Living in your own buy-to-let

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j25_8
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#1
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#1
Say you purchase a 3 bedroom home on a mortgage with a 15% deposit. You can afford the mortgage on your own salary alone. Would you be allowed to rent out the other unoccupied rooms to one or two other people and continue to live in the house yourself whilst paying the mortgage? I’m not in this situation but I’m just pondering.
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londonmyst
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#2
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It depends on the terms of your specific mortgage.
You are usually allowed to take in a lodger while you are resident.
But exclusively renting the property to tenants or a business is often not allowed by the mortgage company, unless they have given permission.
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Muttley79
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#3
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(Original post by j25_8)
Say you purchase a 3 bedroom home on a mortgage with a 15% deposit. You can afford the mortgage on your own salary alone. Would you be allowed to rent out the other unoccupied rooms to one or two other people and continue to live in the house yourself whilst paying the mortgage? I’m not in this situation but I’m just pondering.
The rent would be regarded as income and be taxed unless you do this: https://www.gov.uk/rent-room-in-your...-a-room-scheme
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martin7
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#4
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#4
(Original post by j25_8)
Say you purchase a 3 bedroom home on a mortgage with a 15% deposit. You can afford the mortgage on your own salary alone. Would you be allowed to rent out the other unoccupied rooms to one or two other people and continue to live in the house yourself whilst paying the mortgage? I’m not in this situation but I’m just pondering.
You'll probably need to get your mortgage lender's permission to rent out rooms -- check your mortgage agreement.

If you let the whole house, you'd need a buy-to-let mortgage, for which a lender will typically charge a higher interest rate. If it's just one or two rooms, they might allow you to do this on an owner-occupier mortgage (still you'll still be in occupation).

You should also check what your buildings and contents insurers have to say on the subject -- they might also need to know that you're doing this, and might also charge higher premiums.
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Quady
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#5
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(Original post by Muttley79)
The rent would be regarded as income and be taxed unless you do this: https://www.gov.uk/rent-room-in-your...-a-room-scheme
Do what?

Your link says you don't need to do anything
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Surnia
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#6
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#6
(Original post by Quady)
Do what?
Complete a tax return if income from rent is over the threshold...
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Quady
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#7
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(Original post by Surnia)
Complete a tax return if income from rent is over the threshold...
And if you don't do that then how is it 'regarded as income and be taxed'?
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mnot
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#8
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#8
(Original post by j25_8)
Say you purchase a 3 bedroom home on a mortgage with a 15% deposit. You can afford the mortgage on your own salary alone. Would you be allowed to rent out the other unoccupied rooms to one or two other people and continue to live in the house yourself whilst paying the mortgage? I’m not in this situation but I’m just pondering.
Depends on the terms of your mortgage, if this is a first house & you move out you would probably have to re-finance, however if you are a live in landlord I think you have much better chances but you’d have to read the contract (or just ask when you get the mortgage).
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Muttley79
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#9
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(Original post by Quady)
And if you don't do that then how is it 'regarded as income and be taxed'?
You are liable to be prosecuted - rent is income ...
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harrysbar
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#10
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(Original post by Quady)
And if you don't do that then how is it 'regarded as income and be taxed'?
You would obviously get in trouble if you didn't declare it and got caught.

I do know young people who have unofficially rented rooms from friends but that's a bit different. Because it's unofficial the landlord (friend) doesn't charge as much rent but neither side would have much legal protection if anything went wrong.
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Quady
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#11
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#11
(Original post by Muttley79)
You are liable to be prosecuted - rent is income ...
Yeah of course.

But just to check, it's not taxed unless you fill out a tax return, and you say unless you fill out a tax return it'll be taxed.

Like there is nothing additional to be done.
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Muttley79
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#12
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#12
(Original post by Quady)
Yeah of course.

But just to check, it's not taxed unless you fill out a tax return, and you say unless you fill out a tax return it'll be taxed.

Like there is nothing additional to be done.
So you plan to willingly break the law - you'll need to tell your mortgage provider and your house insurance.

Remember you will have to pay council tax at the full rate and your lodger will have to go on the electoral roll. The lodger will record the address with HMRC, DVLA, NHS, their workplace, ... do you really think you'll get away with it?
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Quady
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#13
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#13
(Original post by Muttley79)
So you plan to willingly break the law - you'll need to tell your mortgage provider and your house insurance.

Remember you will have to pay council tax at the full rate and your lodger will have to go on the electoral roll. The lodger will record the address with HMRC, DVLA, NHS, their workplace, ... do you really think you'll get away with it?
My entire point wasn't about not declaring, it was ro point out the daftness of saying it was taxable unless you were to do what your link said, which said:
- lodger uncomfortable below x, do nothing
- lodger income above x, put it in your tax return.

The only way it wouldn't be taxable is a scenario where you do jack all.
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Muttley79
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#14
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(Original post by Quady)
My entire point wasn't about not declaring, it was ro point out the daftness of saying it was taxable unless you were to do what your link said, which said:
- lodger uncomfortable below x, do nothing
- lodger income above x, put it in your tax return.

The only way it wouldn't be taxable is a scenario where you do jack all.
So risk prosecution and losing your job! If they steal your possessions or damage yourhome while you are out then they'll be no payout from insurance - don't be a fool.

Your mortgage provider may also take action if you don't inform them - and if you don't ... well they will require immediate repayment.
Last edited by Muttley79; 3 months ago
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Quady
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#15
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#15
(Original post by Muttley79)
So risk prosecution and losing your job! If they steal your possessions or damage yourhome while you are out then they'll be no payout from insurance - don't be a fool.

Your mortgage provider may also take action if you don't inform them - and if you don't ... well they will require immediate repayment.

Just to check.

You think I'm risking prosecution because I've not told HMRC of my lodgers over the last three years?
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Muttley79
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#16
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#16
(Original post by Quady)
Just to check.

You think I'm risking prosecution because I've not told HMRC of my lodgers over the last three years?
Yes ...
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Quady
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#17
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#17
(Original post by Muttley79)
Yes ...
Your own source said:

'How it works
The tax exemption is automatic if you earn less than £7,500. This means you do not need to do anything.

If you earn more than this you must complete a tax return.'


So why do I risk prosecution by not telling HMRC?
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harrysbar
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#18
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#18
(Original post by Quady)
Your own source said:

'How it works
The tax exemption is automatic if you earn less than £7,500. This means you do not need to do anything.

If you earn more than this you must complete a tax return.'


So why do I risk prosecution by not telling HMRC?
Well you didn’t say earlier that you earn less then £7500
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Quady
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#19
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#19
(Original post by harrysbar)
Well you didn’t say earlier that you earn less then £7500
No, but neither did I did I earned more than that.

£625/month or more from lodgers would be quite chunky.
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harrysbar
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#20
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#20
(Original post by Quady)
No, but neither did I did I earned more than that.

£625/month or more from lodgers would be quite chunky.
Have you got any productive advice to give OP?
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