Letting to friends and family can seem like a perfect solution – they’ll move in, look after the property, pay the rent and be fantastic tenants… However, it does not always work out! Renting to someone that you know needs to be carefully considered – and approached with a business mind!
In fact, many Landlords have warned that friends and family can often be the worst tenants as they are far more likely to take advantage of you. You may start to feel things going downhill when the rent is short one month; a little late the next, but they always have a good excuse. Perhaps the pets that they were supposed to give away are all of a sudden moving in and causing trouble? … or you’ve popped round and the garden is completely overgrown and the house is a mess!
Being a Landlord, particularly of buy-to-let property is a business decision, which can often be effected if you allow friends and family to enter the equation. It can make the whole process much trickier if you have to approach any of these common problems with an emotive mind-set than if you have a purely business relationship.
If you do decide to let your property to friends or family – these tips will help you to be prepared in the event that things do go wrong:
1. Treat it as a business decision and ensure every aspect is covered, as it would be with any other tenant.
2. Draw up a Tenancy Agreement so that the terms of the arrangement are clear and if things do go wrong, the intentions of both parties have be set out at the outset. We would also advise including a break clause so that if it is not working out, either party can give notice to leave and do not feel tied into something that could be causing relationships to get tense.
3. Take a deposit. This will help to cement the idea that it is a business arrangement and will also offer security if it doesn’t work out and money is owed at the end of the Tenancy.
4. Take out relevant Landlord insurance. Landlord insurance can prove invaluable if the property become uninhabitable or a leak causes damage to a neighbour’s property.
5. Get a Property Inventory and Check Out Report provided by a professional and reputable company. This will show exactly what condition the property was in when they move in and will show your tenant the level of property maintenance and care that you expect throughout the tenancy.
6. Use a Letting Agent. Running the rental and property management through a third party can remove any awkwardness and keep things professional. This will also mean that the tenancy and any other terms can be easily negotiated.