Clarification on AST with our own son and his friend ?

by Readers Question

9:16 AM, 26th February 2024, 2 years ago 21

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Dear landlords,

We have a buy-to-let property with two decent-sized bedrooms in London where our son goes to University. He is currently living in the university’s hall of residence but would like to live and share with his friend in our own buy-to-let property from the next academic year onwards.

Can we ask the two young men to contract an Assured Shorthold Tenancy Agreement just like any other tenants? NB: both young men are financially supported by their parents, i.e. parents of both young men will be paying for their son’s respective (50-50) share of rent. We will be using our own savings to create our own taxable rental income (!).

The father of our son’s friend has written to me recently suggesting his son is a good friend of ours, surely both young men don’t have to contract an AST with me, instead, he suggests we just sign a simple agreement between parents based on agreed rent, as friends (we have met once briefly).

Please advise whether the proposed casual arrangement is sensible; is there any pitfall in the suggested casual arrangement? What would be the best way to go about letting the property to the young men to share together?

Thank you and looking forward to any comments/suggestions.

Best wishes,
XM

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Tags: ast agreement, landlord tips, rental income, shared accommodation

Comments

DPT

Member Since October 2020 - Comments: 1178

3:52 PM, 27th February 2024, About 2 years ago

Why would you turn taxed income into newly taxable income?

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Xiaolei

Member Since May 2021 - Comments: 31

9:24 PM, 27th February 2024, About 2 years ago

Reply to the comment left by David at 27/02/2024 – 15:52
Because we have to give our son money to pay his rent to us, especially if we sign AST with our son and his friend, i.e. we will be landlords to our son and his friend (receiving rent) whilst giving our son money to pay his share of the rent.

If we go done the route of Rent a Room, perhaps our son’s friend (the lodger) can pay our son who stays in the property rent free?

Any suggestion how best to go about this would be most appreciated.

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NewYorkie Read Full Bio

Member Since October 2013 - Comments: 1642 - Articles: 3

11:34 PM, 27th February 2024, About 2 years ago

Provide the friend with a lodger agreement?

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Xiaolei

Member Since May 2021 - Comments: 31

11:58 PM, 27th February 2024, About 2 years ago

Reply to the comment left by NewYorkie at 27/02/2024 – 23:34
Noted. Thanks. Lodger agreement between our son (resident landlord) and his friend (lodger). And rent paid to our son.

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Richard Ellis

Member Since November 2023 - Comments: 4

9:27 AM, 28th February 2024, About 2 years ago

Reply to the comment left by Xiaolei at 27/02/2024 – 23:58
Well the next question from the other parent will be “why do we need a lodger agreement* etc etc!

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Londonlad

Member Since November 2020 - Comments: 51

8:05 AM, 2nd March 2024, About 2 years ago

If you have a BTL mortgage terms normally preclude family occupancy.

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GlanACC Read Full Bio

Member Since March 2023 - Comments: 1506

8:09 AM, 2nd March 2024, About 2 years ago

Reply to the comment left by Londonlad at 02/03/2024 – 08:05
True, I thought I would hit this problem when I bought my first BTL and wanted to put my mum in it. Wasn’t an issue as I purchased the property through a LTD company, and as a LTD company it doesn’t have any ‘relations’

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Judith Wordsworth Read Full Bio

Member Since January 2015 - Comments: 1450 - Articles: 1

11:13 AM, 2nd March 2024, About 2 years ago

Reply to the comment left by Xiaolei at 26/02/2024 – 11:20
A tenant, with the landlords permission, can rent a room out in their rented property under the Gov Rent a Room Scheme.

Your son might not get so much student grants /loans if he is using the scheme, but the tax free income could be worth it. BUT he will be his friends landlord and might not want that relationship. My daughter didn’t so I rented the spare bedroom to her friend on a formal AST with all the necessary docs etc.

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Puzzler

Member Since July 2013 - Comments: 1266 - Articles: 1

1:17 PM, 2nd March 2024, About 2 years ago

Reply to the comment left by GlanACC at 02/03/2024 – 08:09
You need to check the conditions, I have one with Precise and it does preclude family members even though it is a ltd co. The co doesn’t have relations but the loan is guaranteed by you

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DAMIEN RAFFERTY

Member Since September 2022 - Comments: 193

2:29 PM, 2nd March 2024, About 2 years ago

Make sure you tick ALL the boxes.
EPC, EICR, GSC, Take a deposit and register the deposit within the 30 days while serving the DPC certificate and prescribed information to your tenants.
Make 100% sure you do right to rent checks
Ask your student tenants to register for council tax exemption.
Use an AST from the NRLA
I hear alot about Rent To Rent on here but if you have a BTL mortgage that may not be allowed.
Does your son want to be a Landlord ?
Maybe keep it simple and Rent to both of them as 2 tenants in the flat.
Gift your son the rent plus £5 each month

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