Advice re tenants please. TIA

jimamma

Hi all,

I am a longtime poster on mse but have lots of friends and family on here and do not wish to divulge too much personal info. IYKWIM:beer:
Anyway I purchased a 2 bed flat through the RTB scheme about 18 months ago. I had 2 children at the time and now have 4 (twins 10 months old). Now that my children are a little older its getting really difficult for us to live in such a small place. Therfore I want to let my property to rent a bigger place for us to live in. There is no mortgage on the property. I work P/T and DH works FT.

Im really confused on the difference between DSS and private tenants..some people have said DSS are unreliable but private could be too. Ive also been told if I have DSS tenants will have to declare the rent as income. Will I not have to declare private as well? Ive also been told if HB is paid to the tennants I will be taxed on the rent. Will I not be taxed on private?

Im really confused:mad::mad:. as I have someone wanting to move in who is currently working but has forewarned they may lose their job and end up on DSS for a short time. Ive never dealt with anything like this before.

Oh and just for the record I am not overcharging on the rent when I was renting from the council I was paying £96.00 a week I am charging £400.00 pcm though the flat next door is £525.00. Simply beacuse I want trustworthy reliable people who will pay their rent on time and not mess me around so I in turn can pay my LL.

Thanks so very much if you got this far!!!

Any advice would be greatly appreciated.

JM xxxxxxx:beer:

outofmoney

Tenants are tenants. Regardless of whether DSS or private the risks are the same. It is all down to the person so checks are vital. Someone who earns enough to pay all their rent without any help from housing benefit can lose the job next week and then be reliant on help. The DSS tenant could be very reliable and pay on time, in full, every month. Both could turn out to be pretty unreliable.

If you have someone lined up, I would do the check and then also find out how they plan to pay the rent if/when they lose their job. Are you prepared to wait a few weeks whilst they sort benefits? If not then you need to make sure they have enough savings to cover that period.

harrys_dad

You will have to declare the rent as income whoever you let to. It is important that you find out what the Local Housing Allowance is for a two bed flat in that area, and whether your prospective tenant is eligible under LHA for a two bedroom flat. This is the most they will get for Housing Benefit (DSS does not exist any more).

There are many other things you need to think of as a landlord, such as gas certificate, deposit protection. Someone will post a link soon I am sure to the thread for new landlords.

[Deleted User]

It is nice of you to charge under the going rate for rent but make sure u have budgeted all your costs when setting the rent rate. Ideally u should include insurance, estimate cost of repairs, tax costs if they apply, Land Lord association costs (as a new LL this could have enormous benefits for you as u don't seem to be overly knowledgeable about what you are getting into).

You need to do some proper research to help you avoid making some mistakes. I'm not sure where you are getting your information from, but it sounds a bit more like 'word of mouth' information (and some of it is inaccurate) rather than real facts/guidance.

jimamma

Many thanks for your prompt reply, the couple came to view the property today they are an elderly couple but the gentleman is still working I was very straight up with them and explained the situation, which is when they also told me Mr X may lose his job as he is in his late 60s. Regarding the shortfall in rent I will discuss this with them when I see them next..Didn't think of that (the inbetween HB period)

Bahh LHA the prospective tenant did mention that they are downsizing to a 2 bed so in the future they will not have to pay bedroom tax. Is this LHA?? Also where can I find the going rates.

Gas safety checks didnt know I had to do them aswell (eeeek) Is that getting someone corgi registered to come an sign a cert that everything is ok?

What is deposit protection?

And do I have to have insurance the buildings insurance is currently covered by the council as the property is a leasehold?

(Its more complicated than I thought).

And yes all the info is Word of Mouth from friends/family and work colleagues Bless.

marliepanda

Rental increase is rental income. The source doesn't matter. You're personal rent isn't taken into account, no more than your rent is taken into account when you get taxed on your salary...

The profit will be taxable, but you can offset various things to reduce the taxable profit.

jimamma

Letting it for less than the going rate was my tool to try and get good tenants I thought all the other landlords were just being greedy and pocketing extra cash (tongue in cheek). Didnt realise all the additional expenses.
Also when I let the property do I declare only to hmrc as a change of circs extra income or is there other agencies I need to advise? Also how will they charge me tax on the rental income. Will they take into consideration I am also paying rent.

Oh and quickly because I pay a service charge to the council will they not carry out the saftey checks such as gas etc?


Thanks

marliepanda

No they won't take into consideration that you are paying rent.

You could sell up and buy another property, but won't for obvious reasons. You won't get let off tax as you have expenses to pay, that's not how it works, for any income.

I doubt the service charge will cover a LL safety check. You need to realise you are setting up a business with responsibilities.

jimamma

marliepanda wrote: »

Rental increase is rental income. The source doesn't matter. You're personal rent isn't taken into account, no more than your rent is taken into account when you get taxed on your salary...

The profit will be taxable, but you can offset various things to reduce the taxable profit.

Thanks for your reply? So would it be like a self employed income?? So I tell them the rent and then expenses such as if I have to get someone to repair the boiler or kitchen cupboard etc?

Sorry for all the questions Im :mad::mad::mad:

Thanks JM x x

marliepanda

You need to join a LL association (fees can be offset against profit for tax) and all if this information will be accessible.

You really don't know enough about letting to go it alone.

Yorkie1

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12 for advice to new LLs.