Renting my house questions

Swampy3k

I currently own a house (mortgaged) and due to a job promotion and transfer I moved 85 miles away to rent a house in another city. At the time it was a pickle as I didn't want to sell my own home, luckily a relative asked my intentions for my house and we have came to an agreement where I let the house out to them. This is currently just a 'family rates' deal and is unofficial.


now the dust has settled my first question is, is this completely legal? is there anything I should be doing? I am looking to increase my properties portfolio so I will eventually go down the road of becoming a licensed landlord etc. with all the proper certificates but will doing this first one unofficially hurt my chances of getting a 2nd mortgage? and, if I should be legally going about this, where to start? and with it being Christmas around the corner, what fee's are likely to be incurred?


Watched too much homes under the hammer, with little knowledge of the background area me thinks!

Pixie5740

Swampy3k wrote: »

I currently own a house (mortgaged) and due to a job promotion and transfer I moved 85 miles away to rent a house in another city. At the time it was a pickle as I didn't want to sell my own home, luckily a relative asked my intentions for my house and we have came to an agreement where I let the house out to them. This is currently just a 'family rates' deal and is unofficial.


now the dust has settled my first question is, is this completely legal? is there anything I should be doing? I am looking to increase my properties portfolio so I will eventually go down the road of becoming a licensed landlord etc. with all the proper certificates but will doing this first one unofficially hurt my chances of getting a 2nd mortgage? and, if I should be legally going about this, where to start? and with it being Christmas around the corner, what fee's are likely to be incurred?


Watched too much homes under the hammer, with little knowledge of the background area me thinks!

1) You should have sought consent to let for your lender before letting the property.

2) You've broken the first rule of letting, never let to friends or family

3) You except rent in exchange from your relative therefore a legally binding AST (assuming England or Wales) is in place meaning you have all the legal responsibilities of being a landlord. Read G_M's Guide to Tenancies in England and Wales.

3) The rental income is subject to income tax.

4) One swallow does not a summer make, you do not have a property portfolio.

5) If you have to ask such basic questions due to a lack of research how have you arrived at the conclusion that property is the best investment for you?

davidmcn

Pixie5740 wrote: »

3) You except rent in exchange from your relative therefore a legally binding AST (assuming England or Wales) is in place meaning you have all the legal responsibilities of being a landlord. Read G_M's Guide to Tenancies in England and Wales.

Given the OP's location is stated as Dumfriesshire I presume the property is also in Scotland - so SATs (or the new-fangled replacement).

Which also means we know that registration as a landlord is compulsory.

csgohan4

Swampy3k wrote: »

I currently own a house (mortgaged) and due to a job promotion and transfer I moved 85 miles away to rent a house in another city. At the time it was a pickle as I didn't want to sell my own home, luckily a relative asked my intentions for my house and we have came to an agreement where I let the house out to them. This is currently just a 'family rates' deal and is unofficial.


now the dust has settled my first question is, is this completely legal? is there anything I should be doing? I am looking to increase my properties portfolio so I will eventually go down the road of becoming a licensed landlord etc. with all the proper certificates but will doing this first one unofficially hurt my chances of getting a 2nd mortgage? and, if I should be legally going about this, where to start? and with it being Christmas around the corner, what fee's are likely to be incurred?


Watched too much homes under the hammer, with little knowledge of the background area me thinks!

First off it is a business and your not a charity

Money and family shouldn't mix, are you willing to evict them if they don't pay rent e.t.c? You lose more than money if there are disputes

You need to know your legal responsibilities as well as tax

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

Link above is G_M's guide. Have a read.

Your first house should be on a BTL mortgage and not a residential if not already done so and you can either change your mortgage to a BTL or get a Consent to let, but the latter is only temporary and may not always be granted.

Expect to pay high rates on BTL, the claiming back tax on mortgage interest is being phased out and you will be paying more tax.

Are you really ready to become a landlord as you technically are. Have you got gas safety checks? tenancy agreements, protected e.t.c?? If not your relatives in your first house can really take you to court and take a long time to evict

Pixie5740

G_M's guide isn't relevant to you since the property is in Scotland meaning it is a criminal offence for you to let the property without being registered with the local council. No paperwork means your tenant has an Assured Tenancy.

Pixie5740

davidmcn wrote: »

Given the OP's location is stated as Dumfriesshire I presume the property is also in Scotland - so SATs (or the new-fangled replacement).

Which also means we know that registration as a landlord is compulsory.

Yes I see from a previous thread the property is in (North or South) Lanarkshire and without an AT5 it would be an AT rather than an SAT. Unless, as you say, the tenancy started after 1st December in which case it would be a PRT.

pinklady21

Have you informed your insurer that you have let the property?
Have you informed your mortgage lender?
Have you applied to your local council to register as a landlord?
Are you aware of the 3% Stamp Duty supplement when/if you buy another property?
Do you fully understand the tax implications and what records you need to keep so that you can complete your tax return?
This is before you look at your landlord obligations for safe-guarding of deposits, repairs, inspections, tenancy agreement, anti social behaviour legislation, starting and ending the tenancy properly etc etc etc.

Being a landlord is not a simple undertaking. As a small landlord, who is very mindful of all the legal and other obligations, I do find it most irritating that anyone could think otherwise!

Comms69

What a mess.....

mrginge

Swampy3k wrote: »

I am looking to increase my properties portfolio...

Will that be before or after you sort the 23k of debt out?

G_M

Just to clarify, my post (linked by pixie above) may provide some useful tips and things to think about, but yes, the legal requirements mentioned in it relate to English, not Scottish law.

Nonetheless may be worth looking at. As would Shelter Scotland's website, and the Scottish Landlords Association.

But the bottom line, Swampy, is that you are

* breaking a number of laws
* breaching a number of contracts
* making a number of unwise decisions
* exposing yourself unecessarily to a number of financial (and personal?) risks

The action to urgently take now is

* read up on the law and your responsibilities
* then read up some more, till you fully understand
* contact the various organisations involved (off top of my head: insurer, HMRC, mortgage lender, council)
* get your property organised on a legal, & professional, footing
* only after all that start thinking 'portfolio'!

theartfullodger

Swampy3k wrote: »

I currently own a house (mortgaged) and due to a job promotion and transfer I moved 85 miles away to rent a house in another city. At the time it was a pickle as I didn't want to sell my own home, luckily a relative asked my intentions for my house and we have came to an agreement where I let the house out to them. This is currently just a 'family rates' deal and is unofficial.


now the dust has settled my first question is, is this completely legal? is there anything I should be doing? I am looking to increase my properties portfolio so I will eventually go down the road of becoming a licensed landlord etc. with all the proper certificates but will doing this first one unofficially hurt my chances of getting a 2nd mortgage? and, if I should be legally going about this, where to start? and with it being Christmas around the corner, what fee's are likely to be incurred?


Watched too much homes under the hammer, with little knowledge of the background area me thinks!

As pointed out earlier, broken the law, not a registered landlord, fines up to £50k. (yes, £50k).

Suggest you apply NOW, TODAY, RIGHT NOW!!

And your tenancy position is dreadful .. what a paperwork mess.

However, congratulations, you've cheered me up! When I started as a landlord in Scotland in 2000 I also made daft, stupid, expensive, painful, long-drawn-out (one still running..) mistakes: {I'd granted an AT rather than a SaT,, so no easy eviction, some rent unpaid still owing - yes, debts in Scotland last for at least 20 years}.

But you've beaten me, you've made bigger mistakes!! Thanks! There was no Landlord registration & I didn't have the £50k fine hanging over me... I feel strangely liberated by hearing your tale... If you wait long enough someone else will eventually no doubt make a bigger sc** up, the daft bampot.

On a related matter, are you a "Fit & proper person"? I only ask as only such people can be landlords in Scotland.

Starting suggestions for your position:
- Join Scottish Assoc of Landlords & do the free courses. You've tried ignorance, you've found how expensive that can be, try a little learning.
- Have a look at the Scottish landlord/tenant forum over here..https://forums.landlordzone.co.uk/forum/scottish-rental-legal-issues.
- Get registered!! See..
https://www.landlordregistrationscotland.gov.uk/
- Beg with your mortgage lender to be allowed to let

etc etc etc etc etc...

PS You may need a large Whisky now....

Slàinte mhath!