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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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

137 replies

pictish · 28/07/2013 20:31

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 Sad 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??

OP posts:
valiumredhead · 29/07/2013 00:16

Personally my bull shit radar would go off big time with a text like that BUT there's nothing you can do Pictish,I think you just need to accept it and sell the flat or rent it out properly x

Wibblypiglikesbananas · 29/07/2013 00:39

I am completely ignorant of such things...the legalities and what not.

Pictish - I was surprised this was you. I know you're a long time poster and I had to check back that I'd read your name correctly! Gosh, you've put yourself and potentially any tenants in a really vulnerable position.

With regard to the AIBU question - well, morally, I think he should pay. Yes, the situation he's in is horrendous (if he's telling you the truth) but that's why people have insurance etc. If I got ill, I'd still have bills to pay.

However, I think you're on a rather sticky wicket talking about a moral dilemma, given there doesn't seem to have been much that was ethical about the renting that's been going on for the past few years. Ignorance is no excuse and there are enough threads on here about rogue landlords that I'd be surprised you weren't aware of the consequences of not having proper contracts, safety certificates, deposits and so on organised.

It looks like things have ended relatively well for you if all you'll be losing now is a couple of weeks' rent before you sell. Make sure you check out capital gains if the property hasn't been your main residence for a while.

Trapper · 29/07/2013 06:35

Get his sister to have a word with him about it. You have generously let him live there at a discounted rent (compared with the market) and used a personal reference instead of a cash deposit by way of security. He should pay until the end of the month.

WaitingForMe · 29/07/2013 07:00

It may be worth getting some advice anyway as there is something jumping out at me (I'm a landlord) and that is council tax.

Who was paying it? Because if it was the tenant, this is something that could potentially alert HMRC to OPs non-declaration of income.

SolomanDaisy · 29/07/2013 07:23

It's highly unlikely you have any tax liabilities if to you were only charging enough rent to cover the mortgage, as there is no profit there to tax. The mortgage company would almost certainly give permission to let on the same interest rate too, so you haven't 'defrauded' them (ffs).

If I were you I'd talk to estate agents who do both lettings and sales and see what the market is like. It might be worth your while to wait a few years to sell - you can get the estate agent to fully manage it to reduce the hassle.

In the meantime I would ask your tenant to leave his furniture for a while since he is living back at his parents, then do airbnb for a few months to cover some of your costs.

FiftyShadesofGreyMatter · 29/07/2013 07:51

If you have a mortgage on the flat it might be worth considering going interest only as it is only the interest that is tax deductible.

Beastofburden · 29/07/2013 11:36

wrong, solomandaisy- the mortgage payments include repayment of capital and that is not tax deductible. So there is almost certainly tax due. But the OP can deduct some expenses. And some of the profits could go against her PA, so if she is not otherwise earning, that would help.

selfesteem · 29/07/2013 12:42

SolomonDaisy - sorry but your information is incorrect, of course it is fraud. It is in the terms of the mortgage that you have to advise the mortgage company if you rent out the property. It is unlikely they would charge you the same interest rate as they usually make you move to a buy to let mortgage which costs more. The house insured would be invalid if you have not told the insurers that you have rented it out. If you did not get a gas safety certificate you would be personally responsible in the event of harm to your tenants. You could still be taxed on profit even if the rent is less than the mortgage if it is a repayment mortgage not an interest only one as only the interest part can be offset against tax.

StepAwayFromTheEcclesCakes · 29/07/2013 13:27

pictish if there is any chance that you may be outed on here i would ask for this to be deleted as some people can get a bit arsey about things done illegally however innocent. FWIW I think you made the only choice available really in the circumstances. good luck with the sale.

valiumredhead · 29/07/2013 13:40

I agree about getting it deleted x

SolomanDaisy · 29/07/2013 13:45

For some reason I thought the mortgages interest only, so sorry, yes there is a potential for a very small tax liability.

Re the mortgage, no the companies will mostly say yes to letting out your home on the existing mortgage if you have a good reason and the rent/equity are ok. We have done this and not being able to sell is one of the reasons on the form. Several friends have done the same thing.

Gas safety and insurance are different issues obviously.

Original poster
pictish · 29/07/2013 14:09

Have asked that the thread be deleted, so we'll see.

OP posts:
Beastofburden · 29/07/2013 15:04

bye bye then, good luck Smile

Original poster
pictish · 29/07/2013 15:11

Have messaged you beastofburden x

OP posts:
Babbit · 29/07/2013 15:17

I shouldn't trouble your mortgagor either unless they are aware you were letting out the premises as this may be in breach of your mortgage agreement.

Babbit · 29/07/2013 15:19

Ah I see that's been mentioned.

oohdaddypig · 29/07/2013 20:37

Self esteem - Solomon is correct that its very unusual for a mortgage company not to issue a consent to letting provided the borrower isn't a professional landlord with multiple properties. They would not usually force a switch to a buy to let mortgage.

It is a condition of most mortgages that letting only happens with consent but lenders are fully aware that this happens a lot without people seeking consent. Consent usually means just charging a nice fat fee for issuing a standard letter. The mortgage company would require a lease to be on standard terms....

Beastofburden · 29/07/2013 21:50

Pictish, have replied x

Pigsmummy · 29/07/2013 22:09

You are paying the price for not doing this above board. You can't ask him for any more money. I wish him well

PeerMon · 29/07/2013 22:13

Can I ask which city?

PeerMon · 29/07/2013 22:13

Or just region..

Shesparkles · 29/07/2013 23:04

PeerMon what business is that of yours? Knowing that information makes no difference to the outcome for Pictish

Devora · 29/07/2013 23:14

Glad your dilemma has been resolved, Pictish - sounds like you've handled it beautifully.

Just to add, for those smelling bullshit, that tumours in the spine are rare, but when they do happen disproportionately affect 30something men (or so I was told when it happened to a close relative). Even when they're not cancerous, they're still a big deal because of the obvious risks of surgery around the spinal cord.

selfesteem · 30/07/2013 13:09

oohdaddypig - yes I agree if you don't have another mortgage they may permit you to sublet without a BTL mortgage. Not sure if we know if OP or her partner have another mortgage or not though. However it is still a requirement of the terms to notify them. Not sure what you mean by saying most lenders are aware this happens a lot without people seeking consent. No lender or insurer would just accept this without being notified. Imagine the worse consequences - house burns down and you are then not insured. Tenant injured by gas leak and no gas safety certificate. I cannot believe people can be so complacent about it and think it is OK.

tittytittyhanghang · 30/07/2013 14:08

I have a normal mortgage that I let out. When i went to arrange my second mortgage for our new house i queried whether the first mortgage would need to be converted to btl. Bank manager said that as i was renting to close family there was no need. I asked him what happened if close family moved out and someone not related moved in. His actual words - "no one else tells us". So im pretty sure they are very aware of it and unless the mortgage is defaulted upon, they are not overly worried.

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