Renting out our house with annex

Jade2017

Hello,

I was hoping someone might be able to offer some advice regarding renting out our property.


We have a 4 bedroom house which is 3 storeys high with an attached 2 bedroom annex. My boyfriend and I would like to rent out 4 bedrooms in the house to 4 tenants and we would live separately in the annex. Although the annex is attached to the house and there is a door between the properties, they have separate entrances and we pay separate council tax. The tenants would share the communal areas in the main house (bathrooms, kitchen etc) but the door between the properties will be locked and the tenants will not be allowed to enter the annex.


I believe our house would be considered a House in Multiple Occupancy (HMO), however would it be considered a large HMO due to the fact that there are 4 tenants altogether as well as myself and my boyfriend who are living in the annex? If we are a large HMO I believe that we need to inform the council.


Would we need a separate TV licence for the house and for the annex?


What is the situation with tax? Do we just complete a self-assessment tax form at the end of the year or is there something else we should be aware of?


We will ensure that we would have the right electric and gas certificates for renting and we would use the government deposit scheme. Is there anything else that we need to consider? Do we need to fit fire doors etc?


This is our first time as landlords so any advice would be greatly appreciated!

G_M

Jade2017 wrote: »

We have a 4 bedroom house which is 3 storeys high with an attached 2 bedroom annex. My boyfriend and I would like to rent out 4 bedrooms in the house to 4 tenants and we would live separately in the annex. Although the annex is attached to the house and there is a door between the properties, they have separate entrances and we pay separate council tax. The tenants would share the communal areas in the main house (bathrooms, kitchen etc) but the door between the properties will be locked and the tenants will not be allowed to enter the annex.
OK

I believe our house would be considered a House in Multiple Occupancy (HMO),
Yes
however would it be considered a large HMO due to the fact that there are 4 tenants altogether as well as myself and my boyfriend who are living in the annex? If we are a large HMO I believe that we need to inform the council.
There are effectively 2 separate properties. The (rented) house would be an HMO - check your local council for the precise HMO rules.

Would we need a separate TV licence for the house and for the annex?
Yes.
And probably each tenant would need their own as it's an HMO

What is the situation with tax? Do we just complete a self-assessment tax form at the end of the year or is there something else we should be aware of?
Self-assessment.
But you need to read up on the tax rules to see what is an allowable expence etc


We will ensure that we would have the right electric and gas certificates for renting and we would use the government deposit scheme. Is there anything else that we need to consider? Do we need to fit fire doors etc?
You'll need to comply with the relevant HMO rules - see your council website

Read:

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?and all the links within those posts.

theartfullodger

It will almost certainly be a HMO: Speak with council HMO dept. Fire doors, smoke alarms, inspections etc etc etc..

This is worth a read

https://forums.moneysavingexpert.com/discussion/5180214

As you will be in the annex they will have a tenancy (they ain't lodgers...) but it can't be (may not be, legally impossible to be) an AST: They will have Common law tenancies. It is likely tenants, most agents, councils won't understand.

You need to declare ALL rent income to HMRC, with allowable deductions/expenses.

Speak with any mortgage company - might be an issue. Also insurers.

It's a minefield...

Cakeguts

You may need to apply for planning permission from your local council for a change of use to an HMO.

JuzaMum

It's a LARGE HMO because it has three floors.

CIS

For council tax purposes - will it be a joint tenancy or will it be individual tenancies for a room ?

Craig

00ec25

theartfullodger wrote: »

As you will be in the annex they will have a tenancy (they ain't lodgers...) but it can't be (may not be, legally impossible to be) an AST: They will have Common law tenancies.

artfull, why not an AST?

by the sounds of it the occupation will be of a self contained building which obviously has not been purpose built as self contained, but will be operated as such. Yes the LL is resident in the same building, but they are in a separate self contained part?

theartfullodger

00ec25 wrote: »

artfull, why not an AST?

by the sounds of it the occupation will be of a self contained building which obviously has not been purpose built as self contained, but will be operated as such. Yes the LL is resident in the same building, but they are in a separate self contained part?

See Housing Act 1988 Schedule 1(10)
http://www.legislation.gov.uk/ukpga/1988/50/schedule/1/part/I/crossheading/resident-landlords
- Schedule 1 lists those "Tenancies Which Cannot be Assured Tenancies" (may not be ATs, legally impossible to be ATs). An AST is but a special form of AT
- clause 10 says "Resident landlords" can't have ATs (so can't have ASTs) and defines them as

Resident landlords

10 (1)A tenancy in respect of which the following conditions are fulfilled—
(a) that the dwelling-house forms part only of a building and, except in a case where the dwelling-house also forms part of a flat, the building is not a purpose-built block of flats; and etc etc etc etc....

As I said, It is likely tenants, most agents, councils won't understand. Or many landlords, solicitors etc etc etc

CIS

theartfullodger wrote: »

See Housing Act 1988 Schedule 1(10)
http://www.legislation.gov.uk/ukpga/1988/50/schedule/1/part/I/crossheading/resident-landlords
- Schedule 1 lists those "Tenancies Which Cannot be Assured Tenancies" (may not be ATs, legally impossible to be ATs). An AST is but a special form of AT
- clause 10 says "Resident landlords" can't have ATs (so can't have ASTs) and defines them as
As I said, It is likely tenants, most agents, councils won't understand. Or many landlords, solicitors etc etc etc

It's an interesting issue - one which I've never thought of before as I've never needed to.

There's a good write up on it here - http://www.letlink.co.uk/articles/119-articles/resident-landlord/461-resident-landlords-under-the-housing-act-1988 - where this sort of issue is considered. Lewis-Graham v Conacher would appear to be the most relevant of the listed cases and agrees that the dwellings would be considered to be in the same 'building' (assuming the case has been superseded)

Craig

00ec25

theartfullodger wrote: »

See Housing Act 1988 Schedule 1(10)
http://www.legislation.gov.uk/ukpga/1988/50/schedule/1/part/I/crossheading/resident-landlords

thanks

an interesting contrast because I'm sure that for tax purposes they cannot claim to be resident LL, and so cannot use the rent a room scheme

CIS

00ec25 wrote: »

thanks

an interesting contrast because I'm sure that for tax purposes they cannot claim to be resident LL, and so cannot use the rent a room scheme

It's another good example of how legislation uses a term for one thing and then the same term with totally different meanings for something else.

Craig