Hi,
I am thinking of renting 2 rooms in my flat to two friends. I share ownership of the flat with my two sisters who will have moved out. The rent for each room will go to my two sisters and will cover their share of the mortgage. Would only my two sisters pay income tax or do we all have to share it? Is it only income tax that we need to pay or are there other fees? Thanks
If all the money goes to your sisters, they pay tax on their income.
Provided you are living in the same flat, the renters are lodgers, and you have very little to do other than act as a free administrator for your sisters by looking after your lodgers, the property, and keeping the books to catalogue the cost of repairs etc and the money received and sent to your sisters.
You may need to check with your local Council for legal compliance issues. I would expect that you will need an annual gas safety check, if in England a fire alarm on each floor if you have more than one level in the flat, more if in Scotland, and Carbon Dioxide Detectors by the boiler and any combustion devices like a fire place.
For comprehensive free advice on having lodgers, look up the Landlord Law website.
If you receive income from this arrangement, you pay tax on your share of the income. For more on taxation look up the gov website.
If you are not living with the proposed ‘tenants’ you need to comply with over 130 laws as a landlord, and dependant on your location, you have a whole range of obligations and costs to bear: that is a whole different ball game! Too much for me to advise on here, so read all the information available on Open Rent, apart from blog entries, or spend far more time and lots of money on Landlord Law.
I can’t give you links as I don’t have the time to look them up on my mobile phone that I am using to provide this feedback: I find it difficult.
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Never rent to friends or family. It will destroy the relationship.
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Thank you very much, that’s really helpful! So you don’t think I need to pay for a solictor? I really want to avoid this if possible.
When you do eventually rent out a room, have a written signed agreement on household rules, e.g. have a rota so each occupier cleans the kitchen and lounge every three weeks say, lights off at…, no noise after …, and if you wish, one weeks notice each way, and pay rent every Friday or on 1st of month, not pro rata, etc
Best bit of advice going !