Should the new person renting be a Tenant or Lodger?

Should the new person renting be a Tenant or Lodger?

9:54 AM, 16th February 2014, About 8 years ago 31

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My husband and I are about to buy a 2 bedroom flat for our daughter who will use the living room as a bedroom, the small bedroom will be used by us when we visit the city from time to time and we propose to rent out the other big bedroom. Should the new person renting be a Tenant or Lodger?

We have experience of renting properties and usually choose excellent tenants. However, in the circumstances of a shared flat if something went wrong it would be easier to ask the renter to leave if she was a Lodger. However, as this is not our main home but a place where we will visit and stay at times, technically can she be a lodger?

Could we rent the flat to our daughter and let her take the new person in as her lodger but all the rent received would be given directly to us. The annual rent would be in excess of the government’s Rent a Room Scheme so if our daughter received the rent would she be liable for tax even though she would pay it all over to us along with the smaller rent she would pay us.(She will be a poor student for the next couple of years!)

The other option is to rent the room as an AST and hope we make a good choice of renter!

Any advice would be gratefully received.

Thanks a lot.

Marie



Comments

by Richard Kent

9:05 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Marie " at "17/02/2014 - 08:27":

Marie,

You are welcome.

The locks on doors is a but of a moot point.- In the past I have used locks on doors for which I also had a copy key for cleaning etc.. Or in case the lodger looses their key 🙂

The Lodger Agreement is the main protection.

by Mark Alexander

9:27 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Marie " at "17/02/2014 - 08:27":

Hi Marie

You don't need to pay for good advice about taking in lodgers, it's all free on the UK's largest website for this market - Spareroom.co.uk - see the article I wrote here >>> http://www.property118.com/student-rent-a-room/33915/
.

by Mark Alexander

9:32 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Marie " at "17/02/2014 - 08:34":

Hi Marie

If you put a lock on the door you may also find that your lodgers room become band A rated for Council tax too. Not so much an issue for your lodger if he/she's a student as he/she will be exempt anyway but it could cause you problems later.
.

by Richard Kent

9:51 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "17/02/2014 - 09:32":

Locks or not, from my experience the only effect it will have on Council Tax is that the owner/occupier should not claim a single person discount on the Council Tax.

Ask your local council 🙂

P.S Locks are not a problem if you have a Lodger Agreement in place from my experience.

by Mark Alexander

10:06 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Richard Kent " at "17/02/2014 - 09:51":

Hi Richard

You may well be right, this isn't really my market as I don't have lodgers and I don't let HMO's or to students.

However, I have heard several stories of individual rooms been rated as band A for Council Tax purposes in shared houses.

You advice to check with the Council is good advice, especially if you get the answer you were hoping to get! 🙂
.

by Richard Kent

10:34 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "17/02/2014 - 10:06":

Sure,

We all make mistakes 🙂

The law/rules on lodgers etc is not that clear so this is not your or my fault.

As you know, the problem is that the information you get from Councils can be very misleading as well as very helpful.

My advice is to those considering lodgers is.

1. Always use a Lodger Agreement
2. Seek advice from your Council regarding Council Tax

From my experience they will tell you to pay full council tax at your normal band without any entitlement to a single person discount.

Note to all: Not issuing a Lodger Agreement could risk giving a lodger Tenancy Rights or risk opening yourself to expensive legal challenge.

by Mandy Thomson

11:15 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "17/02/2014 - 10:06":

Hi Mark

In an HMO situation (i.e. everyone is tenant with exclusive access to their own room/part of the property) the "rooms" could be regarded as separate dwellings - depending on how much they've been adapted - see this government leaflet here: http://www.voa.gov.uk/corporate/CouncilTax/multiOccupiedHomes.html

In a lodger situation, the property is treated as a single household for council tax.

In the case of Marie's daughter, her daughter, as a student is exempt from council tax. However, we don't know whether the lodger will be a student too - if he/she is, then the whole property will be exempt. However, if the lodger works, (assuming it's just the daughter and the lodger living there) the lodger would pay but would get a single occupier's discount.

by Mandy Thomson

11:35 AM, 17th February 2014, About 8 years ago

Reply to the comment left by "Mandy Thomson" at "17/02/2014 - 11:15":

Further to this, in an HMO type property individual liability to pay council tax comes down to whether any facilities are shared, regardless of whether the tenant has a fully self contained living area or not. However, this is unlikely to affect Marie's daughter's lodger.

by Highland Lass McG

12:16 PM, 17th February 2014, About 8 years ago

Reply to the comment left by "Mandy Thomson" at "17/02/2014 - 11:15":

Hi Mandy

So if the lodger works (or even if they are a student) would they contact the council for Council Tax forms to fill and our daughter would also sign one as a student and therefore exempt.

Does this have to be completed every time there is a change, say a new lodger or when our daughter leave uni and starts to work.

by Mandy Thomson

12:48 PM, 17th February 2014, About 8 years ago

Hi Marie

In your daughter's place, I would contact Council Tax, make them aware that I was a full time student (and anyone else in my household, if applicable) and ask them if I needed to apply for an exemption - please see this government leaflet https://www.gov.uk/council-tax/full-time-students.

She will need to inform them any time there's a change of circumstance, such as a new lodger moves in - it's probably not strictly necessary if the new lodger's also a student and your daughter's own status remains the same, but I would be inclined to do so just to cover myself.

From the wording of the leaflet, it might be an idea for her to contact them at the start of each academic year, even if the household composition remains the same (i.e. same people, both full time students).

It goes without saying that she would inform them if she or her lodger started working - if it's not full time, or doesn't pay very much, she (or her lodger) would most likely be entitled to a council tax reduction (this has replaced council tax benefit and is administered locally).


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