Shared ownership – staircasing while subletting advice

csgohan4

dee096 wrote: »

I’m not as worried about the tenants or housing association, getting the mortgage while being abroad it the toughest one.

The apartment is new and I didn’t fill any official tax thing out. Not sure if it matters that the sublet doesnt cover the rent it just help towards it. Otherwise I could have left it empty. Maybe should have!

Have you not listened to the others above, this is not a place to hear what you want.


You should be worried, tax evasion is illegal and if you haven't declared your income that does not bode well. Doesn't matter if the rent covers your mortgage or not, you do not even know about the interest changes for landlords nor the legal and tax implications.


You have broken the terms of your mortgage in subletting and knowing this you took the job on when you could have sold the house. Evicition or recalling of the mortgage is a very real threat. Did you not sign and agree to the terms and conditions of the mortgage?


Your greed got the best of you. Karma always comes back to bite, hope it works out for you. Pay your taxes like everyone else, your not special

Ozzuk

Mortgage fraud, tax fraud, HA fraud, further advice is pointless!

dee096

[QUOTE=_Your_greed_got_the_best_of_you._Karma_always_comes_back_to_bite[/QUOTE]


Wow. Well has it? worst case scenario I leave things as they are and no-one ever finds out. Or I get evicted and deal with it. I’m hardly going to Jail. Millions breach their contracts by just letting out on Airbnb, same conditions apply. I'll let you know how it goes but the ball is in my court on what risk to take and I'm happy its worth it.

wymondham

Interesting that after all the very clear, valid advice (including legality!) the OP has chosen to ignore and go ahead..... I'm not sure why they asked the question when their mind was already made up?

dee096

I’m not ignoring advice, The advice I’m given is just that I’m breaking laws, bad Kama due to me. I know this but thanks anyway. Or the other advice is to not try staircase and keep current status in order to avoid the issue coming up, which I may well take. Any other thoughts welcome though no need to repeat the same. Cheers all!

Lurkingtoposting17

dee096 wrote: »

I’m not ignoring advice, The advice I’m given is just that I’m breaking laws, bad Kama due to me. I know this but thanks anyway. Or the other advice is to not try staircase and keep current status in order to avoid the issue coming up, which I may well take. Any other thoughts welcome though no need to repeat the same. Cheers all!

This is a case of you hearing what you want to hear. You are breaking laws yes, but most importantly (beyond tax avoidance) they relate to your obligations as a landlord.

Have you protected your tenants deposit? Do you have a gas safety certificate? Do you understand how you can go about evicting your tenant? Do you have a tenancy agreement in place? Etc etc.

Please read the wonderful G_M's guides to being a landlord as I believe you need to some advice to make sure you are compliant, if not - whether or not the HA chooses to reprimand you, or your mortgage company does, or your insurance does/proves to be invalid - this could be the part in which you become unstuck. Your HA may not prosecute you, but if your tenant refuses to leave and you can't apply a legally enforceable S21 notice ... you may really regret not looking into the advice given here

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

I hope you take this all on board, you came for advice. It wasn't what you wanted to hear, but take the opportunity to learn something that could really help you!

Cakeguts

You aren't listening. This isn't about breaking laws. It is about what happens to someone when the authorities find out that they have broken laws.

Tax authorities of different countries talk to each other. How long do you think it will be before the UK tax enforcement people find out that there is money going into your UK account that isn't being declared?

Once this happens your whole subletting scheme will be found out about really quickly.

00ec25

dee096 wrote: »

The apartment is new and I didn’t fill any official tax thing out. Not sure if it matters that the sublet doesn't cover the rent it just help towards it. Otherwise I could have left it empty. Maybe should have!

it matters, but going by your attitude you'll ignore it anyway but I'll list it for the benefit of other readers

you can make a cash loss but still have to pay tax because of the way mortgage interest in treated.

on the miraculous off chance you get an attack of legality this is it:
https://www.gov.uk/tax-uk-income-live-abroad/rent

unlikely I grant you that a tenant subletting a SO property will be clued up enough to know tax (they may well know their tenancy rights to a T though), but if they do, they are legally required to deduct 20% tax from their rent before paying it to you if you are not registered (and have proved it to them) with the HMRC NRL scheme.

I wonder which of your cards will be marked and cause the whole house to collapse when "things" start being married up.

bowlhead99

If your tenant is best friends or family you are probably pretty safe as long as you don't try to 'rock the boat' by changing mortgage lenders, applying for a different type of mortgage, changing your mortgage deal for a better one after the term expires, trying to buy the remaining part of the property, etc.

If your tenant is not best friends or family and a single thing goes wrong with their experience of being in the property which doesn't go perfectly to their liking they will be wondering how to get it addressed; paying the £3 to land registry to determine that the landlord isn't actually the sole owner of the property, and getting the details of the housing authority and the mortgage company, and realising that tax should probably be deducted from what they give their overseas landlord; that's 3 separate things to use to hold you over a barrel for fixing their issues ASAP and maybe giving them money off the rent. And scope to mess you about a lot when you want to give them notice if they don't want to give up their place.

So, you are on a bit of a knife edge as regards risk as that could happen any time. But meanwhile if you put your head above the trench to start to buy more of the property or get a better mortgage deal you could get it shot off.

There is no real need for you to buy the remaining 40% of the property at this point in time. And your personal income tax on your lettings business for the tax year ended April 2018 is not really due until January 2019 (notwithstanding the fact you shoul be registered on NRL scheme). Maybe you will get away with it if you just keep quiet for a year or so and serve them notice as soon as your agreement with them says you can. Then once you are back in the property you can buy more of it.

Of course, everyone else has already mentioned mortgage fraud etc etc, subletting without permission, potential insurance problems and tax regulations and all the landlord obligations etc so I won't labour the points there

agrinnall

dee096 wrote: »

In which case I can ask the tenants to leave and leave the property empty until Oct 2018 when I return.

Maybe, if you're lucky, and if the tenancy is in a position where you are able to legally evict your tenants. But equally you could have to wait months until you can issue a S21, and then the tenants might decide not to go quietly and that'll be more months (and more money spent by you) before a court grants you possession. You could easily find that it'll take until Oct 2018 to get the property back, you might not be getting any rent for some of that time, and the flat may be trashed when you do get it back.