Sekangel Posted September 18, 2008 Report Share Posted September 18, 2008 What do I do if my tenants want to run a B&B from my property? My new tenants have recently requested to use the large house I'm letting to them as a B&B. I would like to be able to allow them to do this but I'm hoping for some advice. a) Seeing as I'm renting the house to them very cheaply I feel I should get more of a profit seeing as they're making money from my property. Should this be done by increasing their rent? If so, by what kind of percentage? Or should this be done by asking for a percentage of the profit? If so, what kind of percentage? Or is there any other method I have not thought about? Are there other things I should do? (Insurance, tax, informing my Mortgage company). Or is everything else my tenants responisibility? I'm very new to all this so any help you could give me would be highly beneficial! Many Thanks! Link to comment Share on other sites More sharing options...
Selkirk Posted September 18, 2008 Report Share Posted September 18, 2008 You have a mortgage on the property and I very much doubt the lender would allow it. Building insurance, you would have a Landlords policy, once again I doubt it would be covered under a standard policy. You are probably missing the point though, why don't you let the property as a HMO and fill the rooms yourself, this is the way to maximise the properties potential. Bottom line for me is NO, they are taking liberties with your obvious good nature and inexperience, if you allow it - it could come back and bite you very hard. Just my opinion. cheers Selkirk Link to comment Share on other sites More sharing options...
Melboy Posted September 18, 2008 Report Share Posted September 18, 2008 Absolutely not! Business rates, Mortgage increases, Insurance for commercial property, water rates, the list goes on and on. There would have to be a whole new contract for your rent payment as well on a commercial basis for remuneration. The answer should be a big fat NO... in a nice way of course. Mel. Link to comment Share on other sites More sharing options...
Mortitia Posted September 18, 2008 Report Share Posted September 18, 2008 I agree - definitely not and would add public indemnity insurance and fire regulations to that lot! Mortitia Link to comment Share on other sites More sharing options...
Trenners Posted September 19, 2008 Report Share Posted September 19, 2008 Hi Sekangel, There is no reason, whatsoever, why your tenant shouldn't rent your house and use it as a B&B as long as the whole operation is set-up correctly and with the blessing of your mortgage company. I agree that a commercial lease will need to be created (so that you are protected from all the things that could go wrong whilst your tenant runs his business). A lot of these things are already listed as responses to your original question. HOWEVER - I find your approach to determining the rent / sharing the profits laughable! Do you think Debenhams (or any other business) negotiate their commercial lease with their landlord based on the share of the profits that they are going to derive from renting his property? Does the greed of residential landlords have no boundaries? Your tenant is proposing to undertake a risky business venture. He will be risking his money. He will have to pay your rent whether the rooms are full or empty. You should simply agree a commercial rent (based on what other commericial premises are achieving in your area), make sure the lease is water-tight, get approval from your insurance and mortgage companies ..... then sit back and let the rent roll in (irrespective of the success or the failure of his business). Mark Link to comment Share on other sites More sharing options...
Selkirk Posted September 19, 2008 Report Share Posted September 19, 2008 If the tenants want to run a B&B they should buy a property for themselves in which to do it, prices are good at the moment. I wonder why they don't then and this would be a concern therefore. Just my thoughts cheers Selkirk Link to comment Share on other sites More sharing options...
Melboy Posted September 19, 2008 Report Share Posted September 19, 2008 I would also add that the first hurdle to overcome would be change of use from residential to commercial rating/ permission from the local council planning office. If your property is located in a purely residential area you will have a lot of protests from neighbours..... that you can bank on. B&B's now come under very strict occupation rules regarding health and safety compliance which does involve a large capital expense in setting up. (probably the reason why you do see a lot of ex- B&B's for sale on the open market having reverted back to normal property status.) Mel. Link to comment Share on other sites More sharing options...
russ295 Posted September 20, 2008 Report Share Posted September 20, 2008 Do you think Debenhams (or any other business) negotiate their commercial lease with their landlord based on the share of the profits that they are going to derive from renting his property? hi mark, i looked at renting a shop in eldon square in newcastle city centre a few years ago and the deal was rent + % of that years profits, you had to give them business forecasts for three years to apply for a lease, i cant remember the exact % they wanted. russ Link to comment Share on other sites More sharing options...
Preston Posted September 22, 2008 Report Share Posted September 22, 2008 Hi, Most of the advice is covered above, but just one further point. There are indeed very stringent planning, fire and health and safety regulations applying to B & Bs and houses in multiple occupation. If the tenancy (or lease) you are granting to your tenants is a short term one then it is quite possible that in law the responsibility to comply with some or all of the regulations could fall on you as the "head landlord". In other words, you will need a cast iron lease professionally drawn up and covering all the bases; and this wont be cheap. So, I'm not saying dont do this, but I am saying that this is quite a different proposition to single occupancy residential accommodation, so you need to approach it a very different way. Good luck and let us know which way you jump! Preston Link to comment Share on other sites More sharing options...
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