Why Landlords Renting to Friends or Family Must Still Follow the Rules
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Renting to someone you know might feel like the safe option, but without the right protections in place it can quickly become complicated.
The common perception of a residential landlord might be a faceless company managing a large portfolio, but in fact the market is much more diverse than that; people become landlords for a variety of reasons.
Perhaps that is why a recent piece of research has revealed that almost two-thirds of landlords have rented a property to someone they know, either family or friends. You can see the attraction: having a tenant you know is, in theory at least, a safer option than a complete stranger. You would hope that a friend or family member is less likely to default on the rent or trash the place.
However, the same study showed that around a fifth of landlords who rent to someone they know do so on an informal basis, and that is not such a good idea. Sadly, friendships and even family bonds can break down, and if the standard protections are not in place, that can lead to all sorts of problems.
Renting to a friend or relative doesn’t remove the responsibilities of being a landlord; if anything, it makes putting formal structures in place even more important. A misunderstanding with a tenant who is a stranger might be a hassle; a misunderstanding with someone close to you could ruin a friendship or cause a long-lasting family split.
Most important of all is to ensure your tenant has a tenancy agreement, even if they are related to you. This sets out responsibilities, rent terms and rules, protecting both of you.
Likewise, not only should you take a deposit, but you need to register it with a government-approved scheme within 30 days. Make sure you carry out a proper inventory to reduce the chances of any fallout should there be a dispute.
Just because the tenant is a family member doesn’t negate the need to safety checks such as annual gas safety inspections and five-yearly electrical safety checks. And even if you are renting to a relative, you need proper landlord insurance.
Sadly, even the closest friendship or family relationship can break down, and the same consequences of non-compliance for landlords apply whether the tenant is a complete stranger, a close friend or a blood relative.
Just as important, having the proper formal structures in place means that any dispute can be settled calmly and quickly, reducing the prospects of ruining that friendship or family relationship.
Daisy Egmore is lettings property manager at Arnolds Keys.
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