Knock two houses into one and Rent-a-room?

by Readers Question

10:52 AM, 1st June 2017
About 2 years ago

Knock two houses into one and Rent-a-room?

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Knock two houses into one and Rent-a-room?

We are considering buying the house next door and combining it with our own house to create one property.

We would then rent out the bedrooms under the rent-a-room-in-your-own-home scheme, which would be more tax efficient than renting out the house separately.

From a legal point of view, does this sound viable, and what arrangements would we have to make to allow the 2 houses to be officially recognised as one property, from the point of view of renting out rooms?

Thank you!

Ryan



Comments

Neil Patterson

10:57 AM, 1st June 2017
About 2 years ago

HI Ryan,

I am guessing it needs to be registered as all one title and with the council for council tax and no part being self contained.

From .Gov >> https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

" 2. The Rent a Room Scheme

The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.

You can let out as much of your home as you want.
How it works

The tax exemption is automatic if you earn less than the threshold. This means you don’t need to do anything.

You must complete a tax return if you earn more than the threshold. From 6 April 2016, this is £7,500. For the 2015 to 2016 tax year, the threshold was £4,250.

You can then opt into the scheme and claim your tax-free allowance. You do this on your tax return.

You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.
More information

Read the Rent a Room helpsheet for more detailed information on how to complete the form, and when it makes sense to opt out of the scheme.
Eligibility

You can opt in to the scheme at any time if:

you’re a resident landlord, whether or not you own your home
you run a bed and breakfast or a guest house

You can’t use the scheme for homes converted into separate flats."

Your lodger is an excluded occupier

Your lodger is likely to be an excluded occupier if:

they live in your home
you or a member of your family share a kitchen, bathroom or living room with them

In this case, you only have to give them reasonable notice to end the letting - and you won’t have to go to court to evict them."

St. Jims

11:16 AM, 1st June 2017
About 2 years ago

If you knock two houses into one, I believe you will be held to the latest and most stringent building regulations, just as if you were building a house from scratch.

That means you will probably have to upgrade a ton of things in *both* homes, including soundproofing, the thickness and composition of walls, new wiring throughout, swapping all single glazing for double glazing etc - the list of these remedial works is often long and expensive.

It's no longer easy to make a profit by (say) buying a big old Victorian house and splitting it into flats.

Before you commit, get a building control inspector and a quantity surveyor to have a look over it.

Puzzler

21:55 PM, 1st June 2017
About 2 years ago

You will have to get planning permission

Ryan Whelpdale

8:51 AM, 2nd June 2017
About 2 years ago

Thanks very much, everyone. Would we be subject to the 3% stamp duty surcharge, buying the adjoining house, even though we would be incorporating it into our residential property?

matchmade

16:50 PM, 13th June 2017
About 2 years ago

Reply to the comment left by "Ryan Whelpdale" at "02/06/2017 - 08:51":

Ryan - seek advice from your solicitor or conveyancor, but I would have thought you have to pay the SDLT. This is payable on the date of completing the purchase, notwithstanding your intentions for the two properties later.


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