Notice to Quit – 3 Named Tenants, one vacated already
I have a BTL property in which three tenants (a couple and a cousin) have resided since July 2012, so it is currently periodic. I need to regain possession of the property for my recently married son and his wife.
The tenants’ deposit is protected via My Deposits.
The cousin left several months ago as the couple had had a baby and needed the second bedroom. The cousin now lives elsewhere. The prescribed information was not re-issued to cover her departure. Will this affect the validity of the Section 21 notice which I need to issue to the couple?
I then would like to allow my son and his wife to live at the property rent free.
Would that have any tax implications?
I presume I can still offset my running costs such as maintenance costs, gas safety etc. across the rest of my property portfolio?
Thanks
Malcolm
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Member Since January 2011 - Comments: 12212 - Articles: 1407
4:21 PM, 15th June 2015, About 11 years ago
Hi Malcolm
You’ve opened Pandora’s box with this one!
Yes there will be tax implications, possibly beyond those you have raised.
Letting to your son will probably put you in breach of your mortgage conditions, please read them or check with your lender if in doubt.
You probably created a new tenancy the first time you accepted rent after the cousin moved out. This will have created a deposit protection issue with the possibility of having to pay a fine of three times the deposit plus the deposit. The best way around this would be to refund the deposit now on the basis that the tenancy ended when the Cousin moved out. I am not aware of a penalty for returning a deposit late. You may be able to kill two birds with one stone by doing this. The first is that you will be able to claim that there is no deposit related to the new tenancy, hence no fine. Secondly, if there is no deposit then you cannot be prevented from serving a valid section 21 notice.
You cannot serve notice until the unwritten tenancy is 4 months old and you cannot enforce it until it is 6 months old.
.
Member Since July 2013 - Comments: 19
4:48 PM, 15th June 2015, About 11 years ago
Thanks Mark. I look forward to anyone’s comments re the tax implications of letting free of charge to my son and his wife.
The property in question is unencumbered, so no problems with any mortgageor.
Re the deposit, if it was paid by the couple rather than the cousin who left, would that make a difference?
Member Since October 2014 - Comments: 423
6:14 PM, 15th June 2015, About 11 years ago
You may be liable to pay the tax that would have been paid, had you let the property at a market rent. Best to ask an accountant.
Member Since August 2013 - Comments: 883
7:15 PM, 15th June 2015, About 11 years ago
I agree with Mark that, depending on what happened, you may have in effect created a new tenancy.
You do not have to wait until the tenancy is 4 months old serve notice, though, but no possession order can be effective in the first 6 months.
I am no accountant, but if you let someone live in one of your property rent free I would think that this is not a rental business and therefore you cannot offset expenses.
Member Since January 2011 - Comments: 12212 - Articles: 1407
7:20 PM, 15th June 2015, About 11 years ago
Reply to the comment left by “Malcolm Ingham” at “15/06/2015 – 16:48“:
Was the Cousin a named tenant on the tenancy agreement?
.
Member Since July 2013 - Comments: 19
8:04 PM, 15th June 2015, About 11 years ago
Yes, all three were named on the tenancy agreement.
Member Since January 2011 - Comments: 12212 - Articles: 1407
8:12 PM, 15th June 2015, About 11 years ago
Reply to the comment left by “Malcolm Ingham” at “15/06/2015 – 20:04“:
That being the case, the tenancy would be likely to be deemed to have ended when he left. When you accepted rent from the remaining tenancy a new tenancy began.
.
Member Since May 2015 - Comments: 5
10:39 AM, 17th June 2015, About 11 years ago
In the case of three tenants on the original agreement, one moves out but no notice or anything given to the Landlord, surely the tenancy still exists and the tenant who moved out is at liberty to move back in. If the tenancy is broken simply by one tenant moving out without notification to the Landlord how can a new tenancy be created?
Advice appreciate.
Member Since November 2013 - Comments: 3
11:00 AM, 17th June 2015, About 11 years ago
Reply to the comment left by “Mark Alexander” at “15/06/2015 – 16:21“:
Is the new tenancy definitely now an AST?
Member Since July 2013 - Comments: 561
11:20 AM, 17th June 2015, About 11 years ago
Did you agree to him leaving? Did he give notice to end the tenancy?
It is possible that he is still a tenant on the original tenancy.
I expect that his will need PAID advice from an expert looking at all the documents and who said what when….