New to letting

Chisser

My daughter is in the lucky position to being buying a house in an inner city area,
at the beginning of her second degree. She wishes to let to other students
on the course, partly to learn together but obviuously to help pay back at least
some of the loan from us to help the purchase.

Is there an off the shelf shorthold tenancy agreement she can use for her paying tenants?

If she lets to 3 other students who pay her rent what will her tax position be?
She will have a part time job paying about £3,600 a year for the next 5 years so will
not pay income tax. Will one room be tax free under the rent a room scheme?

Total monthly income from the rooms would be about £12,000 per annum.

There is no mortgage/interest but can she offset furnsihings etc against income.
She would like to share bills with everyone. Is there a good way to achieving this
in practical terms?

Presumably as all undergrads no Comm. charge due?



Thanking you in anticipation.

need_an_answer

HMO Regulations...

Being a LL


Presumably she has some experience of this?

sal_III

If she will be living in the property along with the other students, as a resident Landlord they will be lodgers, not tenants.

A template for Lodger agreement can be easily found on the internet, this one from Shelter should be decent example:

https://scotland.shelter.org.uk/__data/assets/file/0005/378689/Sample_Lodger_Agreement.rtf

There is a tax free £7500 rent-a-room allowance, but at the figures you mentioned it might be beneficial to opt out of it. You/she will have to do the math and decide

https://www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/rent-a-room-scheme-letting-a-room-in-your-home-azk7l7f28wuz

muhandis

In your/her place, to keep life simple (at least to start with, especially if she is new to all this) -

1. I would ensure that the property did not turn into an HMO. Your daughter + 3 lodgers will almost certainly qualify as an HMO.

2. I would only take as many lodgers (not tenants) as would give me an income of no more than the threshold for the rent a room scheme ie £7,500/year.

For lodger licenses, etc, if you use services like OpenRent or Spareroom, they will help with keeping things legal.

And do make sure the property is properly insured for all the potential major issues you can think of.

Chisser wrote: »

My daughter is in the lucky position to being buying a house in an inner city area,
at the beginning of her second degree. She wishes to let to other students
on the course, partly to learn together but obviuously to help pay back at least
some of the loan from us to help the purchase.

Is there an off the shelf shorthold tenancy agreement she can use for her paying tenants?

If she lets to 3 other students who pay her rent what will her tax position be?
She will have a part time job paying about £3,600 a year for the next 5 years so will
not pay income tax. Will one room be tax free under the rent a room scheme?

Total monthly income from the rooms would be about £12,000 per annum.

There is no mortgage/interest but can she offset furnsihings etc against income.
She would like to share bills with everyone. Is there a good way to achieving this
in practical terms?

Presumably as all undergrads no Comm. charge due?



Thanking you in anticipation.

spadoosh

I cant emphasise enough how bad of an idea i think this is.

If you can guarantee among one specific group of people that there will be a non payer and subsequent legal/credit implications it is students.

Theres no tenancy agreement for what youre suggesting because it isnt a tennancy, its a lodging. You need to be looking for a licence agreement.

Income from lodgings is taxable, there are allowances but it is a taxable income, she will almost certainly owe income tax on earnings of £15k per year, you might be able to make the liability £0 but it depends on the specific financial situation.

Then theres things like gas safety certificates, compliance with fire regulations, running right to residency checks, damages eg. in our student halls there was a water fight, it hit the mains junction box for the building, £30k repair bill. Had a house party, found loads and loads of drugs, thoguht id be minted, then realised we needed to replace the fridge (written all over) a plug socket that shattered due to particularly loud speakers, we needed to replaster because the DJ created and !!! grove in the wall, a shoe blocked the toilet, the table legs became cricket bats at about 2am. Insurance was always a head ache.

What time frames we talking for this as well, not this educational year no?

Grenage

spadoosh wrote: »

in our student halls there was a water fight, it hit the mains junction box for the building, £30k repair bill. Had a house party, found loads and loads of drugs, thoguht id be minted, then realised we needed to replace the fridge (written all over) a plug socket that shattered due to particularly loud speakers, we needed to replaster because the DJ created and !!! grove in the wall, a shoe blocked the toilet, the table legs became cricket bats at about 2am. Insurance was always a head ache.

But other than that, I'm sure it was all plain sailing.