guaranteed rent and uk fhl taxes

[Ranbir5]

hi !

i am being offered a guaranteed rent option but that will be the same rent every month from a management agency,  but will the tax man in the uk see that as a problem? so i get paid even if it’s not rented out?

i want to benefit from fhl tax.

thanks,

ranbir 

[Helen3 · Accepted solution]

Personally as a landlord in the UK I would never get involved in a guaranteed rent scheme from someone wanting to them sub let the property to guests on short term rentals.

It's likely to invalidate your buildings insurance and if the management company doesn't manage the property properly you are likely to end up with complaints from neighbours and guests may damage your property.

You would need to speak to your accountant about tax implications @Ranbir5 

[Mike-And-Jane0]

@Ranbir5 As you are not running the rental you will have to have an EPC for the property and various other things that are not needed for STR. Also as it is passive income it will not be pensionable and you will not be able to offset any mortgage interest against tax.

[Ranbir5]

so basically, I would need to run the STR directly by myself, so I couldn’t use management firm at all?

[Mike-And-Jane0]

@Ranbir5 I don't know whether it is the fact that you are doing the work of a STR or the fact that you are taking the risk that makes it a FHL with all those advantages. I suspect it is the latter as people employ cleaners, laundrettes etc. but it might be both. @Helen3 's advice to seek help from an accountant makes a lot of sense.