Long term leases subject to Section 24?

Long term leases subject to Section 24?

0:03 AM, 28th June 2023, About 8 months ago 5

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Hi all! I wonder, for an owner who has a section 24 issue if he lets his property on a 7-year lease to an Ltd Company client who then sub-lets on either Airbnb, serviced accommodation or indeed to long-term residents,  has he then been taken out of the Housing Act 1988, Rent Smart Wales registration, Renting Homes Wales 2016, Section 11 of the Landlord & Tenant Act 1985? And even the Tenant Fee Ban Act and Deposit Protection?

What would the tax position be – and would the owner then be liable under the Finance Act 2015 section 24?

Obviously, the property will be a residential one but the transaction will be a commercial one, will the final style of resident be integral too?

Thank you,

Dale


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Comments

DAMIEN RAFFERTY

14:41 PM, 28th June 2023, About 8 months ago

Well Dale are you the Landlord ?
Are you really thinking of offering a 7 year lease to a limited company ?
How much do you know about this Ltd company ?
Checked on Company house ?
Assets ?
How long trading ?
History of directors ?
I think as always the buck stops with the Owner of the property.
You have skin in the game so to speak in that you own an assest the property

Blodwyn

22:42 PM, 28th June 2023, About 8 months ago

We have let our (extended lease) leasehold flat property to a Limited Company for a fixed rent. The initial term is 3 years. They in turn have an arrangement to sublet to tenants introduced by the Local Authority under a community housing scheme and the Limited Company manage the contract performance. We know the company intimately without having a personal stake in it,
The LA are suited and happy. The main point for us is that we are nearer 80 than 70 and we don't have the anxiety of coping with the next nasty regulatory problem, designed as we see it to disincentive LLs from offering housing to those who need it. We believe we are very fortunate.

Puzzler

8:47 AM, 29th June 2023, About 8 months ago

The owner is subject to the same tax rules as if they let directly to a tenant. It is their status that operates not that of the company renting the property. So any finance is not deductible.

Recent case law then suggests that the company taking on the lease is responsible for meeting any regulations.

You might make sure that your agreement with them states this.

You also need to make sure the freeholder is in agreement as leasehold properties are not usually permitted to be let on short stays. Any reference to single private dwelling or running a business will mean you are in breach

Robert M

9:23 AM, 29th June 2023, About 8 months ago

I believe that s24 Finance Act 2015 applies to a "dwelling house", regardless of who it is let to. Therefore, IMHO, s24 would still apply to your letting whether you let it to an occupying tenant on a 6 month AST or whether you lease it to a company on a 10 year commercial lease agreement, as it continues to be a "dwelling house".

David

12:45 PM, 1st July 2023, About 8 months ago

I would urge you to avoid rent to rent deals at all costs. Google rent to rent issues for more information.

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