Letting someone stay in your house rent free

mickrourke

Hi,
I have a little query I am not too sure about and I was wondering if someone could help me with. I have 2 houses, one in County Clare which I use as a holiday house. I have registered this house as a 2nd house, pay tax on it etc, but I have never rented it out to anyone, only let friends and family stay for a while.
Someone wants me to stay there for quite a while and this makes sense to me to have someone in over the winter to keep the place lived in, heating on etc.
So this person gets social welfare, medical card, etc, and wants a lease, proof they are staying there, etc.
As I have never rented before does this person become a tenant even if no money changes hands or is this going to cause me a world of pain now even if I am not receiving rent.(We had agreed the person would pay the services bill for water and electricity when they arrive as they are still in my name).
So will I have to register with PTRB, get BER, landlord insurance etc... or is the fact that no rent is changing hands, it really is a favour as houses can go to ruin when not lived in and I can't get down there to maintain it regularly. Is there something else I can do, sign, with the individual that is not a lease and specifies them as a guest and not a tenant?
Any advice gratefully appreciated, Mick.

ongarite

Could be wrong but to me sounds like your friend will be trying to claim for rent allowance from the state?
Why would they ask for lease on a house they will pay nothing for.
Do you intend to give them a 6 month lease? What happens if they refuse to leave after the lease ends?
By giving your friend a lease on your free house you are giving them all the power so to speak.

athtrasna

Sounds suspicious to me. Are they going to try to claim rent allowance? That's the only reason I can think of for them needing a lease.

Cabaal

Sounds dodgy and certainly sounds like they may be trying to claim rent allowance on the free house

mickrourke

I was told a lease is needed for the medical card, is there something else I can do instead? There is no question of me signing anything to scam rent allowance but I don't believe he would try it anyway. He really just needs somewhere to stay, and I get someone minding a house.

L1011

mickrourke wrote: »

I was told a lease is needed for the medical card, is there something else I can do instead? There is no question of me signing anything to scam rent allowance but I don't believe he would try it anyway. He really just needs somewhere to stay, and I get someone minding a house.

There is no need for a lease for a medical card unless it's a DVC or discretionary card and non existent housing costs are being claimed

_Brian

I think asking a small rent is reasonable in a case like this.

Even if staying for free would your insurance company view this as a tennant arrangement and so your insurance should be changed.

Unfortunately , even friends sometimes don't appreciate something that's free.

mickrourke

It probably is reasonable but then I would have to register with ptrb, get Ber, etc so it may be pricey. That comment about the insurance is valid though. I feel like I could be letting myself in for grief I can do without.

hobochris

mickrourke wrote: »

It probably is reasonable but then I would have to register with ptrb, get Ber, etc so it may be pricey. That comment about the insurance is valid though. I feel like I could be letting myself in for grief I can do without.

Also get him to sign something waving his part 4 tenancy rights, as you are dong him a favor.

I would make the small rent he pays the amount it well cost you in terms of prtb & insurance etc.

Prtb could be a 3 grand fine and 6 months prison if not done right.Something to keep in mind.

L1011

You can't sign away Part IV rights...

delthedriver

This arrangement sounds like a lot of bother.

You will also be liable for income tax even if the rent is a nominal amount.

There will also be an element of wear and tear costs which you need to consider

I am sure the potential tenant could find plenty of other houses available to rent in West Clare.

Enjoy your second home, don't let your life become complicated !!!!:)

mickrourke

And who'd have thought doing someone a favour could be such a pain, I may need to do this properly and even charge a small rent as this is going to cost me when it shouldn't. At least it will be all above board when completed and I can do a 6 month lease or something for minimal rent.

red_bairn

I got a Medical Card while unemployed and living with my parents. I'm not sure what this lease business is about.

delthedriver

mickrourke wrote: »

And who'd have thought doing someone a favour could be such a pain, I may need to do this properly and even charge a small rent as this is going to cost me when it shouldn't. At least it will be all above board when completed and I can do a 6 month lease or something for minimal rent.

Do yourself a favour , don't begin this arrangement.:)

hfallada

OP he needs to give you something. Even €1 a month to make a contract valid. You don't need to get a ber( they aren't enforced) but I imagine you will have to register with the prtb (about €150). Plus there will be water charges and you will have change your insurance from personal house insurance to insurance for a rental property. Also there is the risk that your friends can't be evicted if he tries to claim he is unfairly evicted by you ( the prtb makes it slow to evict someone).

OP isn't not worth the bother being kind to your friend. Its going to cost you money and there is the risk he won't leave the end of the winter. There is the benefit of insurance companies have a clause on long periods of house being empty. But just go down for the weekend.

delthedriver

If tenant claims illegal eviction , potentially it could cost you min €10k if PRTB uphold his claim.

Don't get involved!:)

MouseTail

This situation is not uncommon, but only works if you trust the person staying there 100%, there are risks it can go wrong if not.

It doesn't sound as if you are particularly close to this person, or trust them completely. Little wonder, that needing a lease is cock and bull.

mickrourke

I'm sure this is a fairly common occurrence for a family member like a parent in a house or something like that. However this is different. I do trust this person but even if there is no lease, there are still things I need to do just to help them out.

delthedriver

mickrourke wrote: »

I'm sure this is a fairly common occurrence for a family member like a parent in a house or something like that. However this is different. I do trust this person but even if there is no lease, there are still things I need to do just to help them out.

I am not sure your friend is telling you the full story............

mickrourke

delthedriver wrote: »

I am not sure your friend is telling you the full story............

No I'm fairly sure he's good - it just looks like it's going to cost me a bit just to help him out.

Teyla Emmagan

If you don't take an even nominal amount of rent then technically they could claim squatters rights. Eventually, but stranger things have happened.

tenifan

Op, spend a couple of hundred on a solicitor to write up a licensee agreement. This situation has disaster written all over it.

delthedriver

mickrourke wrote: »

No I'm fairly sure he's good - it just looks like it's going to cost me a bit just to help him out.

It may be cheaper to give him the money to rent someone else's house ????

Perhaps he is trying to establish himself at an address for 6 months in order to qualify for Rent Allowance ??? It may be all quite genuine, be very ,very careful.

The last thing one wants to do is land oneself with all sorts of problems in order to give someone a dig out.

Suggest talking to your solicitor....................:)

Mrs OBumble

If your friend is rented a house at less than market rate, then s/he is potentially liable for tax on the "benefit in kind" - that's not the right name for it, but the principle applies.

Now, depending on what allowance / benefit s/he is getting this may not be an issue. But if the welfare amount is taxable, it will be using up most or all of their tax-credits, so it may be an issue.

Of course the market rate for a house in West Clare in the winter is probably very low. But still it will be more than E1 per month.

Gatling

tenifan wrote: »

Op, spend a couple of hundred on a solicitor to write up a licensee agreement. This situation has disaster written all over it.

Except the friend wouldn't be a licencee , he/she would be an actual tenant

Dayor Knight

Say sorry, mate. I'll let you stay for free as my guest, but I don't leases.... It's a pretty generous offer anyway, so if the person can't live with that, then so be it.

mickrourke

mickrourke wrote: »

I'm sure this is a fairly common occurrence for a family member like a parent in a house or something like that. However this is different. I do trust this person but even if there is no lease, there are still things I need to do just to help them out.

To be honest with you, if I had a second home and offered it to someone for a period of time, I'd be quite annoyed that they instantly try to turn it into a cash grab and put me through a lot of hassle so they can claim a few more euro.

And if it were me being offered the house, I'd be thrilled to have it, and certainly wouldn't be doing anything to make things uncomfortable for the owner.


You're doing him a favour (a massive one at that!). Don't let him run you around.


As an aside, if you need someone to live in your house rent-free.. I've always wanted to see Co. Clare...

zef

The Op is trying to help his friend out , and i agree arrangements like this are fairly common between family and friends.
Letting a friend stay in a summer house is what is is, right? No wonder the legal profession do so well in this country!

I guess it's all down to do you trust your friend or can you see him refusing to budge come Spring?
For the medical card you do need a lease if you are renting. The person who said you did not is not an independent householder by his own admittance.
Good luck and fair play helping out your friend in the midst of this housing crisis. Many would rather the house go empty for fear of that ISIS of the renting game, the 'rent allowance tenant'.

January

OP how can you be sure your friend will pay these utilities for you? If he doesn't pay and they are in your name then you will be liable for the debt.

delthedriver

zef wrote: »

The Op is trying to help his friend out , and i agree arrangements like this are fairly common between family and friends.
Letting a friend stay in a summer house is what is is, right? No wonder the legal profession do so well in this country!

I guess it's all down to do you trust your friend or can you see him refusing to budge come Spring?
For the medical card you do need a lease if you are renting. The person who said you did not is not an independent householder by his own admittance.
Good luck and fair play helping out your friend in the midst of this housing crisis. Many would rather the house go empty for fear of that ISIS of the renting game, the 'rent allowance tenant'.

Respectfully, there is no housing crisis in Co. Clare . Sure I admire the OP for trying to help someone out, however it should not be to their detriment. I suspect the issue would never have been raised if the OP felt 100% comfortable in the first instance.

tenifan

Gatling wrote: »

Except the friend wouldn't be a licencee , he/she would be an actual tenant

Not necessarily. There could be a similar arrangement to those vacant hotel/offices, where in return for acting as a caretaker a knock-down rent was applied. Those agreements specifically drew attention to things like no guests, limited use of the house/facilities (e.g. licensee can only use a particular room), no notice period, no tenant rights, etc.

Gordon Minard

Hi Mick:

I had a possibly very, very similar situation in the last 3-4 weeks.

My step daughter, partner and two kids were had been living in the spare room of his mother's house up until a "parting of the ways" occurred at that time ( 3-4 weeks ago ).

They arrived to me - really, really upset and I was devastated for them. I was, myself, totally upset at the situation and wanted to do what I could for them.

I was really worried that, due to living in "each other's ear", we would have a falling out and, in anyway, living in a single room is no way to live.

I told them that they could move into the spare room in my house provided that:

a) it was short-term
b) I would be directly involved in their house hunting efforts

When I got involved in their house hunting efforts with them I discovered that they really weren't searching that hard for a place to live over the last 12-14 months and were really waiting for the council to give them a house.

This, basically, pointed to an open ended arrangement where there was never a possibility of a good result. I had to sit with them and, ultimately, they are now living elsewhere.

Apart from legal consequences etc. you have to think of how you are going to "book end" this. What happens if, next Summer, you want to go to your house in Clare for holidays and can't because they are still there?

Everybody wants to help - expecially help family and loved ones - but it has to be reasonable on both sides.

As far as I am aware the Medical Card is all about income whereas Rent Allowance etc. is about Leases etc. Ultimately, in the case where they are in receipt of Rent Allowance, it is the State that is putting your roof over their head and it is the state that would be asked to account if they were come to harm because of living in sub-standard accomaodation - I am not, in any way, saying that your Accomodation is Sub-Standard I am just speaking in general.

Sit and talk with them. Understand what they are looking for and get them to understand your concerns and, if you only took €5.00 off them in the week, do so in the context of a duly executed lease. Do it before you ever hand them a key! Now is the time - it's too late once they have made your holiday home their Family Home.

Gordon

Chucken

delthedriver wrote: »

Respectfully, there is no housing crisis in Co. Clare ..

http://www.clare.fm/news/mid-west-simon-welcomes-proposal-tackle-housing-crisis

I live in East Clare and its near impossible to find anywhere to rent. I can understand the OPs friend maybe wants to try make a new start? As someone else said, if he has a 6 month lease, then he can apply for RA.(not necessararly on that house)
It leaves the OP in a bit of a pickle though. Is he prepared to go down that road or leave the house empty? I've often wondered that actually, if holiday homes were let out for the winter on cheap rent (with a contract re utilities etc) would it help everyone out.

mickrourke

Thanks to everyone for all the advice. This is a tricky one - like I said, I am only trying to help someone out but if I am going to end up massively out of pocket just for doing the right thing and they are not going to end up out of pocket, then it's not the right thing to do.

I can either do it with a lease, and register a a landlord and then start charging rent, maybe nominal but just to cover my costs - then i can transfer utilities over to his name and do it that way or just let him continue as a guest and put my faith in him, the future, etc.

I see a quick chat with a solicitor might be in my near future.

Mrs OBumble

Ring your insurance company too, and get them to quote you for the possible scenarios. I suspect that might help you decide how to approach things.

Tell them the full truth of the situation.

the_syco

mickrourke wrote: »

Someone wants me to stay there for quite a while and this makes sense to me to have someone in over the winter to keep the place lived in, heating on etc.
So this person gets social welfare, medical card, etc, and wants a lease, proof they are staying there, etc.

Lease equals tenant. And possibly a tenant that you'll never get rid of if they're living there for free.

delthedriver

Op, irrespective of how well you know this person, you must do the right think for yourself.

Buy a dehumidifier and control the heat & light via time clocks. I think it will save you a lot of hassle.

This way you will still have unhindered access and use of your holiday home for weekends, Christmas, New Year etc.

Your holiday home is an extension of your home albeit at a different location, personally I would not consider renting my holiday home to anyone!!!

Of course we have friends and family who stay as invited guests. Your holiday home is your holiday home , not an investment property.

I appreciate you are trying to help a friend, however if you wish to remain friends long term, do not consider what you are proposing any further. Kill it now !:)

pc7

mickrourke wrote: »

And who'd have thought doing someone a favour could be such a pain, I may need to do this properly and even charge a small rent as this is going to cost me when it shouldn't. At least it will be all above board when completed and I can do a 6 month lease or something for minimal rent.

No good deed goes unpunished!

the_syco

delthedriver wrote: »

I appreciate you are trying to help a friend, however if you wish to remain friends long term, do not consider what you are proposing any further. Kill it now !:)

This. Also, the friend sees you as a rent-free house. If they had offered money from the start it would've been a lot different, but they didn't.

Ficheall

the_syco wrote: »

If they had offered money from the start it would've been a lot different, but they didn't.

Where did you glean this bit of info from?

handlemaster

Wouldnt be arsed with that messing jour already on boards worrying about it. Next up would be they refuse to move and think its their place.

the_syco

Ficheall wrote: »

Where did you glean this bit of info from?

User implied it, but I do note what you are saying.

=-=

The friend perhaps want a lease as proof that they are staying there to get the medical card for that area, and social welfare. Note that the person may be there 24/7 and thus cause a lot of wear and tear, unless there is something in that area that is of interest to him (a certain sport, for example), other than a rent-free house.

El_Duderino 09

It sounds like you can see the benefit you could offer your friend by allowing him to stay there for the winter and that is commendable. When exactly will he move out? If he has nowhere to live now, what makes you think he will have anywhere to live then?

Imagine he agrees to move out in April. April comes and he is faced with packing up and becoming homeless or refusing to move. Shelter is one of the basic needs and I imagine most people would do almost anything to keep a roof over their head. He might be your friend and you don't have the heart to say no to him now, imagine how hard it would be to tell him to leave and sleep on the street then.

delthedriver

It can be challenging enough dealing with tenants when everything is straight forward. Op, what you are proposing could change your life forever! Sadly I don't mean for the better.:)

Spanish Eyes

I wonder if a Caretaker's Agreement would work here? Kind of like a "house sitter" arrangement?

No lease, no PRTB etc. and a start date and end date for the agreement.

I'm just throwing it out there for rebuttal as I'm interested myself.

I found this, and I know it is not an Irish site, but gives some ideas.

Not sure how enforceable it would be though!

http://www.mindmyhouse.com/advice/advice_legal

Nomis21

I think he is taking a liberty. I would be asking him to leave.

No friend of mine would be asking for a lease if I gave them a free place to live.

Crumbs868

Mrs OBumble wrote: »

If your friend is rented a house at less than market rate, then s/he is potentially liable for tax on the "benefit in kind" - that's not the right name for it, but the principle applies.

Now, depending on what allowance / benefit s/he is getting this may not be an issue. But if the welfare amount is taxable, it will be using up most or all of their tax-credits, so it may be an issue.

Of course the market rate for a house in West Clare in the winter is probably very low. But still it will be more than E1 per month.

You are mixing all your taxes up, CAT (gifts of which you can receive €3k tax free every year) and Income Tax are taxed independently.

Think boards has a policy of not allowing advice on taxes for this very reason as people who don't know what they are talking about give advice at the risk of someone following it assuming the advice is good.

madmaggie

Two words, squatters rights.

endacl

Cabaal wrote: »

Sounds dodgy and certainly sounds like they may be trying to claim rent allowance on the free house

If you do provide a lease (baaaaaaad idea), make sure that it states that rent is set at a euro per calendar month. I'd like to see the reaction when/if rent allowance is applied for.

shreddedloops

I'm in a similar problem to OP, however I'd imagine there's much less room for serious issues arising.

My parents recently bought a house with the plan to rent it out. However, since myself and my girlfriend are currently in a position to move in they would be happy for us to do so but would only want to charge us about half of the 'going rate' for rent.

We're unsure at the moment whether the property would have to be registered with PTRB or not?

And in which cases would we have to pay gift tax/they have to pay income tax etc.?

Seems like a minefield of an area so any tips would be welcome.

ceecee14

Your friend needs a lease for the social welfare to continue claiming his benefits as he will be changing address he needs proof of new address from landlord. Anyway if he was trying to claim rent allowance he would need you to fill up some of his rent allowance form.