Notice to Quit – 3 Named Tenants, one vacated already

by Readers Question

16:12 PM, 15th June 2015
About 3 years ago

Notice to Quit – 3 Named Tenants, one vacated already

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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. Notice to Quit - 3 Named Tenants, one vacated already

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



Comments

Mark Alexander

16:21 PM, 15th June 2015
About 3 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.
.

Malcolm Ingham

16:48 PM, 15th June 2015
About 3 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?

Jay James

18:14 PM, 15th June 2015
About 3 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.

Romain Garcin

19:15 PM, 15th June 2015
About 3 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.

Mark Alexander

19:20 PM, 15th June 2015
About 3 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?
.

Malcolm Ingham

20:04 PM, 15th June 2015
About 3 years ago

Yes, all three were named on the tenancy agreement.

Mark Alexander

20:12 PM, 15th June 2015
About 3 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.
.

Brian Hughes

10:39 AM, 17th June 2015
About 3 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.

Elizabeth Corroon

11:00 AM, 17th June 2015
About 3 years ago

Reply to the comment left by "Mark Alexander" at "15/06/2015 - 16:21":

Is the new tenancy definitely now an AST?

Ian Ringrose

11:20 AM, 17th June 2015
About 3 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....

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