First house...friends living with me, confused!

lazer

I think it is a lovely thing you are doing.

If your friends are going to help you do the house up etc then you are both getting something out of it, and i assuming you like living with these people and will enjoy the company.

As per onlyroz's comments above do lay down a few groundrules - perhaps think what you want and right it all down and then have a discussion about what groundrules should apply with your friends

(You should do this when renting too - only difference here is if there is a disagreement over a groundrule your opinion counts for more!)

Another suggestion since they are not paying rent - to solve potential arguements over housework agree that they pay for a cleaner once a week?

I would spilt all bills equally - including council tax, and agree a weekly sum for all these (perhaps with about a 10% increase built in to allow for higher bills at times etc) and get your friends to pay their share as a regular amount instead of spilting the bills when they arrive. (But have a provisio that they may need to pay more if the bills increase!)
If there is money left in the pot at the end of the year use it for a night out or a girls night in etc, or keep it for yourself.

The bills i would suggest to spilt equally are
Council Tax
TV Licence
Phone/Internet
Electricity
Gas
Cleaning/Gardening etc

A kitty of sorts could work for toilet roll, cleaning products and maybe even milk or bread if you want to share it!

well done for considering such a generous gesture, I'm sure your friends will really appreciate it (I know i would!)

Out,_Vile_Jelly

You may be good friends with someone, but you really only truly know them when you live with them. That's when you discover they leave pubes in the bath, borrow your stuff without asking and snore loudly.

delmonta

Thanks guys for everything

I will be careful, and lay down some ground rules with my friends, and possibly work out some small rent in the near future, but we've literally just moved in, so just trying to settle in first

Thank you

jimbog

If and when you charge rent - set it up using a standing order to avoid reminding them each month

Oompa

What will you do if your friends find partners and move them in, too?

It would be normal for your friends to stay rent free for, say, a month or two if they are unemployed and trying to find their feet while applying for a different job, but it is really a bad idea to let your friends stay for free.

You should ideally rent those rooms out to non-friends and charge market rates.

It's just reading that they will be staying for a whole year that sets off alarm bells. Whose idea was this "too good to be true" arrangement anyway?

A friend of mine is undercharging an old colleague to rent a room of his in London, and already this old-colleague is getting on my friend's nerves. It's not easy living with people, and the old-colleage is already inviting her friends round, having bbqs and generally treating the place as though they are joint tenants.

You'll also find it much harder to say "no" especially when your two friends pull a "two against one" job on you. You'll find yourself saying "yes" to everything just to keep your [not really your ] best mates in your life.

Do your friends work?

Also, do not EVER allow these friends to contribute towards your mortgage if you have one. So don't let them transfer money to you and have 'mortgage' as the reference. Not sure what the law states now, but it may give them some interests in your property if you ever decide to sell.

I agree with the previous poster in that when people acquire something with little effort, they respect it less. That goes for your property and towards you as a friend.

Seriously. Any real friend would not do that to you.

It just sounds like they are collectively envious of your recent purchase and want to benefit from it as well, which they clearly will be.

Bestie beware!

G_M

ringo_24601 wrote: »

Friends and money don't mix brilliantly. Friends and free renting.. well that's a disaster waiting to happen.
So far so good. I agree. But from here on, terrible advice!

Do it right, get a basic tenancy agreement, small rent that will cover the bills and keep you under the tax free allowance in the rent-a-room scheme. Do not give them a tenancy agreement. Do not award them rights you don't need to. Give them a lodgers agreement.

If you have a rolling 3-monthly notice period, that gives you, and them, some security.
!!! !!!!!!!!!
At MOST, a 1 month notice period, though I would strongly recommend 1 week either way. If things turn sour, for whatever reason, you don't want to be sharing your home for 3 months.

Equally, if they decide to move out, would they want to have to give you 3 months notice? I think not.

Collect rent weekly or monthly but stipulate 1 weeks notice.
If you only have one property, I don't think capital gains tax would be involved when it came to selling it.

CGT becomes relevant if there are 3 'households' sharing the property. Couples (and children) count as 1 household.

At least I believe. Check the HMRC website.

LODGERS (Licencees/Excluded Occupiers)
A lodger (broadly) lives in the same property with their resident landlord, and shares facilities. Unlike tenants, lodgers have few rights.

The Housing Act 1988 provides definitions of 'Resident Landlord' and 'same property' (S31 & Schedule 1 (10).

There is advice for landlords considering taking in lodgers here:

LodgerLandlord (21 tips from solicitor Tessa Shepperson + General information site)

Landlordzone (Various articles on taking in lodgers)

Renting out rooms in your home (Government info)

Rent a Room Scheme (Government scheme for tax-free income from lodgers)

[Deleted User]

ok lodger not tenant Consider it misinformed advice with the right heart.

OP is riding the fine line between friend and landlord.. i suspect 'friend' is the side of the line they want to be on - a one week notice period does not shout 'friend'

booksurr

G_M wrote: »

CGT becomes relevant if there are 3 'households' sharing the property. Couples (and children) count as 1 household.

At least I believe. Check the HMRC website.

exposure to CGT is not defined in terms of households

the only reference in the context of lodgers is if you have more than one lodger you lose the ability to claim exemption from CGT but can claim letting relief instead.

note the word used is one lodger, not one couple or one household. A couple are 2 people, QED 2 lodgers and so you become exposed to CGT when you have more than one lodger


however, letting relief means it would be a very long time before your exposure actually resulting in having to pay any tax. That is a topic for another time as the OP is still at stage 1 in his understanding ...

booksurr

delmonta wrote: »

So a couple of last things on the rent a room scheme : If I dont need to fill our a tax return for it, do I need to do anything to let anyone know I have signed up for the scheme? Or if I rent out a couple of rooms, for under £7500 a year, I can just get the lodgers to pay me, and dont need to declare anything? Sounds too good to be true

if your total income from all your lodgers (it is not 7500 per room or per person it is per total annual income) is less than 7,500 (see note *) you do not need to do anything. This is explained in the links you ahve already been given, I suggest you read them in detail

delmonta wrote: »

What if I had the rent money going in to my bank for years, and then got investigated, would I just have to prove I had people living in my house, paying rent all that time? .

it is always wise when dealing with the tax office to have some sort of paper trail supporting your cash coming in and going out. A lodger lodger agreement, as mentioned already, listing the bare basics would be a very worthwhile record to keep in case of such eventuality: lodger name, amount of rent and frequency of payment. Obviously the amount may have to be altered if you increase it at a later date.

delmonta wrote: »

Also, the government website still says £4250, so im guessing this fairly new, and hasnt been implemented yet.

Note * the increase was announced as part of the budget last Wednesday and the new limit applies from 6 April 2016, hence the website still refers to 4.250 as that is the limit until then

onlyroz

ringo_24601 wrote: »

OP is riding the fine line between friend and landlord.. i suspect 'friend' is the side of the line they want to be on - a one week notice period does not shout 'friend'

If they set fire to your kitchen, or start bringing home their one-night-stands, or start using their room as a meth-lab then you'll want a means to boot them out quickly.