Camden Leaseholders’ Forum homepage › Discussion Board › Lease + Ownership › Subletting my flat – have you encountered any problems? › Reply To: Subletting my flat – have you encountered any problems?
If you are thinking of letting your flat then there is a bit more to consider than what you seem to have been told above
Start off by looking at http://www.camden.gov.uk/ccm/content/housing/council-tenants-and-leaseholders/homeownership/renting-out-your-property/ which sets out much of which you need to know. The main points I would highlight are
1) Mortgage Consent – you seem to have discussed this with your Mortgage Company but remember anyway you will need to get their consent and there may be some effect on your current deal (and if you end up remortgaging you would have to get a Buy-to-Let Mortgage as well).
Bear in mind as well that if you currently have a mortgage on the flat this could affect your ability to get a mortgage on a second property – you have to show you can fund both mortgages although I would expect you should be able to produce potential rental income from the flat (could you manage to pay both mortgages though if the flat was empty?).
2) Landlord’s Consent – this is as covered in the discussion above and, yes, it is a Deed of Covenant which is much easier to handle now than it used to be. As stated above, though, you need to check the terms of your individual Lease (I would not expect you to not be able to do it and any consent required cannot be unreasonably withheld) and as you say you cannot sell because you are still within your 5 years of Right To Buy do double check that letting would not also affect your RTB discount (I don’t think it does)
Regarding short term lets this is not so much a question of the Lease so much as a question of Planning Permission affecting all properties – Camden explain this at https://www.camden.gov.uk/ccm/content/environment/planning-and-built-environment/two/planning-applications/before-you-apply/residential-and-business-projects/short-term-lettings/ but basically you need Planning Permission for a Holiday Let if you are going to let your Property in periods of 90 days or less for more than 90 days in the year. On the other hand, my Lease has a ‘Permitted Use’ clause for a ‘self-contained residential flat’ which I would guess could be interpreted as excluding Holiday Lets.
3) Houses in Multiple Occupation – This is one of the major stumbling blocks in recent years and not mentioned on Camden’s Subletting Page above! If you are letting your property to more than 3 people from at least 2 different households (people unrelated to each other such as Students / Flat Sharers) then you need to obtain an HMO Licence from the Council (in its Council Capacity as opposed to as Landlord). Details are at http://www.camden.gov.uk/ccm/navigation/housing/private-rented-housing/landlords/houses-in-multiple-occupation/?page=1#section-1 but there are some quite strict rules (minimum room sizes and a requirement to have a washbasin in the toilet cubicle stand out). These rules do not apply if you are only letting to a family (1 household) but the Student Market has been one of the strongest markets in Camden especially in the central areas.
4) Health and Safety – As a Landlord there are a number of requirements on you. The main one is an annual Gas Safety Certificate but a 5-yearly Electrical Inspection and Fire Safety Inspection is also recommended.
5) Service Charges – again, this is one of the lesser publicised impacts of renting your Property. If you are not resident in your flat then Camden expect you to pay all your Service Charges on demand. The annual Estimated charges are generally regarded as quarterly in your Lease but for any Major Works Bills Camden will not allow you the privilege to pay in installments nor will they give you the discount they are discussing offering to people who pay in full straight away (I have questioned this but Camden regard this as a discretionary offer that they do not have to offer to non-resident Leaseholders)
6) The emotional impact of renting out your ‘home’ – don’t underestimate this. You have probably put a great deal of effort and memories into your home but as somebody advised me once you will have to realise that once you let this out you are going to have to ‘let go’ and accept that this will be your Tenants’ home and not yours. You may not fully approve of the conduct of your Tenants but so long as it’s not illegal or barred in the Tenancy Agreement (Drugs/Smoking/Pets) it doesn’t matter – it’s their home not yours. You will likely go into your flat at some point and see the walls / doors / furniture damaged – you are entitled to be compensated for this but no more.
7) Income Tax – Any Rental Income is declarable for Income Tax payable by all the Leaseholders and you will have to register for a Self Assessment Tax Return to be completed and paid by the end of the January following the Tax Year (April-March) when you start renting.
There will be an initial financial hit, then, and you should not assume that the money that comes in at first is yours to spend. If you can pull it off, though, you should have a steady income stream that will cover the costs of your new home. I would recommend you get a good Agency for your first year at least – I got quotes from 4 different Agencies and chose one close to my flat in the end so that they are close by in case of any problems.