Letting rooms - advice needed

smdabs

Hi all... hoping i could pick some of the brains of the people on this forum as you're usually very helpful...

My situation:
Was in the process of buying and selling a house. For the 3rd time, the buyer has pulled out ('brexit' being given as the reason each time) and therefore i decided to fund the purchase myself. This has all been approved so i'm just waiting for my exchange and completion date for the new property.

My plan is to try and sell the current house again in the new year (when i'm not being held to deadlines/my sellers timescales) however would really prefer to let the house/rooms out to make cover the mortgage in the mean time as given how this year went... i don't imagine it's going to be a quick sale!

How i see it, i have 3 options:

1. I've found people willing to rent the rooms for more than enough to cover mortgage and bills. They would not be formal tenants as such as it would be short-term (this is what they're looking for as well) so technically 'lodgers' albeit i would be a 'live-out' landlord and would be able to have access to my house at any given time. (this is my preferred option)
My concern for this: I would not be able to provide an AST agreement, nor would i want to be held to this just in case the house does in fact sell more quickly than i thought. However, what rights do i need to give them? Where does this leave me in the event they trash the house or refuse to leave when the time comes for me to sell?

2. Rent the house out properly under AST and become a landlord - not really an option as i would need the house back rather quickly and could not promise a minimum of 6 months as per ASTs (unless it's possible to go straight on to a rolling monthly contract?)

3. Leave the house empty - not ideal as means i'd be covering 2 mortgages. While this would be okay in the short term, if it ends up taking anywhere near as long as it did to try (and fail) to sell it this year, it isn't financially viable.

My preferred option is number 1 however i can't seem to find the right insurances (to cover me in the event they ruined anything or burn the house down) which frankly makes me very uncomfortable. Would 'holiday let' insurance suffice given the short term nature of the tenants renting the individual bedrooms?
And again, my concern being it comes time to sell and they won't leave... how would i enforce this without a set tenancy agreement? (I was going to create a lodgers agreement but i don't know if that really holds the same weight...)

Are there any other options available that i've missed? If you were in my position... what would you do?

NB: I do have to sell as i need to repay the 'gift' provided to me for the deposit of the new house, and to claim the extra stamp duty back so leaving it as a buy to let isn't an option.

foxy-stoat

If its a 3 bed house then rent 2 of the rooms out to lodgers, leaving the 3rd as your room. That way you can kick them out when the time comes. If you rent out to 3+ people then your into HMO territory, if you want to do things properly.

Personally I would rather it left empty so it will be much easier to sell and you wont have to worry about keeping it clean for viewings.

need_an_answer

so you want to be a have your cake and eat it LL.

Be either a LL or someone trying to sell a property,even if you have to reduce the price...don't try to do both it can become protracted and you'll most likely lose more potential buyers waiting for tenants to vacate,or end up with disgruntled tenants simply because they don't know how long they will be living there.

You cant mess with peoples living arrangements to suit your convenience.

hazyjo

I would have gone with an Option 4 - try again to sell and buy simultaneously. Yes, I know you have been unlucky so far...


In answer to the other choices:


1. Yes, they would be 'formal tenants'. It would not be your home. You would need to comply with LL responsibilities, and it could take you 6+ months (and a lot of dosh) to evict. There is no such thing as an 'informal tenant'. They would not be lodgers.


2. You can issue shorter lets, but, as above, if they don't comply then they're there for over 6 months. A 6+ month let is to protect you as much as them.


3. Check your insurance.




You could airbnb, but it's risky and you would need to check mortgage terms and insurance.

smdabs

thanks for your responses so quickly.

In an ideal world, i don't want to be a LL at all. As per my post, I have been trying to sell and push this along through 3 different buyers which has taken 9 months to get to the position we're in.

The people i've found (thanks to a rather good website that i don't think i'm allowed to post here), they are very much aware of my situation and only need the rooms temporarily as they are working locally. The advert on said website also explain my exact position so 'messing with people's living arrangements' isn't quite how i'd put it.

I'm more trying to work out what my options are in the event of a 'worst case scenario'... the same risks a standard landlord tries to mitigate with the right insurances and legally binding agreements.

I just don't know what those options are in order for me to actually do an informed cost/benefit analysis.

gettingtheresometime

Is your mortgage co happy for you to rent rooms or the house out?

need_an_answer

Then with respect if you don't want to be a LL don't be one its as simple as that.

Even if you get the most fluid of tenants from whatever website you want there is absolutely no guarantee that they will do as they say and leave when you deem the time is right

Your worst case scenario is that you will end up with a costly eviction of tenants who have trashed your property.

I still maintain that your best option is drop the price and sell the property quickly unencumbered.

Clearly we have differing views on being a LL and the business responsibility it entails.

Cakeguts

No to the renting the rooms. You either do the renting job properly or you become a rogue landlord. If you can't afford the two mortgages without the tenants then you can't afford it and the repairs if your tenants stop paying the rent.


1 Lodger means live in landlord. If you are not living there then they have a tenancy whatever you have written on the agreement.



Your only options are to leave the house vacant or to wait and sell next year. All the others risk you having to pay two mortgages without any rent coming in but while still making repairs to the property.

hazyjo

smdabs wrote: »

The people i've found (thanks to a rather good website that i don't think i'm allowed to post here), they are very much aware of my situation and only need the rooms temporarily as they are working locally. The advert on said website also explain my exact position so 'messing with people's living arrangements' isn't quite how i'd put it.

I'm more trying to work out what my options are in the event of a 'worst case scenario'... the same risks a standard landlord tries to mitigate with the right insurances and legally binding agreements.

By telling potential tenants your situation, you are inviting those knowing how to fleece you. 'Professional tenants' if you like.


If you are not going to be living there, they are not lodgers.


If you want to evict them, you will be up s... creek as you won't have complied with any LL responsibilities. You may also find yourself in trouble legally for not complying.


Worst case scenario, you end up in jail.

foxy-stoat

smdabs wrote: »

For the 3rd time, the buyer has pulled out ('brexit' being given as the reason each time

Wrong buyers then, Brexit has been happening for 3 years and counting so that wont be the reason they didnt buy it as they would of come to view it since 2016 referendum so its not new news.

smdabs

Mortgage company have approved a 'consent to let' for the period thankfully.

House price was dropped significantly with the last buyer, to the extent i was losing money on it already. I agreed a sale price below the lowest valuation and yet it still fell through.

And that is the exact reason for my question, i just wanted to check with people in the know if there were any other ways for me to mitigate that risk? My buildings insurer has said that a HMO insurance policy may suffice however I work in building regs/fire risk and frankly i am not going through the a**ache of getting the licences and work done to make it fit for that purpose just to save myself some money.

I just don't know whether it is in fact worth the (relatively low/high?) risk or just leaving it empty and taking the financial hit...