Renting part of property

Has anyone here dealt with renting out part of their property?

I'm planning on moving house and one option I've considered is buying a three bed house and converting the bottom into a flat to rent out because I don't need all that space.

I'm wondering, though, if there's going to be any problems.

I'm not (initially) creating it as a leasehold, but the upper and lower flats would have separate "front doors" off the main hall (ie behind the "real" front door) so would it count as a separate, self-contained, residence?

If I'm renting it, I don't know if I'd qualify for the single person's 25% Council Tax discount as it would (at least some of the time) be occupied. Also would the occupant be liable for Council Tax payment seperately from mine?

Does anyone have any ideas?

Also are there any other factors that people can point out that I might not have thought of?

[paulyoung666]

would each part of the house have its own address ???? , i.e. flat 1,2,3 etc , if it did then i would have thought that you would get the 25% discount , if i was you then i would look into some properly written tenancy agreements , have you thought about using a letting company to let the flats you propose ????????? , ok so it would cost you so much but i reckon it would remove a lot of the hassle you may encounter from bad tenants

my instinct is 'more hassle than it's worth'

- it must be possible, but you are relying on mortgage lender & local council agreeing to a change of use ?

- your obligations as a 'landlord' are fairly daunting - all fixtures/fittings compliant with current regs for everything, gas checks, etc ? - Insurance?

I can see where you are coming from, but imo, a mix of 'buy to live' & 'buy to let' in the same property, will be too complicated.

[SMHarman]

Problems, lots of them...
You are converting the house, so would probably need planning permission from the council, then these changes would need building approval and the upstairs property may well need consideration of alternate escape routes.
Mortgage, you would have two dwellings so this would be a non standard mortgage.
Buildings Insurance, how would it be insured.
Water, Heat, Light, no dual services to the property.
You would end up with two taxable properties and 25% discounts, but if you converted back you could well end up with the property rerated to a higher band.

As an owner you can rent a room and recieve £4125 a year (or therabouts) tax free income, have you thought of that?

[Rob]

Originally Posted by SMHarman

Problems, lots of them...
You are converting the house, so would probably need planning permission from the council, then these changes would need building approval and the upstairs property may well need consideration of alternate escape routes.
Mortgage, you would have two dwellings so this would be a non standard mortgage.
Buildings Insurance, how would it be insured.
Water, Heat, Light, no dual services to the property.
You would end up with two taxable properties and 25% discounts, but if you converted back you could well end up with the property rerated to a higher band.

As an owner you can rent a room and recieve £4125 a year (or therabouts) tax free income, have you thought of that?

I think you are very much on the right track here. If you don't do a full conversion, you are creating a "house in multiple occupation". That in itself could need planning consent. Certainly you need to satisfy fire escape standards (alarms and things), and show you have adequate cooking and washing facilities. In Council Tax terms, the two separated properties would attract higher overall tax than the single one.

The cheapskate option would be to sort of divide, but not divide, and rent out a room or tow effectively describing the additional occupants as "lodgers". You could define the space they use, but it remains your house as a whole. The advantage: you can kick your lodger out at quite short notice, but they can also leave at short notice. If you properly divide the house you'd have to let out using shorthold tenancies, whcih have their own advantages and pitfalls.

Originally Posted by SMHarman

<snip>

As an owner you can rent a room and recieve £4125 a year (or therabouts) tax free income, have you thought of that?

- I will mention that to my son, thankyou

[SMHarman]

Originally Posted by homealone

- I will mention that to my son, thankyou

http://www.inlandrevenue.gov.uk/pdfs/ir87.htm
Its £4250 this year.

[Chris W]

If you are purchasing the house yourself (which i assume you are) remember that if someone moves in they will have an interest in the properly (can't remember if it is legal or equitable- my brain hurts) but if you decide to sell the property it is sometimes a legal requirement that this rights are kept by the party living there under the new owner- this might make it harder to sell.

Seperatiing the properties, as people have mentioned, can make things very complicated, could you bear with just renting out a room and sharing kitchen/ bathroom etc because then a shorthold tenancy agreement will not cause you as much hassle and will be easier to end if you want to sell the property.

If you want more advice on the legal side of things... let me know

MB

[Escapee]

Originally Posted by SMHarman

http://www.inlandrevenue.gov.uk/pdfs/ir87.htm
Its £4250 this year.

Interesting, that is also usefull to me.

I am currently trying to buy a property next door that was subject to a comulsory purchase order by the council. The property is landlocked, but fortunately I own the piece of land between the property and the road.

It's next door to the current place I am just negotiating to buy, I have arranged for the owner (my grandfather) to seperate the piece of land to make it easier without involving the mortgage people if I manage to get my hands on next door.

I am dealing with someone in Asset Disposal and he has agreed to make it a priority as he was told to sort it out before the end of the year, A big coincidence happened yesterday when the senior public health inspector turned up to look at the property. This guy is now going to apply pressure to the asset disposal department because he is anable to proceed with court action to get the other council department to pull their finger out.

The property need about £20-25K spending to put in access steps and some repairs, it's not bad and with the work done will easily be worth £120K.


I have offered them £1 , you may laugh but it will save them a fortune.

How will they knock it down, Helicopter !!!!!!!!!

Thanks for the replies everyone, they've given me a few things to think about that I hadn't considered.

I think the "lodger" idea might work, it would still only be one address, but I could put a door at the bottom of the stairs to keep a "private" space for me and if the house has two bathrooms and two kitchens that shouldn't be a big deal.

I'll have to do some checking around, but if anyone has any other info/ suggestions I'd be grateful.

Originally Posted by Graham

I think the "lodger" idea might work, it would still only be one address, but I could put a door at the bottom of the stairs to keep a "private" space for me and if the house has two bathrooms and two kitchens that shouldn't be a big deal.

Oh bugger, yes it will be a problem.

A lodger shares family rooms and gets meals provided.

That's that plan out the window!

[Escapee]

Originally Posted by Graham

Oh bugger, yes it will be a problem.

A lodger shares family rooms and gets meals provided.

That's that plan out the window!

My plan out of the window as well, as the tax break is only for lodgers and not renting out the whole property.

[zoombini]

Call it a lodger but one with his own en suite bathroom & 2nd kitchen.

as for eating meals with him/her, why? I dont always eat meals with the kids so why should you..lol

[SMHarman]

Originally Posted by Graham

Oh bugger, yes it will be a problem.

A lodger shares family rooms and gets meals provided.

That's that plan out the window!

No thats the traditional thought about lodgers, this can apply equally to say a child at uni with wealthy parents who finance a mortgage on a house for them, they then rent the second and third bedroom to other students.

I can hardly see student child providing meals to the other two students!

The sharing family rooms is part of the lodger being integral to the sole premises, if you had a granny flat with separate enterance, then that would not be a lodger, if they had the option to walk into your living room (un)invited, then it would be.