Buying rental flat but not renting it out...advice please?

Raymond2016

Hi, looking for some advice from fellow MSE users please....

I am purchasing a flat that I am planning to live in from 2018 onwards. I am buying it now as it was my ideal property and i got it at a good price. There is going to be no mortgage on the property and i will own it outright. In the meantime, I am going to let my sister live in the property for the next 6 months as she is getting her own house renovated. I do not plan on charging any rent or anything. So I have a couple of questions :

1) Do I take out buildings insurance to protect myself and ask my sister to take out her own contents insurance? Do I need to take out landlords type buildings insurance? My sister will pay the council tax etc.

2) I do not want to rent out the property for the 18 months after my sister moves out and I move in and I was just going to leave it empty. However my sister has offered to look after and rent the property out for me as my agent after she moves out. I am happy for this to take place as she will register properly with the council etc. Again i am not looking for any income during those 18 months but is she able to rent it out on my behalf and just keep the rental money for herself (I know she will need to declare it as her own earnings for tax purposes etc). In principle is that ok?

Your advice is gratefully appreciated...thank you

Pixie5740

1) I think the buildings insurance would already be sorted via the freeholder. Yes your sister would sort out her own contents insurance.

2) You'd need to check the terms of your lease to see if you can sublet the property but in theory yes your sister could let out the property and keep the rental income although she wouldn't be your agent.

csgohan4

You will need to do some research


http://www.landlordzone.co.uk/


It's not just insurance you need to take out but gas safety check for example.


Not sure if your sister can keep the money as the property is yours, possibly you need to submit tax return for this

anselld

Pixie5740 wrote: »

2) You'd need to check the terms of your lease to see if you can sublet the property but in theory yes your sister could let out the property and keep the rental income although she wouldn't be your agent.

Not convinced HMRC see it that way. Income belongs to the beneficial owner regardless of who collects it.

Pixie5740

anselld wrote: »

Not convinced HMRC see it that way. Income belongs to the beneficial owner regardless of who collects it.

Can't people sublet properties?

Raymond2016

1) I'm not formally renting it to my sister and there's no financial exchange so do I still need to do the gas/electrical safety checks?

2) Yes I guess what I'm asking is can she sublet the property and arrange to collect and keep any rental income and declare tax appropriately etc and also do all the gas safety checks and the other rental regulation things etc? I don't want to make any money from it over those 18 months or so,

agrinnall

Raymond2016 wrote: »

1) I'm not formally renting it to my sister and there's no financial exchange so do I still need to do the gas/electrical safety checks?

I'm sure your sister will be delighted to know that you care so little about her well being that you can't be bothered to get the gas checked (there is no requirement for electricity checks, but if you have any doubt about the state of the installation it might be sensible to do it anyway).

Raymond2016

The boiler has been serviced yearly by current owners and so I meant formal checks that landlords need to do. Its not due again till after her 6 month stay.

molerat

Yes, you will need a landlord gas safety check. The lack of paying rent, written letting contract or being family is irrelevant. Plus, when your sister is letting the property you will be responsible for the gas safety check unless there is a clear written responsibility for her to do it as your agent. http://www.hse.gov.uk/gas/domestic/faqlandlord.htm

Raymond2016

Thats helpful thank you.
So i will need a gas safety check. Do i need to actually register as a landlord for first 6 months or only if/when my sister wants to actually rent it out?

Thanks again

Marvel1

Personally I think number 2 in the future when it's time for you to move in e.g. evicting the current tenants which may go hopefully smooth and no damage or a long legal process through the courts and you may end up blaming your sister.