Turning a 3 bed rental into 4

allan154

I own a 3 large bed rental and the lady is moving out after all her kids have left (cost too much on her own), we are contemplating selling to my son and daughter to re-let. The property in a big 3 bed council house built 1970's a semi detached. The property has 5 huge walk in wardrobe style storage rooms.
We have had the idea to turning one into a walk in shower with a corner basin and the other into an upstairs toilet (already has a toilet downstairs) and again small sink in the new toilet. The plumbing and electrics are all basically in place they've landed lucky so we could simply tap into both with zero structural changes needed to be made as the rooms walls and dimensions will all remain the same, the only thing that would change is their use.

The plan would then be to turn the fair size original bathroom into a 4th bedroom. There is a frosted glass in the bathroom but there are no facing properties as there is a large grassed area out front. The upstairs landing window is close to the frosted bathroom and that's not frosted so for overlooking I cannot see their been an issue.

There is also a shared communal car park to the side of the property and a large car park for about 12-15 vehicle's and another 20metres away for even more so parking certainly isn't an issue. Both my son and daughter were looking at possibly leasing the property to the local Council on their ELA scheme or to a letting agency as they don't want any day to day running.



The difference on yield is quite significant hence the reason we are all investigating going from 3 to 4 but my questions are:

What is the legal process to make these changes ?, who do you contact ?. I did contact Land Reg but they have no dealing with that. My kids would be looking at everything legal so the ELA can legally command rent for a 4 bed. Obviously the property Council Tax would change band.

If anyone has done similar say change a second lounge into an extra bedroom I'm all ears on the process thank you. 

lincroft1710

The CT band may not change.


You would definitely need Building Regulations Approval. You may need planning permission if changing number of bedrooms, but check with planning authority before making any formal application. If the property is leasehold you may need the freeholder's permission.


But before you do anything, talk to the council lettings team, they may insist (for example) on there being a proper bathroom, rather than just a shower

anselld

Is the bathroom greater than 6.5 sqm?  That would be the minimum size to be considered a bedroom under the national space standards.

I personally cannot see how building regs or planning would be required as there is nothing structural or notifiable involved.

Letting to the Council or a rent-to-rent style agent are bad ideas in my view.  You have zero control over the type and quality of tenant they put in there and you lose control of maintenance and upkeep, pot luck when you get your property back and in what state.   In fact I would go as far to say if son and daughter want to be ccompletely disengaged then you would be far better selling open market and let them make some other passive investment.

Hoenir

Have you allowed for a potential CGT liability in selling the property ?  Basis will be at market value not the consideration as this a connected party transaction. 

lincroft1710

anselld said:

I personally cannot see how building regs or planning would be required as there is nothing structural or notifiable involved.

New plumbing and possibly electrical work would require BR approval, council lettings may insist on this. Even with "plumbing basically in place" you still have to have correct pipework running from water supply and to sewerage/waste water outlet. 

allan154

Thank you for all the comments I've took them on board, firstly CGT will be paid on the property sold as it is, whatever new owners do is their prerogative.
Plumbing ? The pipework & electrics without going into depth for the new toilet would be next to the soil pipe and the shower in the other room has the downstairs toilet directly below it for the shower. Also down below to the left is the consumer unit. 

Renting to the Council? 
This is the scheme:-
https://www.wigan.gov.uk/Business/Property-and-Land/Private-Landlords/Ethical-lettings-agency.aspx

We are still at the very early stages as to which way to go but we heard a rumour that we could possibly be able to claim grants via the scheme to pay towards any upgrades. Any damage would be paid for and put right by the Council.

I understand about tenants but you can do as many stringent checks and still get it wrong.

Saying that, that's my fear leaving my kids with a nightmare rather than an investment. We have been able to gift them the deposit to give them a start so the BTL mortgage isn't the biggest for a 3 bed property but 4 means it's paid off far far quicker.

My other main concern is the changes to tenants rights and section 21 and it's implications if anyone can please tell me the implications that would be great. But thank you to everyone who has replied much appreciated 

Hoenir

allan154 said:

Thank you for all the comments I've took them on board, firstly CGT will be paid on the property sold as it is, whatever new owners do is their prerogative.

Nothing to do with the new owners. Liability rests entirely on the vendors. HMRC do monitor property transactions.  

eddddy

allan154 said:

Any damage would be paid for and put right by the Council.

I assume you mean leasing the property to the council - maybe for 3 or 5 years.

You need to check the terms of the lease carefully, to identify any nasty stuff.

Some of the problems that people have mentioned include...

• Compensation for damage is capped - for example, at 3 months rent. A property owner complained that the council's tenants had kicked holes in walls, broken the bath etc, resulting in £20k of damage - but the council's lease terms said that their liability was capped 3 months rent in compensation.

• Councils refuse to do 'no fault evictions' (and maybe they will become illegal anyway). So after the lease ends, the property is handed back tenanted - so you might inherit very difficult tenants, and you might have to undertake a 'difficult' eviction process.

allan154

Lets say my kids sign a 5 year ELA lease to rent then after the 5 years has ended they decide to sell. Under new laws that are due to come in will selling be enough to evict the current tenants or can that be blocked hence they can remain even if you decide to sell ?. I'm not saying they will decide to sell. I hear horror tales about bad tenants but not all tenants are bad there are good ones as well who take pride in their home.

£20,000 worth of damage ? thats an awful lot of damage 

lincroft1710

allan154 said:

Lets say my kids sign a 5 year ELA lease to rent then after the 5 years has ended they decide to sell. Under new laws that are due to come in will selling be enough to evict the current tenants or can that be blocked hence they can remain even if you decide to sell ?. I'm not saying they will decide to sell. I hear horror tales about bad tenants but not all tenants are bad there are good ones as well who take pride in their home.

£20,000 worth of damage ? thats an awful lot of damage 

Unwise to speculate on what proposed legislation will actually say until it hits the statute books and subsequent Statutory Instruments can easily alter/amend statute law.


Wreck the kitchen and bathroom, damage a few internal doors plus scrawl all over the walls, destroy carpets, easily £20K.

saajan_12

Just letting as a whole property to one household in the private rental market, then there's there's no rules or definitions that change from the size or number of bedrooms/bathrooms/facilities. 

If you let as a HMO to multiple households, then many councils require a licence which will define minimum room sizes and very specific criteria on bathrooms, hobs, cupboards, sinks, etc based on the number of occupants. So you're not licenced for the full number of people, that may reduce the benefit of more rooms if they can be shared by fewer people. 

If you're going for council lets then they will also have specific rules on sizes etc, so you need to find out and make sure you'll meet those.