landlord to be

777birdy

Hi My partner and myself moved in together and sold my house and kept his property on to rent out - we have had a friend renting it casually for few months and  now moved out and looking to rent it out commerciality. We are aware we need to set it up as a company to reduce taxes etc not going to be making megabucks just probably cover costs but need to do it the right way and quickly 
Mortgage is fixed for another 8 years - realise we have to inform them but  would this end the fixed deal ?
any advice on dos and don'ts 
not sure if worth using letting agency or not but obviously that is another cost 
thanks in advance 

Albermarle

Thread three below yours.
Renting out a home for a novice — MoneySavingExpert Forum

propertyrental

Why as a company? Depends on various factors. Get an accountant to explain the pros/cons, costs/benefits.

You have already breached the terms of your mortgage by letting the property toa friend- yes, you need to eiher ask them for consent to let (CTL or switch to a buy to let mortgage BTL.

What insurance do you have? If standard residential, it will be invalid (and so never pay out).

Read the stickie here, and all the posts within the thread, plus all the links within the posts!:

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

jj_43

No such thing as renting casually. You are now probably liable for all sorts of consequences being unaware of the basics.

landsbeyondthesea

You are already a landlord. You don't need a company, but you do need to inform your mortgage company. You may need to remortgage immediately, depending on their response.

Grumpy_chap

777birdy said:

Hi My partner and myself moved in together and sold my house and kept his property on to rent out - we have had a friend renting it casually for few months and  now moved out and looking to rent it out commerciality. We are aware we need to set it up as a company to reduce taxes etc not going to be making megabucks just probably cover costs but need to do it the right way and quickly 
Mortgage is fixed for another 8 years - realise we have to inform them but  would this end the fixed deal ?
any advice on dos and don'ts 
not sure if worth using letting agency or not but obviously that is another cost 
thanks in advance 

Why do you think this?
"We are aware we need to set it up as a company to reduce taxes etc"
Given you already own the property, transfer to a company is not simple and may not save taxes (indeed total tax liability may increase).  The subject was discussed in a recennt thread:
https://forums.moneysavingexpert.com/discussion/6483586/rent-income-into-ltd-company/p1

You will need "Consent to Let" from your mortgage lender.

Given you have limited knowledge on the processes and rules for being a Landlord, I would suggest that it is essential to engage the services of a Letting Agency.  Look at the value they can provide rather than looking at the cost.  A good LA will guide you through all the rules and requirements, ensure the tenancy is correctly set up with all the steps you will need to protect your position going forwards.  Have you considered right-to-rent checks, energy rating, deposit protection, gas checks, electric checks, necessary paperwork, insurance???

BeerSavesMoney

777birdy said:

Hi My partner and myself moved in together and sold my house and kept his property on to rent out - we have had a friend renting it casually for few months and  now moved out and looking to rent it out commerciality. We are aware we need to set it up as a company to reduce taxes etc not going to be making megabucks just probably cover costs but need to do it the right way and quickly 
Mortgage is fixed for another 8 years - realise we have to inform them but  would this end the fixed deal ?
any advice on dos and don'ts 
not sure if worth using letting agency or not but obviously that is another cost 
thanks in advance 

If it is already being rented out then you are a landlord now and should have sought permission from your mortgage lender.

sevenhills

777birdy said:

Hi My partner and myself moved in together and sold my house and kept his property on to rent out
thanks in advance 

So you have sold one property, live in one and have one that you rent out?

Getting a lodger is much easier if you can be said to be still living there?

If you are unsure, why not sell while prices are high and invest in the stock market?

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/f/fundsmith-equity-class-i-accumulation/charts

_Penny_Dreadful

777birdy said:

Hi My partner and myself moved in together and sold my house and kept his property on to rent out - we have had a friend renting it casually for few months and  now moved out and looking to rent it out commerciality. We are aware we need to set it up as a company to reduce taxes etc not going to be making megabucks just probably cover costs but need to do it the right way and quickly 
Mortgage is fixed for another 8 years - realise we have to inform them but  would this end the fixed deal ?
any advice on dos and don'ts 
not sure if worth using letting agency or not but obviously that is another cost 
thanks in advance 

Your post makes it sound like you have not done one iota of research into what being a landlord entails.  It doesn't matter if you let the property to a friend, a stranger or your Great Auntie Margaret, when you accept rent in exchange for exclusive occupation of the property you create a tenancy.  Thank your lucky stars that your friend, the tenant, moved out quietly and without a fuss.

Your legal obligations as a landlord will depend on where in the UK the property is based.  Scotland, England, Wales and Northern Ireland all have their own housing and tenancy laws so without knowing that no one hear can really advise you.

Your partner should have sought consent to let from the lender before creating a tenancy but what's done is done. Requesting consent to let will not end the fixed term.  There is no guarantee that the lender will grant consent to let or if granted it may only be for a set period of time after which your partner will be faced with the options of selling or changing to a BTL mortgage even if that means he has to pay the ERC on the current mortgage.  Some lenders increase the interest rate for consent to let, for example I know Nationwide increase the rate by 1%.

I don't know who or what made you aware that your partner (because it's his property not yours) would need to set up a company.  As the mortgage is fixed for another 8 years then should he want to transfer ownership of the property to a company he would need to pay the ERC on his existing mortgage, find financing for the new company created and the company pay the higher rate of SDLT/LTT/LBTT on the transfer.

Olinda99

when you rented it out 'casually' did you follow all the legislation for example gas and electricity safety checks, right to rent and deposit protection

failure to follow some of these is in fact a criminal offence for example the gas safety certificate

Mutton_Geoff

renting it casually for few months and now moved out and looking to rent it out commerciality

As others have said, there is no difference. Have you declared the income (or intend to in next tax return) from your "casual" arrangement? If not then you have also committed tax fraud.