The Risks and Rewards of Renting to Family or Friends

Renting a property to a friend or family member can seem like an obvious win-win. 

But blurring the lines between the professional and personal can sometimes backfire. 

So if you’re a landlord contemplating letting to someone you know, here are a few important points to consider – and some tips to protect yourself if you decide to go through with it. 

The benefits of having family or friends as tenants 

When things work well, it really can be a relationship of mutual convenience. 

You get a tenant that you know, like and trust. 

And your tenant skips the hassle of searching for a rental property and gets a landlord that they know, like and trust. 

In the best-case scenario, the rent is paid on time, the property is well-maintained and any issues that arise are easily addressed. 

The pitfalls 

The person you think you know well may have very different ideas around cleanliness and wear and tear, leading to disagreement. 

Or they could be late with the rent or cause damage or anti-social behaviour, making for an uncomfortable and emotionally charged discussion. 

The situation can be amplified if the agreement is casual or informal. (For example, if you let a friend move in for a few months due to a change in their circumstances – but they then refuse to budge.) 

In the worst-case scenario, the relationship is ruined, damaging the dynamic in your wider social circle, and you’re left out of pocket. 

Protect yourself – and your property 

The insurer Hiscox recently published some tips for landlords about letting to a family member. These include: 

• Formalise the situation with a written agreement, as you would with any tenancy. 

• Adhere to all the safety and right-to-rent checks that go with any standard tenancy and keep the deposit in a government-backed scheme. 

• Prepare a detailed inventory. 

• Check your landlord insurance and mortgage agreement to ensure renting to a family member or friend does not breach the terms of your contract. 

We’d also add one further suggestion to protect your peace of mind: work with a letting agent. 

You may wonder if this is necessary if you already know the tenant. But as detailed above, it can be difficult to address issues when emotions (and possibly a wider network of family and friends) are involved. 

Having an impartial, professional handle matters such as inspections or damage can take the emotions and embarrassment out of the situation. 

The tenant may also feel more comfortable raising issues with an agent (as they may be worried about offending you). 

If you’re a landlord, we can help you build long and successful tenancies. Get in touch with us today.