AIBU to raise the rent!? Long sorry.......

[Fizzielove]

A few years ago we decided to move house to be closer to elderly family, no point in selling our house (in my name) as the market had dropped and we’d just break even. So we decided to rent it out. A family member was offered the house and eventually decided that yes they would like it – we are currently giving them mates rates at a discounted rate of £150 off the rent – this was on the understanding that they would look after and maintain the house as if it were their own and we would be responsible for major issues. They insisted on moving in a week early and didn’t pay rent for that early week as they were still paying rent on their old place!! This was supposed to be a week for us to clear the house, paint a few things that needed doing like the newly plastered kitchen ceiling – they said don’t worry – we’ll do it cos we know we’re moving in early – fair enough! It’s some years later and it still isn’t painted!! Family member was our childminder and didn’t give us mates rates and was actually more expensive to use than other local nurseries / childminders, etc. in the end we couldn’t afford to continue using this person. So the annoyance – it may seem like a little thing but it’s annoying! The bathroom paint in one of the bathrooms is peeling – family member had agreed a weekend for DH to come and ‘help’ strip it back so that it can be sealed again - family member decided ‘nah’ – and pissed off out and left my DH to work at it himself – it took all day. When DH asked about both of them working at it in the evening he was told that family member was too busy to be doing it during the week – when asked what it was he was told ‘life stuff’ – now this family member has no kids and no real responsibilities – my DH has a disabled wife and 2 small children – and he was prepared to ‘help’ – I am nothing short of tearing my hair out!! It seems so selfish!! Family member told me he had already repainted the area – but I checked it and there’s no way it has had anything done!!

WIBU to raise their rent to cover the cost of getting someone in fix issues in the house?

I would look at the contract end date, give notice to quit and not renew it. But I'm guessing there is no contract.

I don't think it works like that. Do you have a formal rent agreement and are you signed up to the tenant deposit scheme? If not you might be in hot water. I think you should get some legal advice pronto.

Do you have a tenancy agreement? If so, don't renew it, give them notice. If not, seek legal advice.

'Mates rates' is often code for 'cash in hand' - are you paying tax in the income?

None of this is above board is it?

If they've been living there for a few years without a rent increase, and they are happy with the arrangement, then it probably is time to raise the rent.

They are family, there is no tenancy agreement - I have spoken to an accountant and because we make no money and are running at a loss we have no tax to pay.

It's been a "few years" with no rent increase? I'd say perfectly reasonable to increase it now.
I would however also take the opportunity to formalise this - with their maintenance obligations set out, and requirements for it to be in a certain condition at end of lease etc.

I know it seems easy to do it informally - but this is the downside, negotiating rent increases with family and discussing their lack of maintenance etc!

You need to get a tenancy agreement in place, and stop running at a loss!

You are on a straight road to family fall outs and your biggest asset being left in bad condition leaving you with a great big bill to put it right. Something will have to give!

It is still income and you should have a detailed set of accounts to prove that.

I think it's time to start doing this properly. You need a proper tenant paying a proper rent and you need to start making an income on the property and then paying tax if need be.

Do you pay insurance on the house? Is everything else as it should be, ie wiring and appliances up to scratch? Unless it's not in rentable condition I would be turfing these two out and getting some fresh blood in.

The property has been rewired, new oven put in for them moving in, gas is serviced annually, we pay the rates, maintenance fees and insurance on the property too. Prior to them moving we had just refurbished and extended the house, so that meant new flooring and carpets everywhere. They basically got a brand new house!

Tell them you can't afford to run it like that anymore, get the house appraised and re-rent it for the new appraised amount, through an agent.

If they wish to continue living there they have to go through the agent.

They are taking the piss!

As an aside .... Are you sure there is no tax to pay? When we rented out our house, our mortgage was £615ish and the rent we got was £550. We still had to pay tax.

We could offset the mortgage interest part of the monthly mortgage repayment, but had to pay tax on the rest of it, after insurance and some costs for wear and tear etc.

I would get these people out if I were you, they are taking the piss.

Yep, time to formalise this I think. Tell them you are handing the house over to an agency and they will have the option of paying agency rates if they want to stay in the house. If they whine, just tell them that they have been making it impossible to maintain the house to a proper standard.

You need to declare the income.

Agree with others, you have to declare rental income on a short tax return. It is easy to calculate your income & expenses and the difference goes in the profit or loss box.

Then HMRC decide whether or not any further tax is due.

You must do this or it will come back to bite you on the derrière.

Thanks for the advice on the HRMC - I will get in touch with them to see what I need to do.

I don't want to cause a family fallout - but I'm just pissed off feeling as though I am being taken advantage of!

can anyone advise - am I as the Landlord responsible for peeling paint due to condensation or is the tenant? Cos the tenancy agreement I have received from solicitor (5mins ago) says that the tenant should maintain the decor in a good fashion......

Get a couple of EAs in to give you new quotes on rent, but to have reliable responsible tennants in for years is worth A Lot. You're saving unpaid rent, admin fees for new tennants, painting and cleaning inbetween, council tax if property left empty for too long.

Don't underestimate that. But rent will have risen in the past few years so you might need to increase it (but still at less than market rate if you want)

You're responsible to repaint if it's a few years old and peeling.

They are if their children crayon all over the wall.

If you are paying rates then I assume you are in Northern Ireland. Don't assume rent ha risen here like in England it hasn't.

But I would get shot and start again with new tenants. You can tell them you want to sell if you don't want the fallout.

various points:

if it is condensation it is the tenant's responsibility, if it is damp it is the landlord.

declaring the income is easy, the revenue's online tax system works well once you are registered. Keeping the relevant records is also simple.

with no written tenancy agreement you have a verbal one (as you are accepting money for the place and they have keys to it). This means your notice to them is 2 months, theirs to you is 1 month. If there is a deposit it MUST be protected.

to raise the rent, you need to give them written notice of that (check the legalities). They either accept or leave. If they do neither, you'll need to evict them, which takes about four months and costs money. I'd get legal expenses insurance now if you don't have it, while you don't have this issue.

They have been in property for almost 3 years - fresh new bathroom just painted before they moved in - paint is now peeling ! Seriously should bathroom paint peel after this short length of time? (they don't open the window to clear the steam / condensation, or even open the blinds - but that's their business! unless it's causing this!!)

If it's a rolling contract you need to give them 2 months notice just before the date their rent is due. Most agencies / landlords look to increase rent at least £20 a year - more probably in some areas but yes it is completely normal to increase rent. In your case I would raise the rent to the going rate and be done with it. They have had long enough at a discounted rate and are lucky to have had that.

Too late now, but never, ever rent a place out without a tenancy agreement in place. Even when you think everything is going to be fine, there will be niggles, miscommunications, etc and the potential for fallings out.

If they agreed to paint the kitchen ceiling and haven't done, can't you just remind them of that and ask them to get it done? See what their response is before you do anything else. If they said they would do it and now say they haven't the time or the energy, remind they moved in early saying they would do it and suggest they get a decorator in to paint it.

As for the work your DH has been doing in one of the bathrooms, that's wear and tear I'm afraid.

I would suggest you moot the idea of putting things onto a proper, documented footing with an AST - for their protection and yours - and broach the subject of the rent at the same time if you need to put it up to cover your costs. But, do bear in mind that even one month without a tenant paying you rent can be costly. So don't cut your nose off to spite your face.

With the best will in the world, even the best tenants won't do things as you would in what was once your home. You have to disengage to a degree and not take it so personally. If you don't communicate clearly as to what their obligations are, inspect regularly, etc then you cannot expect them just to do things. Even when things are in black and white in the terms of a tenancy agreement, they don't ever always read them, but at least you can rely on those Ts and Cs when the cost to deal something falls to you.

X posts - given they never ventilate the bathroom, I would look at recovering the re-decorating costs from them, or fitting an extractor fan so you are not relying on them remembering to open the window.