Married partners as landlords on AST property owned by only one of them?

[Smark67]

Where a married couple are renting out a property that is owned by only one of them (i.e. only one of their names is on the title deeds) can both be included as landlords on the AST agreement? Thanks in advance…

[DrBunsenHoneydew]

Where a married couple are renting out a property that is owned by only one of them (i.e. only one of their names is on the title deeds) can both be included as landlords on the AST agreement? Thanks in advance…

Yes, though you usually have to create a Power of Attorney to allow the non-owner the ability to represent the owner in financial and legal matters as an "agent", even if they are a sleeping partner.

[Mike88]

Where a married couple are renting out a property that is owned by only one of them (i.e. only one of their names is on the title deeds) can both be included as landlords on the AST agreement? Thanks in advance…

Yes, though you usually have to create a Power of Attorney to allow the non-owner the ability to represent the owner in financial and legal matters as an "agent", even if they are a sleeping partner.

Or you could fill out a simple Land Registry form transferring part of the ownership (choose what percentage you like) to the non owner with no stamp duty to pay. I have done this for CGT purposes when I sold my rental property.

[JonE]

Or you could fill out a simple Land Registry form transferring part of the ownership (choose what percentage you like) to the non owner with no stamp duty to pay. I have done this for CGT purposes when I sold my rental property.

Transfer of some part of legal ownership to a spouse doesn't involve SDLT provided that the proportionate part of any mortgage is below the SDLT threshold.

One must then watch out for income tax being based on a deemed 50:50 split of the interest in the property.

Form 17 transfers some part of beneficial ownership between owners who are married or civil partners and is effective for both income tax and CGT. This is especially handy for IT purposes when only one is an HR taxpayer and the other may even have unused personal allowance.

Form 17 can't, strictly speaking, be used when one spouse doesn't have any legal interest in the property whatsoever - it is only properly used to vary the beneficial interest from a deemed 50:50 split when the property is in both names. However, I've been told it seems to have been accepted even when the legal ownership was in the name of only one spouse - though I certainly wouldn't rely on that myself!

I've been out of that game for some years but don't think things have changed though I stand to be corrected on the above.

Cheers!

[pochisoldi]

Where a married couple are renting out a property that is owned by only one of them (i.e. only one of their names is on the title deeds) can both be included as landlords on the AST agreement? Thanks in advance…

Yes, though you usually have to create a Power of Attorney to allow the non-owner the ability to represent the owner in financial and legal matters as an "agent", even if they are a sleeping partner.

If person A wants to transfer income derived from a property to person B, then all that is required is that Person A leases the property at a peppercorn/nominal rent on a full repairing lease to Person B.

Person B then sublets the property and keeps the (post tax) profits on the income stream.
Person A retains the title to the property.

Comments?

PochiSoldi

[JonE]

If person A wants to transfer income derived from a property to person B, then all that is required is that Person A leases the property at a peppercorn/nominal rent on a full repairing lease to Person B.

Person B then sublets the property and keeps the (post tax) profits on the income stream.
Person A retains the title to the property.

This was discussed at 'the other place' and sounds plausible but I don't know that anyone tried it in practice. If I remember correctly, it was suggested that this lease need not even be documented.

Although it may have legs on a 'whole house' basis, there are surely difficulties if wanting to share net profits and, anyway, the CGT position may also need careful consideration. Perhaps it's less flexible than Form 17 when variation may, over time, be required.

No time now to search for that thread as I'm heading out but perhaps it was archived...

Cheers!

[pochisoldi]

If person A wants to transfer income derived from a property to person B, then all that is required is that Person A leases the property at a peppercorn/nominal rent on a full repairing lease to Person B.

Person B then sublets the property and keeps the (post tax) profits on the income stream.
Person A retains the title to the property.

This was discussed at 'the other place' and sounds plausible but I don't know that anyone tried it in practice. If I remember correctly, it was suggested that this lease need not even be documented.

Although it may have legs on a 'whole house' basis, there are surely difficulties if wanting to share net profits and, anyway, the CGT position may also need careful consideration. Perhaps it's less flexible than Form 17 when variation may, over time, be required.

No time now to search for that thread as I'm heading out but perhaps it was archived...

Cheers!

The profit can be shared by (a) having the lease from A to B charge something more than a nominal rent to B (for a constant stream of income), (b) for the lease to make provision for "management charges", or (c) charging a commission for something related to the property (e.g. arranging buildings insurance).

Anyone who's owned a leasehold flat and scraped the surface of dealing with a useless/corrupt managing agent will be aware of how a landlord can extract money from long leaseholders...

[Lootman]

If person A wants to transfer income derived from a property to person B, then all that is required is that Person A leases the property at a peppercorn/nominal rent on a full repairing lease to Person B.

Person B then sublets the property and keeps the (post tax) profits on the income stream.
Person A retains the title to the property.

This was discussed at 'the other place' and sounds plausible but I don't know that anyone tried it in practice. If I remember correctly, it was suggested that this lease need not even be documented.

I've done something similar to that. In one case I rented a 5-bedroom house and then sublet the rooms individually to students for more than the rent I was paying.

The sub-leases were documented but you are correct that they do not need to be. An oral contract is valid, except for longer term leases as I understand it

[Smark67]

Thanks for all the advice. It's really only so I can be my partner's representative with regards tenant liaison, legal obligations etc etc, so I guess a power of attorney would suffice in this instance? Please correct me otherwise…

[Lootman]

Thanks for all the advice. It's really only so I can be my partner's representative with regards tenant liaison, legal obligations etc etc, so I guess a power of attorney would suffice in this instance? Please correct me otherwise…

You can be a property manager without being the owner of the property or named on the lease. Landlords hire agents and managers all the time to take care of everything at a rented property, including collecting rent, organising repairs, finding new tenants etc.

If you are doing this from the outset then the lease could state that Smark67 is the property manager and all communications should go through him, rent paid to him etc. In fact I'd argue there isn't any obligation for the tenants to even know who the owner is.

[pochisoldi]

Thanks for all the advice. It's really only so I can be my partner's representative with regards tenant liaison, legal obligations etc etc, so I guess a power of attorney would suffice in this instance? Please correct me otherwise…

You can be a property manager without being the owner of the property or named on the lease. Landlords hire agents and managers all the time to take care of everything at a rented property, including collecting rent, organising repairs, finding new tenants etc.

If you are doing this from the outset then the lease could state that Smark67 is the property manager and all communications should go through him, rent paid to him etc. In fact I'd argue there isn't any obligation for the tenants to even know who the owner is.

The tenant has the legal right to know who their landlord is, and this can be demanded from any agent or person to whom they pay their rent (Landlord and Tenant Act 1985 Sections 1,2 and 3).

A property manager isn't the landlord, they are the landlord's agent (in the legal sense)

PochiSoldi
(E&W law being assumed here...)

[Lootman]

The tenant has the legal right to know who their landlord is, and this can be demanded from any agent or person to whom they pay their rent (Landlord and Tenant Act 1985 Sections 1,2 and 3).

OK, but the landlord could be an entity and not a person, in which case the tenant won't know the individual or individuals who indirectly own the building anyway. Could be someone overseas operating as a trust or company.

In the event of a complaint the tenants would, in the first instance, go to the agent or manager. If things end up in court then no doubt the owner would be revealed and/or have to show up.

Maybe I am biased as a landlord of thirty years, but I never saw any reason why the tenant needed to know who owns the building. Only who they should deal with.

[JonE]

This now seems OT given statement of OP's actual aim and intent but may be worth putting forward anyway.

The profit can be shared by (a) having the lease from A to B charge something more than a nominal rent to B (for a constant stream of income), (b) for the lease to make provision for "management charges", or (c) charging a commission for something related to the property (e.g. arranging buildings insurance).

These are ways to transfer income from B to A but don't necessarily amount to "sharing" the profit in the usual sense of that term.

While (a) keeps the income of A as 'property income', it isn't sharing risks as well as profits. Options (b) and (c) take A's income outside 'property income' but, again, don't involve sharing of risks. Existence of any brought forward property losses for A could also influence A's view on this.

Perhaps these mechanisms could be handy for tax purposes if, say, the sums involved and size of portfolio are sufficiently large to merit having properties held personally but management hived-off to a company - especially if there is no employment income. A chunk of 'property income' is paid to the company for management and thereby reduces personal property profits while the company could pay sufficient salary for directors to qualify for NIC and also pay dividends to shareholders. Remunerated directors and shareholders need not be equal sets so it could be fairly flexible. Such an arrangement would presumably become more robust for tax purposes if the company were also to manage property belonging to other parties and charges were not inconsistent with trade norms.

Cheers!

[pochisoldi]

The tenant has the legal right to know who their landlord is, and this can be demanded from any agent or person to whom they pay their rent (Landlord and Tenant Act 1985 Sections 1,2 and 3).

OK, but the landlord could be an entity and not a person, in which case the tenant won't know the individual or individuals who indirectly own the building anyway. Could be someone overseas operating as a trust or company.

Look at https://www.legislation.gov.uk/ukpga/1985/70

Section 1 deals with the tenants rights to request landlord details

Section 2 deals with the tenants rights to provide director+secretary details where a Section 1 enquiry reveals that the landlord is a corporate entity.

In the event of a complaint the tenants would, in the first instance, go to the agent or manager. If things end up in court then no doubt the owner would be revealed and/or have to show up.

Maybe I am biased as a landlord of thirty years, but I never saw any reason why the tenant needed to know who owns the building. Only who they should deal with.

That's probably because you and your tenant play by the rules - they pay their rent, and your agent does a good job on your behalf.
When agents start going rogue (trying to simultaneously shaft tenant AND landlord), the ability to bypass them is essential. (I rented a place from an "accidental landlord" years ago, who was oblivious to the fact that she was being done over like a kipper by her agent until I put her in the picture).

PochiSoldi

[Lootman]

Maybe I am biased as a landlord of thirty years, but I never saw any reason why the tenant needed to know who owns the building. Only who they should deal with.

That's probably because you and your tenant play by the rules - they pay their rent, and your agent does a good job on your behalf.
When agents start going rogue (trying to simultaneously shaft tenant AND landlord), the ability to bypass them is essential. (I rented a place from an "accidental landlord" years ago, who was oblivious to the fact that she was being done over like a kipper by her agent until I put her in the picture).

I can see the benefit to a landlord of that. However if the landlord wishes to waive that precaution in order to protect his privacy then I'd like to think that is possible.

In the example you gave, even if the agent is charging more rent than the landlord believes, the tenant still agreed to pay that rent and so is not being done over, only the landlord.

The way you describe this provision is that it is there to protect the landlord and not the tenant. If so then a landlord should be able to waive that protection if he/she chooses. (in my opinion, accepting the law appears to not allow that option unless you create something very convoluted).