Renting out an attached annexe

If you are planning to buy a rental home, or you're thinking about what to do with one you have just acquired, this is the place for any questions about starting out in the rentals business.
californiagirl
Posts: 1
Joined: Wed May 23, 2018 10:13 am

Renting out an attached annexe

Post by californiagirl »

Hi everyone,

Total newbie to this site and the whole holiday letting world. Looking for some advice from you seasoned experts please.

My husband and I have recently purchased a bungalow with an attached one-bed annexe (with bathroom/living/kitchen/patio area). There is an interconnecting door between the two, as well as separate front and rear entrances for the annexe. It needs some work (husband’s a builder) and we have a desire to eventually rent it out as a "luxury" short-term holiday rental to help contribute towards the mortgage.

We’re not looking for this to become a huge business; rather we plan to let it for around 60 days per year at approx. £125 per night so that we come under the Rent-a-Room threshold of £7500pa. The rest of the time it will be used by ourselves and family. The plan is possibly to rent solely through Airbnb.

It isn’t currently registered for separate council tax.

Although it will be a low-key earner and only temporarily used for letting, we would like to do everything properly, such as ensuring it meets safety/fire regs, etc. My questions are:

1) Do we have to register this as a business if we will not be exceeding the Rent-a-Room threshold, and if it is part of our main home? (i.e. equivalent of having a lodger staying with us.) I’m assuming business rates are not relevant here?

2) How do we go about arranging insurance? As this is not a separate holiday let as such (but rather is part of our main home), I’m assuming we don’t need specialist insurance. However, should we also be informing our home insurance company?

3) Do we definitely need to inform our residential mortgage company? We will not be renting out the rest of our home and will always be on the property, so part of me thinks they merely count as (albeit paying) guests. (I imagine the answer is YES to this question…)

4) Any other companies we should be contacting/registering with, etc?

5) Should we be applying to the council for planning permission for change of use? I'm thinking not as it will usually be used as part of the main house, but please correct me if I'm wrong.

We live in Kent, U.K.

Thanks in advance for your advice.
AndrewH
Posts: 1499
Joined: Thu Sep 12, 2013 1:17 pm
Location: Kefalonia, Greece
Contact:

Post by AndrewH »

Welcome to LMH. Your questions are very relevant and these are the answers I can offer, but only in accordance with what amounts to my personal opinion. I see your property is in the UK:

(1) There is no requirement to register a normal business ("The Business Names Register" is now long gone). Nor, from what you say, any need at all to form a private limited company.

(2) Check with your current house insurers first and see what they say. It is usual to have a separate insurance policy for the rented accommodation because there are additional risks involved. There are specialist insurers for this, e.g. Intasure.

(3) Absolutely. Your mortgage company will want to be informed, but they may not in fact object. Read your mortgage document and see precisely what it says about renting out all or part of your home.

(4) I cannot think of any other people/companies you need to inform. I am thinking your bungalow is freehold. If it is subject to a lease, then there may be relevant covenants in the lease and, of course, a landlord to deal with.

(5) If the current use is residential (without restrictions or limitations) there will not be a change of use. For certainty, you could ask someone at your Local Planning Department.

Good luck with your new venture!
AndrewH
Posts: 1499
Joined: Thu Sep 12, 2013 1:17 pm
Location: Kefalonia, Greece
Contact:

Post by AndrewH »

Welcome to LMH. Your questions are very relevant and these are the answers I can offer, but only in accordance with what amounts to my personal opinion. I see your property is in the UK:

(1) There is no requirement to register a normal business ("The Business Names Register" is now long gone). Nor, from what you say, any need at all to form a private limited company.

(2) Check with your current house insurers first and see what they say. It is usual to have a separate insurance policy for the rented accommodation because there are additional risks involved. There are specialist insurers for this, e.g. Intasure.

(3) Absolutely. Your mortgage company will want to be informed, but they may not in fact object. Read your mortgage document and see precisely what it says about renting out all or part of your home.

(4) I cannot think of any other people/companies you need to inform. I am thinking your bungalow is freehold. If it is subject to a lease, then there may be relevant covenants in the lease and, of course, a landlord to deal with.

(5) If the current use is residential (without restrictions or limitations) there will not be a change of use. For certainty, you could ask someone at your Local Planning Department.

Good luck with your new venture!
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