X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Tax

    Income tax from lodger

    So a similar situation would be a bachelor who has a family house in Essex for example perhaps got divorced and has let out a few rooms and who also owns a two bedroom flat in London to avoid the commute and decides to let out a room there as well

    0
    0

    Yes, that would fit the legislation. As long as he could show that he was living at both he would be a resident landlord at both.

    0
    0

    So it would have implications meaning you'd have much more security over both properties and the legal right of entry at all times if I'm not mistaken and couldn't ever be legally locked out of either property as well as being able to gain entry via a locksmith without a court order being required in the case of recalcitrant lodgers for example

    0
    0

    That is correct though of course ALL such lodger income would need to be declared.

    If the second property has a residential mortgage on it then it shouldn't.

    You are only allowed one residential mortgage for PPR purposes.

    I'm not sure whether lenders allow two resi mortgages.

    I would imagine you would need to prove a certain amount of occupation.

    With lodgers they cannot lock you out of your property.

    A lodger agreement is not a tenancy agreement even if the LL only resides at the property once a month.

    Lodgers may be charged anything you like.

    Indeed I have charged lodgers far more for one room than the LHA allowance for one property.

    Of course with a second property you SHOULD declare any lodger income if you are already using the RFR allowance at another property.

    If you don't it is highly unlikely you would ever be detected!!

    Tax evasion is a big step to take.

    Not advisable though millions of people do it.

    You have you and your conscience to live with!


    0
    0

    Hi Paul, the one thing that stands out is how quickly new rules and regulations have evolved and changed, it's only been a year or two that I stopped researching and following property landlord related news but considering the amount of changes doesn't seem entirely inaccurate to use such descriptive hyperbole as "assault" of legislation or an "assault on landlords in terms of legislation". Although I've been busy learning about property refurbishment and "how not to refurbish a property" (But that's another storey) I always keep abreast of Uk and world news and most of this legislation didn't seem to be in the "general everyday news"

    0
    0

    Lodgers are excluded occupiers and as such have very few rights. You will need to do right to rent checks, a gas safety certificate and a rent book if paid weekly. You can choose to have a written licence (think tenancy agreement) but this can be a verbal agreement. Reasonable notice can be given by either side, usually a pay period.

    You can use the Rent a Room allowance at your main residence only although you don't have to if it is more beneficial to claim expenses. You can claim expenses from your second residence. I have not found any reason that you can't alternate your main and second residences, but you should consider CGT implications.

    More importantly ensure that your lodger remains an excluded occupier. It could be very easy with just a few changes in your lifestyle that they will become a tenant. Be sure to understand the difference, because it is still possible you could be locked out if your lodger becomes a tenant.

    0
    0

    As with everything and especially legislation the devil is in the detail and it seems to me "binary" in terms of being black and white in legally defining the relationship with your "lodgers" and not subject to interpretation because the fact that you "reside" there is definite and not subject to "how much time you spend there" because the legal definition of a lodger relies on the word "resident" and that definition legal or otherwise is not conditional to other variables such as the property being your "main residence" or having to spend an exact amount of time there before it can be defined as you being a resident of the property and if that definition was ever challenged for tax purposes or otherwise it should be based on what the generally accepted meaning of the word "resident" so from that point of view (Assuming my reasoning is correct) this would seem to be a fairly robust situation


    0
    0

    The devil is most certainly in the detail and the definition of a lodger is far from binary. Residency is only part of the criteria, you must also consider areas of exclusive use, definition of a liveable unit and services provided and/or received. It is not clearly defined at what point a lodger becomes a tenant and if there is a dispute it will be up to the courts to decide.

    0
    0

    Ok that's something I didn't realise and assumed it was clear cut, so that's another bit of research I'm going to have to look at. I'm going to look into that as the house I'm buying is suitable for me to live in, I hope it's working out well with your living situation, I'm not certain if your currently living in two houses or if your considering it but I hope it works out well for you Gary and it seems that you've got far more control over your property and far more risk mitigation especially with regards to non payment, you've also got the added protection that it's far less likely anybodies going to misuse your house

    1
    0

    May be this, may be that....  dangerous... you don't really know which will be your main home do you (yet - probably not until after it's happened...):

    The issue is, do you want to get sued for up to 3xdeposit & civil ££££££ & criminal record if judge decides what you claimed was lodger is actually AST... when you'd given him notice, changed the locks etc etc... It's not what you nominate, it what judge decides...

    Tax matters someone else may reply....

    Bit of a dilemma eh?

    0
    0