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Any member of PT can't fail to be aware of the changes to mortgage interest relief, commonly known as Section 24.There are valid claims that this will result in landlords selling rental properties, landlords increasing rents and the inevitable claim that this will increase homelessness.There are other claims that this will only effect a small minority of landlords, possibly less than 10% and that it is part of professionalising the PRS.
I can see the same claims being valid for the changes to rent a room relief. A small percentage of landlords that can currently legitimately use the scheme when letting their main or only home will no longer be able to do so when the shared occupancy test is introduced.
I'm alright Jack, neither effects me.However, I have equal empathy for the landlord effected by S24 on a single BTL property as I do for the landlord effected by the occupancy test on their only home let.Both have made a decision based on current legislation which is no longer viable when that legislation is changed. Both will have to make decisions on whether they can viably continue to let their properties. Both are most likely unaware that anything has changed.
Thanks, but what point are you trying to make?
If my point isn't clear I may at least have raised some awareness.
What issues will there be with the shared occupancy test? I understand your point surrounding the sec24 and the SMI cuts and transformation into a loan now.
The rent a room scheme currently broadly falls into 2 groups, letting to lodgers and letting as a trade. The trade element has been taken advantage of by airbnb users and similar and is being restricted by the introduction of the occupancy test. This test will also effect those that are letting their only home on a licence agreement.
How will it affect those letting their own home on a licence agreement to lodgers?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
It won't effect live in landlords with lodgers. It will effect live out landlords that can currently use the rent a room scheme. Whether those occupiers are lodgers or just licencees is another question, for which there is no clear answer.
The scheme was never intended to benefit live out landlords thus the introduction of the test
I agree. However, the benefit is currently available and will soon be removed, which is why I make the comparison with S24.
Those RARA landlords that are aware of the change will have a similar decision process to those facing S24, they may even become S24 landlords.
I see what you're saying however i welcome the changes as many have milked the loopholes and benefited where they shouldn't have, i also welcome the professionalisation of the room renting market.
A couple of examples that I highlighted here:
1. The owner has let the property to someone they knew as a babysitter. The occupier continues as the babysitter with the child staying overnight on occasions. The owner no longer occupies the property.
I believe that this agreement is a licence as long as the property was let on the basis that the babysitting would continue, i.e. there is a significant element of service. The occupier will be a lodger as they share the property with a member of owner's family. Currently, the RARA applies as this is the owners only property. The shared occupancy test for the RARA does not, as yet, include family members, so the RARA may not continue.
2. The owner has let the property but retained the garage and workshop attached to the house. The owner has agreed shared use of the kitchen whilst they are using the workshop but doesn't require use of the rest of the property.
I believe this has created a tenancy, as the occupier has exclusive use of the house with the exception of the kitchen. It can't be an AST as there is shared use with the owner. There is a good chance that the occupier is still a lodger as it is the owner's only home. The question here is whether there is adequate shared occupancy to qualify for the RARA test next year.