Renting Out Properties to Friends
When you rent out your house to friends, ideally, you’d like to ensure you’re still friends after the lease. One of the leading letting agents in Cheltenham provides advice on the problems and questions landlords should consider when letting property to friends.
What are the benefits of renting out your home to friends?
As a homeowner, you want to be sure that the person renting your property is trustworthy and will take good care of it. Renters could feel more at ease renting from relatives and friends because the real estate market is still quite cutthroat, and prime locations are expensive. Although there are perks to renting to a friend or family member as a landlord, it’s still advisable to follow the norm in all other respects.
Are there any drawbacks to renting to friends?
You should only allow friends to rent your house under specific circumstances. It should be based on your relationship with the person(s). The apparent disadvantage is that miscommunication or lack of understanding between you and your tenant might irreparably harm your relationship.
In England or Wales, renting to friends or relatives is not subject to any prohibitions or restrictions. Therefore, it is advisable to review the policies and terms of your mortgage since there may be one that explicitly forbids you from renting to friends or relatives. The same standards that apply to conventional rental agreements should apply to agreements with friends and relatives. For both your protection and theirs, they should be given the same respect accorded to all other renters.
Here are your obligations as a landlord when letting to friends, as well as any other safety measures you should take into account:
You should have the necessary insurance in place, including Legal Expenses Insurance when renting to friends. This is because, as unlikely as it is, problems might develop, and you could require specialised assistance. Additionally, avoid invalidating your insurance. It could be awkward to ask your friends for particular papers, but failing to do so could result in the cancellation of your policy. Good friends should be aware that these guidelines also safeguard them. Speak with your main insurer to fully comprehend your responsibilities and circumstances under your prospective or current coverage.
Utilising the appropriate tenancy agreement contract:
Despite the temptation to create a verbal agreement, resist the impulse and utilise a professional formal tenancy agreement instead. As soon as your friend moves into the property, you will still form a legally enforceable tenancy even if you don’t have a written lease agreement. This implies that you are protected by the law as a landlord and renter.
For instance, your renter will have the legal right to “quiet enjoyment” of their home, which means you shouldn’t enter the premises without written consent. If your friend abruptly stops paying the rent, you will also need to follow the correct eviction processes if they reject vacating.
But on the other hand, if your renter decides to leave the property without providing you with the required notice, they will still be responsible for paying rent.
Knowing that your statutory rights exist can help you decide whether or not to exercise them. That being said, it’s ideal to utilise a formal written rental agreement so that everything is in writing and there is no uncertainty because a legally enforceable contract will be made regardless of how you do it.
You probably don’t need tenant referencing:
The majority of landlords don’t bother to verify the credit rating of their friends. Your familiarity with the person(s) will largely determine how you respond. If you feel the need to reference someone, don’t let your property to them.
One thing to keep in mind is that you will probably need to reference your renter to qualify for a legitimate policy if you want Rent Guarantor Insurance.
Routine inspections of the property:
There is a widespread misconception regarding property inspections. Most people think it has one use: to monitor your tenants’ care of your property. While that is the major purpose of a periodic inspection, it also presents a crucial chance to find problems that the renter might not have seen and/or to upgrade their living arrangements.
Routine checks shouldn’t be sacrificed for friends. Don’t let interacting with a friendly face make you too complacent; instead, follow the right and reasonable measures.
The British Landlords Association is a national landlords association for residential & commercial landlords. Join us today; membership for the year is only £69,95!
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