Rent a section of house as holiday let?

jblakes

Good morning all, 

Just after some advise. We have moved into a cottage in the country side which is three storeys, first one is currently two cellars that are at ground level. We have just had planning permission to incorporate the stairs outside into the house to allow access to these cellar rooms from inside. The idea is to basically turn it into a annex for family and friends. 

We are also looking into if we can rent it out as a holiday let, but unsure what it will be classed as, as it will be part of the house. Do people do this? Is it worth it? How does the tax work etc?

I probably have a ton of other questions, but just trying to first establish if it's possible and gonna be worth it. Its near a number of highly popular walks and so based on that and other holiday let's in the immediate area, it should rent out.

Regards james

theartfullodger

Either a holiday let (if tenant genuinely on holiday) or a common law tenancy.  Because of the dwelllings' construction even if someone lived then as their home for 5 years it could not be an AST (may not be, legally impossible, even if paperwork says it is an AST)

jblakes

The idea is holiday let, as we don't want ppl there all the time so we can use for family and friends. How would that work? Is it just classed as a holiday let and the architect said it could be a rent a room (well rooms) which are different again. 

user1977

Do you have a mortgage? 

jblakes

Unfortunately so

sheramber

Would it be self contained or let as B&B ?

jblakes

I would guess a self contained

eddddy

Insurance is an important consideration. A standard home insurance policy wouldn't cover the holiday letting. (So if a guest did something daft that resulted in the house burning down, you probably wouldn't be insured.)


Your mortgage lender probably wouldn't allow it either. But some people might say they're very unlikely to find out. If they did, they'd probably just tell you to stop.

There might be a planning consent issue - especially if it changed the character of the house. e.g. It resulted in more disturbance, more noise and/or more cars parked than you would expect from a normal dwelling house.  The planning department might find out if a neighbour complained (or you contacted the planning department about it yourself). Again, the Planning Department might tell you to stop.

There might also be the issue of Business Rates for a holiday let property as opposed to council tax for a dwelling. I'm not sure of the rules around that.

theartfullodger

You just need to check people genuinely are on holiday.

Eg family of 4 5 days at half term with background info on jobs, schools (amazing what's on the internet) probably ok.

But couple wanting 6 months from November sounds er... Unlikely....

jblakes

I've I got the wrong end of the stick? I thought it would be classed as rent a room, therefore be entitled to the 7.5k tax free income a year. Or is that something totally different?

Regards james

theoretica

Once it becomes self contained - own bathroom and kitchen - you get to watch out for the risk of the council deciding to charge separate council tax on it. 

My experience of the rent a room scheme has all been for rent a room, not rent an annex, so I can't comment on that.