Renting to Friends Whilst Abroad for 15 Months

lucyelspeth

As part of my husband's GP training, we are moving in with his parents while he gets a diploma, and then to South Africa to work in a hospital there.

We will have friends living in our house for 15/16 months.

I'm wondering how to make this as cheap as possible. Our mortgage interest goes up 1%, then there is insurance. I'm wondering how much of the credit checking etc. for us to do on the tenants, then the tax side of things, and the house check side of things (electrical testing, energy certificate, etc.) we have to do if it is a private rental. We aren't using an agency.

Thanks so much in advance.

quantumlobster

lucyelspeth wrote: »

As part of my husband's GP training, we are moving in with his parents while he gets a diploma, and then to South Africa to work in a hospital there.

We will have friends living in our house for 15/16 months.

I'm wondering how to make this as cheap as possible. Our mortgage interest goes up 1%, then there is insurance. I'm wondering how much of the credit checking etc. for us to do on the tenants, then the tax side of things, and the house check side of things (electrical testing, energy certificate, etc.) we have to do if it is a private rental. We aren't using an agency.

Thanks so much in advance.

Your obligations as a landlord are the same whether you're renting to friends or strangers.

If you don't want the obligations that go with being a landlord, don't take their money.

lucyelspeth

Definitely not looking to shirk any responsibility, but we aren't looking to make a profit either, just trying to cover the mortgage and costs. We'll be living in rural Africa doing medical support work with our two kiddos so need to cover costs while we are away. I wasn't asking in order to 'get out' of anything. I'm asking because partly I'm not sure what we actually do need to do, and partly because it seems that some things are optional (insurance) and some things are not. I'm also interested in any tips on how to do each thing the cheapest way possible.

I'd appreciate help!

Thought this forum would be a supportive place.

lucyelspeth

Also in regards to not taking money - my impression was that even if you don't charge any rent you still have landlord responsibilities. My mortgage lender definitely thinks so. We did explore the option of not taking any rent. We like to give things away - this week it was our car!

Many thanks.

lucyelspeth

quantumlobster wrote: »

Your obligations as a landlord are the same whether you're renting to friends or strangers.

If you don't want the obligations that go with being a landlord, don't take their money.

Not quite used to the forum and meant to reply to you but it's gone as a separate reply. Hope the extra info clarifies. Thanks

Wyndham

Have a look at the sticky at the top of the forum - G_M has covered almost anything you might want to know. Good luck with the adventure!

Lungboy

There's a link in G_M's sticky to an HMRC page about tax for non-UK-resident landlords, definitely worth reading. I'm looking into it myself in case I get offered a job abroad, and there's a hell of a lot of info you (and I) will need to read first.

need_an_answer

On the practical side you need to consider how to deal with repairs during the tenancy.

Do you have tradespeople you can call on,do you expect the tenants to maintain the property or who funds the inevitable things that break along the way.....will you manage the property from a distance as you don't want an agent involved.


People always say never let to friends,it can cause issues and many friendships don't actually last beyond the rental period.

Read up on being a LL,GM's advice stickies are a good place to start.Just because you will be letting to friends(and wont charge a going rate for rent) doesn't mean that all the LL compliances are not relevant.

You may wish to charge a going rent simply because of wear and tear on the property whilst somone else lives there is inevitable...its a nice idea to have them just covering the rent and keeping the place ticking over but your appliances,fixtures and fittings are used and it all depreciates over time etc.

quantumlobster

lucyelspeth wrote: »

Definitely not looking to shirk any responsibility, but we aren't looking to make a profit either, just trying to cover the mortgage and costs. We'll be living in rural Africa doing medical support work with our two kiddos so need to cover costs while we are away. I wasn't asking in order to 'get out' of anything. I'm asking because partly I'm not sure what we actually do need to do, and partly because it seems that some things are optional (insurance) and some things are not. I'm also interested in any tips on how to do each thing the cheapest way possible.

I'd appreciate help!

Thought this forum would be a supportive place.

I'm wondering how much of the credit checking etc. for us to do on the tenant

This is up to you. But you will be running a business. Will you evict for non-payment? Will you take a deduction from the deposit for damage?

then the tax side of things, and the house check side of things (electrical testing, energy certificate, etc.) we have to do if it is a private rental

All of it. As noted above, non-resident landlords have specific rules regarding tax.

You might think that you can subvert this by treating them as house-sitters. I found this:

https://www.propertytribes.com/house-sitting-is-this-legitimate-t-127630191.html

House sitters are not tenants because they are occupying the property for the better performance of their duties. So they are service occupiers and therefore have no rights once the service ends. The case dealing with this is Ivory v Palmer (seeing as I am always being challenged to quote cases!).

But if there are no pets and plants then that is a sham and they will be a tenant. Therefore this is very high risk. The sitter might be held to be a licensee on the basis that both parties had clearly intended to create such a relationship but it would be pretty wide open to dispute and the outcome would be less than certain. Simply writing it on the agreement would be nowhere near good enough.

It might be much simpler to sell the property.

hazyjo

need_an_answer wrote: »

People always say never let to friends,it can cause issues and many friendships don't actually last beyond the rental period.

Didn't want to be a negative nelly and post just that, but friends of mine travelled for a year and let their friend stay in their house. Let's just say they are no longer friends... Nothing awful happened, but I think my friends (actually, slightly unreasonably IMO) didn't think he treated the house well. There was a bit of damage to a couple of things (walls/decor/flooring, etc). They'd given it a once over with paint before they went and seemed surprised it wasn't perfect still nearly a year later. He had his bike in and out of the house too which they didn't seem to like. They're not the pristine type (quite laid back and bohemian) so I was somewhat surprised.


I know that experience won't reflect everyone else's, but, as said above, it is quite a common phrase/belief. It's not always the better option than strangers.


What are you going to do if they don't agree to move out on the exact date you want them to? What are their plans after? To buy? To rent elsewhere?

need_an_answer

OP ...you asked the best way to save money on this venture and perhaps it might be a good move to consider a letting agent with a fully managed service.

I'm not normally an advocate of an agent but there are times that if you do your research and choose the right one it can be one hell of a saving in long run!


You are moving away and not really within an easy commute to visit your property (presumably your biggest asset). You are not I assume particularly looking forward to running a business you know very little about from afar either.


If it were me in your situation I would look to an agent..yes it will cost you in the region of 8-15% in fully managed charges plus the extras that are tagged on like credit checks,tenancy agreements,inventories in and out,inspections, maintenance and certifications ….but in the long run getting a proper fee paying tenant in may be a better solution than a friends.


I didn't really want to be negative Nelly either but as a LL I can tell you there needs to be a distinction between the place you live and the places you rent...if you value your property as a family home I really wouldn't go down the DIY LL route...no one treats your home like you!
Even the best tenants will always look at the property as the place they are renting and never as their family home,nor necessarily have the same respect for it you have.

A mix mash of friends and trying to do the right thing by being a LL who just covers the basic costs will never work IMO.

Investigate managed tenancies and I think you may find its more in tune with what you may need going forward as an alternative to the plan you are trying to put in place.