Advice needed: Lodger/Airbnb arrangement after bereavement

sheramber

Who will clean the AirB&B,  change the bedding, wash the old bedding at  the end of each let? 

You and your brother will have  to register with HMRC  and  submit tax returns. 

Are you prepared for the admin of advertising, taking bookings and payments, arranging for any running repairs and maintenance ? 

_Penny_Dreadful

BryanTomson said:

Hi all,

Hoping someone might be able to point me in the right direction here. My brother and I have inherited our family home following our mum's passing and are considering the arrangement outlined below. We'd like some guidance on the legal side of things before we proceed.

Background: We sadly lost our mum very suddenly back in January. Probate has now been granted and we've inherited the family home. Our Mum had been running a very successful Airbnb on the top floor for years, and we're trying to work out the best way forward.

Proposed arrangement: We're considering having some close friends move in as lodgers on a rent-free basis to help with the situation. The arrangement we're thinking of would be:

• Friends live on the ground and first floors at no charge

• Top floor continues as Airbnb (as mum would have wanted)

• Utility bills split 50/50 between us and the lodgers

• Council tax to be paid by the lodgers (though not sure if this needs splitting?)

• Lodgers would welcome guests and be a point of contact, but we'd hire contractors to do cleaning and maintenance

Our reasoning: The property needs to be occupied ASAP to avoid the council tax empty property surcharge. I've got a young child and haven't got the time or energy to clear out decades worth of belongings - the friends we have in mind would likely be happy living around mum's things for now. We'd also like to keep the Airbnb running as it was mum's pride and joy, but we're not comfortable ethically with turning the whole house into a short-let, and I suspect there might be additional tax implications if we did. The house is very nice and in a beautiful location, so it would be a good deal for the lodgers.

What we need to know: Are there any legal pitfalls we should be aware of with this setup? In particular:

• The rent-free lodger arrangement

• How council tax should properly be handled

• Any implications for the Airbnb side of things, particularly regarding any recent changes in the law

Does anyone here have experience with similar arrangements or could flag any obvious issues we should be thinking about?

Thanks in advance for any insights.

I’m not convinced your friends would be lodgers. Whilst you aren’t going to charge them a monetary amount in rent they will be paying rent in kind by being the greeters and point of contact for your AirBnB guests. They will be tenants and if that rent in kind is worth £250 (£1,000 in London) then they’ll be tenants with Assured Statutory Tenancies (AST). Assuming the property is in England. 

You should also look into the House of Multiple Occupancy rules for the local authority. 

Finally, the golden rule of being a landlord is never let to friends or family. 

the_lunatic_is_in_my_head

Sorry for your loss OP.

I would say friends (or indeed family) and money simply doesn't mix, no matter how well it might appear everyone is on the same page. 

If your friends get used to living rent free and then later you want to do something with the house will they move out? Will you fall out? What happens if they become picky about repairs, etc and there is animosity due to the lack of rent? What if your bother later wants them out to get an income from the place and you disagree?

You say the AirBnB is doing well, doesn't this income cover the council tax?  

Usually lets are subject to business rates that qualify for relief and you'd pay council tax (maybe at a premium due to being empty) on the 2 floors but if only for 6 months to year whilst you sort the place out and rent or have another holiday let it seems better IMHO to pay the cash to council than get involved in a complicated set up with friends who you may end up losing

Ditzy_Mitzy

Archergirl said:

Might be easier just to sell and split the money, that sounds like a lot of faf and an accident waiting to happen.........

Absolutely.  The proposed setup sounds rather like the OP wishing to run the place as a guest house with two live-in caretakers.  If the friends are expected to perform tasks and, even, be 'on duty' at various points, it'll be difficult to justify why they are not employees, too.  

I wouldn't touch such an arrangement with a bargepole.