shamsingh04 Posted June 5, 2007 Report Share Posted June 5, 2007 Hi I am planning to sell my house and buy a bigger house in a better area. To cover mortgage costs I would like to Let out three rooms. Are there any restrictions with this? ie tax, the house being 3 storeys, and types of mortgage. A bit confused Thank you Sham P.S Looking to get about 55k out my current house Link to comment Share on other sites More sharing options...
plym77 Posted June 6, 2007 Report Share Posted June 6, 2007 From a tax perspective, when you have live-in lodgers you can claim rent-a-room relief, which means that the first £4,250 per annum received in rent is tax free, the balance is chargeable to income tax. Alternatively you can operate a normal rental account, ie. Rental Income, less a proportion of the expenses you incur (electric, mortgage interest, council tax etc) and pay tax on the difference. Once you choose a method, you cannot change it, so make sure you know which gives you the lowest tax bill! Regards Sherena Link to comment Share on other sites More sharing options...
shamsingh04 Posted June 6, 2007 Author Report Share Posted June 6, 2007 From a tax perspective, when you have live-in lodgers you can claim rent-a-room relief, which means that the first £4,250 per annum received in rent is tax free, the balance is chargeable to income tax. Alternatively you can operate a normal rental account, ie. Rental Income, less a proportion of the expenses you incur (electric, mortgage interest, council tax etc) and pay tax on the difference. Once you choose a method, you cannot change it, so make sure you know which gives you the lowest tax bill! Regards Sherena HI sherena Thank you for your advice. Sorry for sounding dumb but would I have to get a buy to let mortgage and what are the restrictions on 3 storey houses. I would appreciate your advice and from others Many Thanks Sham Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted June 7, 2007 Report Share Posted June 7, 2007 Hi Sham If you are living in the property and have "lodgers" you will need a gas safety certificate. You will almost certainly be able to use a residential mortgage and Not need a BTL but you will need to confirm this with the lender(your mortgage advisor should sort this one out for you !) 3 Storey ? Not sure on this one as you will have to check with your local council - the regs are 5 (house holds) people and 3 storey and you have to have a (hmo)house in multiple occupation license - but you will be 4 with "lodgers" so you need to check the position on this one but i dont think it is going to apply to you! Hope this helps ! Simon Link to comment Share on other sites More sharing options...
Matthew Posted June 7, 2007 Report Share Posted June 7, 2007 but if you move your girlfriend in, you will then be 5 and have to get an hmo license = around £600 for a 5 year license, the main implications are that you will need to install sinks in every bedroom and a second toilet. Also kitchhen needs to be a certain size and needs lots of storage and sufficient fridge freezer space plus loads of sockets. Also need fire doors = very expensive @ around 80 quid for one, but needs to be fit by expert = another £50 per door, would also need a proper fire alarm system installed = £1000 quid maybe, and emergency lighting in the hallway. Bedrooms can't be too small, no smaller than about 9ft by 8ft I think. Building regs will need to be submitted along with any previous planning approval = avoid having 5 people. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted June 7, 2007 Report Share Posted June 7, 2007 Mat in Cardiff there is no requirement for sinks in every bedroom- Fire doors are £15(+Vat) half hour rated! get yourself along to your nearest HOWDENS Joinery and open a trade acc immediately! the rest i would agree with and definatly avoid 5 people Simon Link to comment Share on other sites More sharing options...
shamsingh04 Posted June 7, 2007 Author Report Share Posted June 7, 2007 Hi Simon/Matthew Thank you for your advice very much appreciated. I will ring the Leicester Council about HMOs and my position. Will let you know what they say Thank you again Sham Link to comment Share on other sites More sharing options...
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