Many thanks.

Guest101

Not sure, its a self contained unit, and you do not live in the premises. I would be surprised if it was a simple process to prove he was a lodger and not a tenant.

pmlindyloo

Do you pay council tax on the bungalow separately?

Also check on the planning permission documents if there is a clause specifying that it is not rented out.

CIS

If its banded separately for council tax purposes and a person only rents a specific part of the building then the owner is legally responsible for the council tax payments.

Kynthia

I'm no expert, however it has it's own bathroom, kitchen and entrance so it's really not sounding like you will share any living space. This moves you away from having an 'excluded occupier' and towards an 'occupier with basic protection' or 'tenant'. As you aren't even in the same building too then I'd fear you'd have a tenant with the rights and responsibilities that entails. Shelter's tenancy checker doesn't go into whether the building is registered separately for council tax so i'm not sure if that will make any difference. More research is definitely needed.

xylophone

You need to check with your mortgagee and your insurers - I'd also be inclined to check with a solicitor before entering into any agreement.

And what is the situation regarding council tax?

Itismehonest

Bacon_Boy wrote: »

Hello!

We're looking at letting a room to a lodger. We'd like to keep it as a lodger type arrangement but I'm not sure if we can.

The house has a small bungalow at the bottom of the garden which has a bed room, kitchen, lounge and bathroom. It all runs off the same meters as the house and shares the same drive as the house. Access can be gained by the small gated path that runs down the side of the main house. It wouldn't really be possible to sell the bungalow on it's own.

My question is can we just rent out the bedroom and specify that the rest of the rooms are shared and part of our residence and therefore keep it as a lodger agreement? My reasoning is for the mortgage conditions.

Also can this fall under the governments lodger program with the £4200(?) tax allowance? We want to bless someone with a cheap but very nice place to live and keep the part of the building warm with it paying for itself.

Many thanks.

A separate 'annexe' as you describe is capable of having someone living there independently & is normally subject to it's own Council Tax. Ours is charged as a 2nd home despite the fact that, like yours, all utilities are run from the main house, access is only available via the main house's drive & the annexe cannot be sold separately from the main house.
It's a completely mad situation but that's how it is.
If it has full residential planning (& there are no restrictions) then you can let it & bills including CT would be down to the tenant to pay.
However, lenders are extremely loathe to give mortgages on anything considered mixed use which enables people other than those named on the mortgage to reside there.

You may also encounter problems when you come to sell. We would love to downsize but the situation with lenders means that it isn't possible without a cash buyer.

Werdnal

Your description sounds like it is a separate, self-contained "dwelling", just happening to be within the boundary of your property, but not part of your actual home. Therefore, even if you offer a lodger agreement to anyone you let to, by default, you are not living under the same roof, and therefore not a resident landlord, so they would automatically become a tenant.

I do not think that the council tax liability on the property is a deciding factor in whether they would be a tenant or lodger. The definition lies with whether the property has its own kitchen and bathroom - you confirm it has, and if it has its own separate entrance, not sharing yours. It also sounds like it is actually detached from your home, which makes it a totally self-contained dwelling in its own right. The fact that you may never have registered it for CT (whether by ignorance or intention) is irrelevant here, and I am sure the CT will be on your backs once they find out!

If the property currently shares your power/water supplies, you would be wise installing a separate "tally" meter within the property you let, to allow you to bill tenants for their portion of utilities used. Offering a tenancy with "utilities included" is giving them a blank cheque to leave heating on 24/7, and run up extorionate bills with no control.

You will also become landlords, with all the legal obligations and regulations that entails:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

G_M

Bacon_Boy wrote: »

Hello!

We're looking at letting a room to a lodger. We'd like to keep it as a lodger type arrangement but I'm not sure if we can.

....

You can call the agreement whatever you like. By all means give the occupant a 'Lodger Agreement'.

But whether the occupant IS a lodger (or tenant) depends on the facts (not the paperwork), and howa judge (ultimately)would interpret those facts.

The council tax issue is just ONE of those facts tobe taken into account. So is the shared utilities.

However, the building clearly appears to be a 'self-contained' property with it's own front door.

Reserving part of the building for shared use would, I suspect, be seen by a judge as a vain attempt to circumvent tenancy status. But of course that is my opinion. It's the judge you would have to convnince!

If you could prove you regularly used the kitchen/living areas, and for more than 'token' reasons, then you'd have a lodger.

But you are on thin ice!

The above, of course, implies any dispute went to court. If there is no dispute, or any dispute is resolved amicably, or the 'occupant'is ignorant of their potential 'tenant' status, then the above is just a theoretical intellectual discussion.

The Housing Act 1988 provides definitions of 'resident landlord' and 'same property.'

lincroft1710

Virtually every granny annex had a condition in the pp that did not allow it to be sold separately from the main house and many also had a condition prohibiting the annex to be let out.

As others have the annex is a self contained dwelling, so if you are able to rent it out, the status of the person who rents it will be a tenant not a lodger.

Vectis

From what you've said the tenant would be just that, a tenant. You'd have to be sharing the same property for the person to be a lodger.

Dressing it up as something else, i.e. giving them a lodger's agreement, wont work. If it went to work, over an eviction for instance, they would be treated as a tenant with all the extra safeguards which a tenant has.

How on earth were you thinking you could convince a Judge that you were sharing a kitchen, bathroom and lounge at the end of your garden?