Renting out a property short term - the technicalities

YLQuestor

 Hi all,

 Thanks in advance for your time and responses!

 My partner and I are in the very lucky position that we are able to purchase the house next door to ours and will complete some time in the new year.

 We live in a two bedroom terrace, owned outright and solely in my name (it predates our relationship), I pay the bills and she pays the council tax which roughly works out the same. We are both named on the council tax for our house.

 Due to me working abroad and being inaccessible for long periods we took the decision early on that she would buy the house in her name, but with our money. This house has a slightly different configuration to ours and is 3 bedrooms (although 1 just sneaks over the size requirements). We're buying outright (it's only 60,000 GBP) and won't have any finance on the property.

 (Sorry, this is already turning into a life story...)

 

 She works at the local hospital and we get a lot of colleagues who often come from abroad on 3 or 4 month rotations, but there are also locums who come for a month or two. They have access to hospital accommodation which makes dodgy student accommodation look desirable. A bedroom with shared access to a couple of bathrooms and a kitchen. They also have no control over their flatmates which can be culturally inappropriate for some people. Due to the lengths of their contracts, the fact they don't want to furnish an apartment they've very few choices. There's a lot of AirBnB near us but they'd be looking at easily 100 a night even with discount, unfurnished 9 month AST isn't of interest either due to their contract length.

 So we would like to offer something which fills the gap - appropriate length tenancies depending on the person / people. We aren't trying to create a HMO, so we would rent to a colleague or pair of colleagues who approached us as a pair. We would let out the property based on knowing the person, so I feel we have a slightly reduced risk of a bad tenant. We would be renting with all bills included and fair usage for electricity and gas.

 We don't want to break the law, but we would like the cheapest, easiest and ultimately most profitable way of renting out the property. Does anyone have an opinion on my partner registering at the neighbouring property for council tax purposes and renting out the two spare rooms up to the 7500 GBP limit (it's unlikely we'd reach that limit as average rents are about 500-600 by us without bills and there'd be down time). Home insurance with the possibility for lodgers. Is there the same legal requirement to check a Lodger's right to be in the UK as there is as a Landlord? I assume if anyone wanted to bring their family this would not work and we don't want to preclude anyone moving with their family.

 Or are we better to register it as a business, pay business rates and professional liability insurance and have everyone on a Tenancy Agreement, even if they are only staying 2 months?

 One random aside - if we provide a TV I think we have to pay a different type of licence, but if they provide their own TV it is their issue?

 Thanks so much for reading all this and any advice you have for us.

 i & k

 

EssexHebridean

I think for them to be classed as lodgers one of you would have to be living at the property - someone else will hopefully be able to confirm or deny. 

_Penny_Dreadful

YLQuestor said:

 Hi all,

 Thanks in advance for your time and responses!

 My partner and I are in the very lucky position that we are able to purchase the house next door to ours and will complete some time in the new year.

 We live in a two bedroom terrace, owned outright and solely in my name (it predates our relationship), I pay the bills and she pays the council tax which roughly works out the same. We are both named on the council tax for our house.

 Due to me working abroad and being inaccessible for long periods we took the decision early on that she would buy the house in her name, but with our money. This house has a slightly different configuration to ours and is 3 bedrooms (although 1 just sneaks over the size requirements). We're buying outright (it's only 60,000 GBP) and won't have any finance on the property.

 (Sorry, this is already turning into a life story...)

 

 She works at the local hospital and we get a lot of colleagues who often come from abroad on 3 or 4 month rotations, but there are also locums who come for a month or two. They have access to hospital accommodation which makes dodgy student accommodation look desirable. A bedroom with shared access to a couple of bathrooms and a kitchen. They also have no control over their flatmates which can be culturally inappropriate for some people. Due to the lengths of their contracts, the fact they don't want to furnish an apartment they've very few choices. There's a lot of AirBnB near us but they'd be looking at easily 100 a night even with discount, unfurnished 9 month AST isn't of interest either due to their contract length.

 So we would like to offer something which fills the gap - appropriate length tenancies depending on the person / people. We aren't trying to create a HMO, so we would rent to a colleague or pair of colleagues who approached us as a pair. We would let out the property based on knowing the person, so I feel we have a slightly reduced risk of a bad tenant. We would be renting with all bills included and fair usage for electricity and gas.

 We don't want to break the law, but we would like the cheapest, easiest and ultimately most profitable way of renting out the property. Does anyone have an opinion on my partner registering at the neighbouring property for council tax purposes and renting out the two spare rooms up to the 7500 GBP limit (it's unlikely we'd reach that limit as average rents are about 500-600 by us without bills and there'd be down time). Home insurance with the possibility for lodgers. Is there the same legal requirement to check a Lodger's right to be in the UK as there is as a Landlord? I assume if anyone wanted to bring their family this would not work and we don't want to preclude anyone moving with their family.

 Or are we better to register it as a business, pay business rates and professional liability insurance and have everyone on a Tenancy Agreement, even if they are only staying 2 months?

 One random aside - if we provide a TV I think we have to pay a different type of licence, but if they provide their own TV it is their issue?

 Thanks so much for reading all this and any advice you have for us.

 i & k

 

To be lodgers aka excluded occupiers there needs to be a resident landlord and it sounds as if neither you nor your partner will be resident landlords therefore the occupants will not be lodgers. 

There is nothing stopping you creating an AST for any length of time, it doesn’t have to be 6+ months, it could be periodic from the get go. 

Yes, resident landlords of lodgers are supposed to conduct right to rent checks and they are supposed to have GSC for properties with gas appliances. 

theartfullodger

An AST may be for 5 days, a week, a month etc etc  etc,.... - the issue is that s21 may not expire before 6 months.. Extraordinarily common myth it must be at least 6 months....

Lodgers & resident landlords works only if resident landlord is genuinely resident - so e.g. just having a room for landlord or just staying there 2 nights a week would mean it would still be an AST. Regardless of what the paperwork (lodger agreement) says.

'umbly suggest you do some education in being a landlord before ending up with anyone paying you rent. 

MultiFuelBurner

Would you consider applying to make both properties one property? A single knocked through locked door upstairs would mean they could be lodgers but there is the obvious costs and then bricking up afterwards and separation to see the properties separately.

It really depends on your long term plans for the two or one bigger property.

YLQuestor

 Thanks all, seems pretty clear!

lincroft1710

As owner of the new property, your partner will have to register for CT in her name. If the intention is to let out rooms individually then your partner will remain liable for the CT. If the whole house is let out on a single or joint tenancy then usually the tenants become liable for the CT 


Do be aware that if you create an AST, it can take a very long time to evict an unsuitable tenant

SDLT_Geek

Are you buying in England, so that the relevant stamp duty is stamp duty land tax?  If so, it sounds likely to me that the extra 3% SDLT will apply to the purchase, given that you are both putting money into it. 

It is certainly worth checking with your conveyancers / solicitors so that you can budget properly.