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

Raymond2016

Thank you everyone for your advice. Can i clarify what i have learnt so far :

1) Once ive bought the property, I need to ensure it has a valid gas safety certificate and i need to get landlords building insurance. Then i can let my sister stay in it where she will need to get contents cover and she will pay all other bills etc herself. As im not collecting any rent i do not need to register as a landlord at this point.

2) If i let my sister sublet the property after that, I need to register as a landlord and comply with all the local landlord regulations etc. I wont be collecting any rent from her so I do not need to declare any earnings she makes from subletting (she will need to declare this as her own income formally etc). She isnt acting as my agent so she doesnt need to register as a landlord. There is no mortgage and there arent any rules against subletting in any other clauses.

Is that a reasonable summary? Thank you again for all your advice...

AnotherJoe

Raymond, there is no such such thing as "registering" as a landlord.
You just need to comply with the legal requirements.

As long as your sister is sole beneficiary of the rent I see no need at all for you to inform HMRC, she will need to declare the income of course. She should do some research on what the requirements are such as protected deposit.

agrinnall

AnotherJoe wrote: »

Raymond, there is no such such thing as "registering" as a landlord.

There is if the flat is in Scotland - the indications are that it's not, but it's not helpful to be so categoric when you're not in possession of all the facts.

Raymond2016

Thank you both....do i need any paperwork to show its my sister subleting the flat from my point of view - like a written agreement or anything should HMRC come asking about rental income etc?

Boatdweller

The freeholder may have a clause in the lease about subletting which you should check.

AnotherJoe

agrinnall wrote: »

There is if the flat is in Scotland - the indications are that it's not, but it's not helpful to be so categoric when you're not in possession of all the facts.

I stand corrected, good point.

AnotherJoe

Raymond2016 wrote: »

Thank you both....do i need any paperwork to show its my sister subleting the flat from my point of view - like a written agreement or anything should HMRC come asking about rental income etc?

No harm in that I suppose, a signed and dated letter maybe, though I dont know how you'd authenticate it, maybe get some friends to act as witnesses? IMO the fact money is going into her account, and there is no corresponding trail into yours ought to be good enough.

Hoploz

As someone has already said, Buildings Insurance is most likely included in your service charges, all that is needed extra is contents, policyholder will be whoever owns the contents, eg sister/tenant.

Some areas in the UK eg areas of deprivation, do have landlord registration schemes, in an effort to stop slum landlords. Check with your local council whether this applies in the area your flat is in.

Check the terms of your lease regarding letting the flat at all, whether for financial gain, free of charge, or with someone else gaining financially - your financial arrangements are not relevant to whether you are breaching the lease terms by having someone else who isn't the leaseholder (you) living there.

agrinnall

Hoploz wrote: »

Some areas in the UK eg areas of deprivation, do have landlord registration schemes, in an effort to stop slum landlords. Check with your local council whether this applies in the area your flat is in.

You must mean "some areas in the UK excluding Scotland" because it is a legal requirement throughout Scotland for landlords to be registered with their local authority.

Pricivius

If I were you, I would consider all the worse case scenarios you can think of and have a think how you would deal with them, such as:

Sister rents out flat to lovely couple. Sister pockets £200 per month for 18 months.

1. Couple move out and you find they had a puppy you didn't know about which peed all over your carpet/laminate and chewed all the door frames. Deposit of £400 goes nowhere to repairing the damage. Will your sister pay or you?

2. Washing machine breaks after 6 months. Who replaces/repairs? It's your appliance, but it would not have broken if it wasn't being used by your sister's tenants.

3. Couple refuse to move out after 18 months when you want the property back and stop paying rent. You have to go to court to evict them. Who pays court fees?

Just a few examples...