to be absolutely flummoxed as to what to do here! Moral dilemma.

[pictish]

This may come over a bit dull and complicated...I would appreciate the advice of anyone who can be bothered to read.

Dh and I own a flat in the city. We live in a small town outside. The only reason we have the flat still, is because the housing market is dead. We'd sell it tomorrow if we could.

So we rent it out. So far, all our tenants have been friends, or friends of friends. We charge the minimum rent - just to cover the mortgage and no more. We don't make any money out of it at all. Therefore, the rent is really cheap. We don't even take a deposit.
We take the rent in cash on the 1st of the month to keep things simple and hassle free. The conditions are that we need one month's notice to quit.

So...my friend's brother has been renting it for the last year or so. On 11th July he texted me and said he was moving out on the 15th Aug, and would give me the 'remaining' rent on the 1st as usual. I asked him what he meant by 'remaining' and he said he meant half a month's rent, as he was leaving on the 15th.
I explained to him that the flat, like any other, is rented by the month, not the week, and that I would be expecting a full month's rent...even if he chose to move out early.
He didn't sound happy, but he agreed.

Now I have received another text...it says this...

"Hi - I have to let you know that I have moved out this weekend. As I have been told I have a tumour in my spine and I need an emergency operation so I will be in hospital a lot over the next couple of weeks/months. So I need to move out right away as I have no other alternative. I will get my mum to hand over the keys to you asap so you can get the flat rented out soon. Thanks again for letting me stay there."

His sister is a friend of mine. I saw her yesterday and she did mention the discovery of a tumour. We were all about it, of course. No one knows if it is sinister or not yet. You can imagine what they are all going through can't you?

However...in my world, we are fucked financially because I think he is proposing to not pay any more rent.

Wtf do I do??

I think you have no option but to take the hit. To pursue it would leave a bad taste wouldn't it? Did you tell your friend your situation? I assume not in the circumstances.
Why on earth leave yourself so tight? I have moved out mid month before & paid part of the usual rent although it is unusual.

I feel very sorry for the young man of course and I'm sure you do to. But mortgages have to be paid. I think that's why people draw up agreements and use letting agencies to make sure deposits and rents are paid and proper notice to quit is given. So I think you should just put this behind you and think about having a more formal arrangement in future. And what about income tax on the rent you have collected.

every day on these boards people are banging on about benefit cheats and people who dont pay their taxes. Thats 4 years of undeclared income you haven't been taxed on

Really? How much income tax do you think people with btls generally pay?!? Everything is tax-deductible - the mortgage interest payments, repairs, upkeep, buildings insurance, petrol you use to reach the property for inspection...

I don't think the Country is missing out on any income tax tbh! There's useually not any to pay anyway!

"Taking the hit" is a lot less than paying tax!

I can't believe you're professionally tax-dodging and insisting your cancer patient tenant pays you when he isn't even living there any more because of 'rules'.

Do you know how that looks?

Prettykitty - your situation was very different from this one. This tenant had an implied (ie unwritten but still binding and enforceable!) periodic tenancy. There is a legal rule that in a periodic tenancy you can give notice to quit on the same day you normally pay rent, and that the notice then expires when rent is next due. This applies unless the landlord and tenant agree otherwise.

Legally the tenant is responsible for august or until the landlord finds a new tenant (if earlier).

Tumour on spine does not necessarily equal cancer.

I think you need to take the hit for this one and from here on, insist on some sort of deposit. Change your insurance to that of landlord and also inform your mortgage company that you're renting out with the aim of covering the mortgage. Check your mortgage agreement ASAP - there can be small print saying you can't rent out your home but some might let you do it for say a year before insisting you change mortgages. You also need to sort out contracts so that if they do want to move out on the 25th say, then they do have to give you notice and the remaining of the months rent.

If you make profit on the rent (say more than the mortgage) then you are liable for income tax. I have a feeling a friend rents it his old fat for the mortgage amount and is able to write it off as a tax deductable. However I can be completely wrong on that last part. You do need landlords insurance though as it might cover these instances.

And notify the council that its empty so your not liable for council tax in the meanwhile x

You've been taking rent illegally for years, not paying tax on it, and now you're complaining about not getting half a month's rent?

Corygal I can't believe you're professionally tax-dodging and insisting your cancer patient tenant pays you when he isn't even living there any more because of 'rules'. Do you know how that looks?

Somewhat exaggerated on your part.

We pay nearly £900 a year in tax to gain the grand sum of £33 per month. Absolutely all our boxes are ticked despite me knowing several other taxdodgers who fail to declare the rental income.

Even so, if I knew this person was not lying, I'd forego the rent despite needing to pay the mortgage.

Would your husband actually go apeshit about this? I think some perspective is needed.

Its pretty shit but your will probably just have to take the hit. Not that i think having a tumour means it is ok for your tenant to act like a shit though.

Vivienne the op stated in her first post that the rent covered the mortgage only so no income tax would be payable i would have thought.

Also I would warn the op that formal agreements and having everything above board does not equal continual and hassle free tenants and payments. If a tenant quits for whatever reason and does not pay outstanding rent waving a tenancy agreement wont magically get you any money. All it gives you is the legal option of pursuing the tenant for the money (and if its one months rent probably not worth the hassle imo).

The tax on the flat we let was about £80 last year. We use a letting company who do all the hard work and we have notified our mortgage company. We have landlords insurance and we are registered with the local authority as landlords. We charge rent that is around the market value, and we cover costs, but we don't gouge our tenants. It's always been easy for the company to find tenants. I would never do it another way. Far too much hassle.

I don't know how it looks - I am completely ignorant of such things...the legalities and what not. The conditions on the flat were monthly rent starting the 1st and one month's notice and that's it. We mean no harm to a soul!

Anyway - dh informed...and we are good naturedly letting it go. Will speak to mortgage company tomorrow, about a break while we organise putting it on the market. Lean times ahead, but hey

May be wrong but my understanding is that if the capital and interest mortgage is say £600 and rent is £600 since only the mortgage interest (not capital) is tax deductible then you make a loss. A letting agent informs hmrc that you're a landlord.

Mortgage payments are not tax deductible; interest is. So there may be rent due. What the op does not want is to be dobbed in and then forced to produce four years' worth of income and expenditure sheets showing what has been offset against the rental income. It sounds like not much! So may well be tax due.

Even without the tumour issue you don't have a leg to stand on legally.

forums.moneysavingexpert.com/showthread.php?t=3223784&page=1

Summary here.

You absolutely can't ask this guy for money at the moment. He has more important things to think about. And it's not nice.

So, onwards and upwards to working out how to pay the rent.

When reading your post, it read as if you were doing these tenants a favour, whereas actually, it's been the other way about for 4 years, for you have been getting your mortgage paid off.

As others have said, be grateful you've had 4 years of tax free rent, and do whatever you need to to cover these few Weeks.

If you don't think he's lying, then walk away and keep being a good friend. If it's the truth then you can't ask for money, it's not the right thing to do since he's a mate. If he wasn't a mate and you had a proper business agreement then you may have considered insisting on payment.

Good advice though from other posters, to protect yoursrlf and your tenants for the future.

OP - can you not just rent it out properly rather than taking the hit on selling? Why not just speak to your mortgage company, a letting agency and get organised? If you are giving a good deal by just covering the mortgage, then you might be able to make a profit at standard rental rates.

I read the original post to mean that the tenant gave notice on July 11th, intending to move out on August 15th, and that therefore he may have misunderstood the terms and thought he was giving the correct notice. If there had been a written contract this might not have happened.

It's ok...it's settled. We're taking the hit, and figuring it out. Thanks all.

As somebody else pointed out only interest on the mortgage is tax deductible. But in principle I don't think you can have an informal arrangement with somebody saving yourself money and perhaps not following all the rules for landlords yourself and then quote the rule book when it suits.

As a landlord you have all kinds of obligations, to your tenant, to your lender and to the taxman. You sound a bit guilty about letting your flat out, as if it is immoral to make money out of renting. Perhaps you have kept it informal so it feels as if you aren't really doing that?

I'm sorry, but you ought to have gas and electricity safety certificates, smoke and carbon monoxide alarms, fire safe furniture, proper insurance, a deposit scheme... And from your end, mortgage provider aware, tax man happy.....

If you were renting more formally you would know that all landlords have periods of no rent, rent is not pure profit. Yr dp will have to accept that there is a void. Be grateful you haven't got stuck with an informal tenant who turns into a squatter, and refuses to leave full stop. Of the poor guy is ill, there is no point " insisting" on the rent, he has no options, nowhere to go and far more on us mind anyway. Be nice, let your friend know that there is a void and it has given you financial problems, and the family may yet offer something once the crisis is over.

It would be safest for you and for your tenants if you got a good agent to take over the property. The rent will go up and so will your expenses but at least you will know you are providing a safe service.

But Pictish, hugs, as I can see you meant no harm. Thank goodness this has ended as well as it has, with him leaving, and not with a fire god forbid or a dodgy appliance. Go to a good agent and they will help you get a rent that covers your costs and gives you peace of mind. Good luck.