Shared student house let for my son – strategy advice request

by Readers Question

17:30 PM, 6th July 2013
About 6 years ago

Shared student house let for my son – strategy advice request

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Shared student house let for my son – strategy advice request

I have a house for my student son and three friends.

My question is quite simple. Would you do a three room tenancy agreement for three students renting part of the property and use of the communal areas, or a whole house tenancy single tenancy for the four (with the higher rent)?

If there is a whole house tenancy, in theory I would be taxable on the one quarter rent I never receive. I would argue against that as the contract is just a legal arrangement and there never was an intention to collect the rent from my son, which I would be paying anyhow.

Presumably I should only claim three quarters of expenses in either case.

So which approach would you take and why?

Thanks

RichardShared student house let



Comments

Mark Alexander

17:40 PM, 6th July 2013
About 6 years ago

Hi Richard

Student letting is not my area of expertise and I am not a qualified accountant so please don't consider the following to be professional advice.

I do have an idea for you to check out though and would welcome feedback on it from other readers too.

Have you considered renting the entire property to your son and including in the tenancy agreement permission for him to sub-let?

You could obviously charge whatever you wanted to you son, i.e. anything from £1 a month if you were planning to fund his education right up to the full rental value. You may just want to charge him just enough to cover your mortgage and other expenses.

I am wondering whether this might make your son a resident landlord and able to let any remaining rooms on licences. If this is possible it would make it very easy to get rid of bad payers or any of his tenants who he doesn't get on with.

Also, if the above does work might your son also be able to claim the first £4,250 of rental income under the Rent A Room Tax relief rules. On top of this he would also have his personal tax allowances.

Just a thought.

Matthew Dickinson

13:27 PM, 8th July 2013
About 6 years ago

I was about to launch into all sorts of ideas, until I saw Mark Alexanders reply, which I must admit is far better than my suggestion, which was to let a decent, and I am speaking from some bad experiences, letting agent, but if your son is to be in the house, that will be ideal, as he will be able to keep an eye on things, from the inside, as it were. You can make visits occasionally to the house, just to make sure that things are being kept in order. Speaking from experience, it is better to have comprehensive insurance cover on the house, and charge enough rent, so that it is you that pays for repairs, as getting money out of tenants for repairs is like getting blood out of a stone. One way of overcoming that is to collect a bond, of some sort, before they move in, which could be used for repairs. This is just a very brief view of the situation, but I would recommend a visit to the Citizens Advice Bureau, as they are a mine of information.

Mark Alexander

16:11 PM, 8th July 2013
About 6 years ago

The other thing which has just crossed my mind is why was an 11 year old child who is quite clearly easily spooked left home alone?

Guat Choo Saw

16:38 PM, 9th July 2013
About 5 years ago

Reply to the comment left by "Mark" at "06/07/2013 - 17:40":

Hi Mark,
I am not a UK citizen and I live in the Far East. I have a son who is currently studying in the UK.

Like Richard, I have a house for my student son. His three friends who are also students would like to rent the remaining 3 rooms in Aug 2013. Does he need to apply for a licence to rent out the rooms? If so, what type of licence and how do we go about applying for one? BTW, he has half ownership and the other half is owned by me.

I am also as curious to know which approach I should take: a 3-room tenancy agreement or a whole house single tenancy, if it is applicable since he is the half owner of the house.

What I would also like to know:
1. Who is liable to pay for the tax on the rental income of
£900pcm? Legally, as a student, does he need to pay
tax? If I need to pay, what is the proportion I need to
pay?
2. As a student, I understand, he does not need to pay any
Council Tax on the property if he lives in the house. But,
being a half owner of the house, do I need to pay any
partial Council Tax on the property?
3. Could you let me where I can get a tenancy agreement
for the purpose of renting out the rooms.
4. Could you also let me know where I can obtain information on the procedures and requirements in renting out a house?

I know I am asking a lot since this is my first time in dealing with rental in the UK, even though I am very familiar with rental in my country.

Hoping to hear from you soon. Thank you in advance.

Mark Alexander

16:48 PM, 9th July 2013
About 5 years ago

Hi Guat

That's a lot of questions and given that letting in the UK is so full of regulations you list barely covers 1/10th of the questions you need to be asking.

Under the circumstances, I strongly recommend you to employ the services of a UK accountant and a good letting agents (see links below).

I have a similar predicament. I also own property in the USA but the laws are incredibly different over there. Therefore, I'm not advising you to do anything I have not done myself.

Links

Accountant >>> http://www.property118.com/landlord-tax/

Letting Agent >>> http://www.property118.com/find-me-a-tenant/

I hope that helps and that you will also sponsor our efforts here by becoming a sponsor of The GOOD Landlords Campaign which you will be able to set up when you log in and update your member profile.


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