Rent2Rent contracts – if you’re going to do it do it right ….

Sorry to clarify, I shouldnt call the person staying a 'tenant' as they are just 'using' the property. Like a hotel room really.

Reply to the comment left by "Peter Pals" at "23/07/2013 - 17:10":

Hi Peter

If you can be absolutely certain that the person you are subletting to is not using the property as their principal private residence then the basis of tenancy is no different to that of a hotel or B&B. Just be sure you can prove that you have checked into that though, otherwise you could well land yourself into a lot of trouble if you try to evict a person and they claim they are in fact tenants. You may get them out, they may even leave, however, that doesn't stop them coming back to you with a civil case for damages based on illegal eviction and harassment.

As for the arrangement between you and the property owner, a standard company letting agreement is generally recognised for use whereby occupation of the property will be by the Directors or employees of the company taking the tenancy. If that is not the case then a company letting agreement is unlikely to be the right one to use. It is not possible to say for sure of course without having a professional take a look at the documentation and provide professional advice. It could be that the document you are using simply carries the title company letting agreement but is actually something completely different, i.e. a commercial lease including clauses to allow subletting. Please note that subletting, which is what you appear to be doing, is very different to allowing directors and employees of your company to occupy the property.

I hope this helps 🙂

,

UPDATE - 29th July 2013

"Rent to Rent" Lease contract templates are now available for immediate download using the embedded order form above. All pre-orders have now been dispatched
.

Reply to the comment left by "Mark Alexander" at "29/07/2013 - 08:38":

Useful document for the purposes you have highlighted. R2R operators are getting many of their leads via lettings agents who have landlords on their books. I am assuming that the letting agent will want to issue some sort of corporate agreement to the R2R operator?

Reply to the comment left by "raj beri" at "29/07/2013 - 15:19":

That's very interesting Raj, I suggest you point all Letting Agents which will accept r2r to this thread.
.

Good afternoon Mark. I have downloaded and used the R2R contract; sadly the property owner has passed away and we are now embroiled in possession proceedings with the lender (our good old friends MEX). There are several issues in the case which I won't go through on this thread but one issue now raised by MEX is whether or not this agreement can be considered an AST (their argument being that we are afforded no protection under the Housing Act if it is indeed a commercial lease). Perhaps more of a question for the author of the agreement template, but wondered if thus question has been posed before? Thx.

Reply to the comment left by "Alistair Cooper" at "15/10/2014 - 13:46":

Hi Alistair

Oh dear!

This is definitely a scenario I have encountered before and therefore your question is best addressed to Justin Selig, the solicitor who produced the document.

Justin's email address is justin@lawdepartment.co.uk

I suspect MX hold all the cards on the basis that they would never have granted permission to the deceased to enter into the contract. You may, however, be in a position to make a valid claim against his estate for any losses your incur.
.

Reply to the comment left by "Mark Alexander" at "15/10/2014 - 15:11":

Many Thx Mark. I will drop Justin a line. You are spot on of course with MEX claiming that they would never had consented to such a tenancy/lease, and the late borrower it doesn't appear sought consent. The issue before the Judge is that MEX have been accepting rent payments from me which I argue (with recent case law) binds them to the tenancy; hence their latest tact of attempting to suggest that this is not an AST. The Judge wasn't that convinced that it made much difference, but adjourned to allow the true nature of the agreement to be argued ( an easy escape route for the Judge one thinks!)

Reply to the comment left by "Mark Alexander" at "09/07/2013 - 12:36":

Hi Mark,

I find your site and forum comments by far the most informative of anywhere in helping to unravel what seems to be such a grey area. I have also read another post where you invited examples of success stories (from non-rogues!)

I would be grateful for your comments with regards to the following scenario, as I remain none the wiser from other sources with regards correct treatment of VAT and profits:

A property portfolio which is a mixture of....
Renting a property as a sole trader/partnership from a private landlord, to then furnish and 'run' as a holiday let / serviced apartment. So, in turn sub-letting (whole property, not separate rooms) to an individual or family for anything from 2 nights to a fixed period of up to 3 months.

I also have 2 properties I own and earn income in the same way, ie letting for 2 nights to 3 months (rather than standard AST type rental)

I have been doing this for a short while, to prove there is a demand, and am now looking to rent more properties from private landlords with myself as the 'master tenant' under an AST agreement with the property owner ; the AST has an additional clause for sub-letting for purposes of holiday rental or corporate lets.

I am simply wanting to account for tax/VAT both correctly and efficiently, however after extensive research of HMRC guidance notes, and other forums and articles, I am yet to find similar enough examples to be clear on a number of areas.

Presumably I am not the only one, and therefore any guidance you have on the following would be most useful....

Is the income subject to VAT (once above the threshold)? If so, is the relevant income the gross booking value, or the difference between the rent paid to the landlord and the amount paid by the guest?

Are non-holiday bookings (eg families staying short term for 1-3 months whilst between house move) treated differently for VAT purposes?

What criteria tests are relevant if an individual property ends up with mixed use throughout the year (eg 200 days of 2-21 nights from holiday/corporate guests, and 165 days of bookings for 1-3 months from families between house moves or contractors)

Are properties that I own (and rent as above) treated differently to properties that I rent from other owners for the same purpose?

Is there any advantage to having some (rent to rent) properties in a partnership, ie separate to a sole trader business?

Many thanks.

Reply to the comment left by "Chester Maney" at "18/08/2016 - 10:26":

Hi Chester

I recommend you pay for professional advice here as there are so many dimensions to the model you have described. For example, you might be creating a tenancy if a person has no other "home" and that in itself opens up a bag of worms in terms of eviction, never mind tax.

Please see our tax section. At the bottom of the page is a contact form for referral to my own accountants. I am not a tax adviser.
.