Renting to friends and family – make sure you’re still friends by the end of the tenancy!

At this time of year many tenants enter the dreaded and stressful process of flat/house hunting.

As a landlord, you want to make sure that you are renting your property to someone you can trust and who will take good care of your property.

With the property market still very competitive and prime locations at a premium, renters may feel more comfortable renting from family and friends. As a landlord there are definite benefits to renting to someone close to you, but it’s still sensible to do everything by the book.

What are your responsibilities as a landlord when renting to family or friends? Are there any extra precautions you should take into consideration?

Tom Pertaia, Associate at DAS Law, offers guidance on the issues and questions landlords should consider when renting to friends and family:

Are there any restrictions when renting my property to a relative or friend?

If you’re planning to rent to friends or family, you want to check your mortgage terms – some mortgage companies do not allow sub-letting to family or friends.

Is there anything specific I need to consider regarding insurance?

When renting to friends and family, you need to make sure you have the appropriate insurance in place including Legal Expenses Insurance – it is not unheard of for issues to arise and you may need the specialist support. Also don’t invalidate your insurance – you may feel uncomfortable asking your friends and family for certain documentation, but if you don’t you could invalidate your insurance. Good friends and family should understand that these rules protect them as well. Speak with your primary insurer to understand your obligations and conditions under your proposed or existing policy.

What kind of documents should I have in place for?

Friends and family should meet the same level of criteria as any other rental agreement. They should also be treated with the same level of respect as any other tenants, for both your and their protection.

Documentation you should have in place include:

·                 Appropriate tenant credit references

·                 Employment reference

·                 Previous landlord reference – if they were renting before

·                 A written and signed tenancy agreement.

What other precautions should I take?

Again, friends and family must enjoy the same level of protection as any other tenants. You must do everything by the book:

•                 Don’t forget to ensure your property is safe, follow all current safety guidelines/ recommendations and make sure you have a Gas Safety Certificate

•                 It is prudent to undertake a ‘check-in inventory’

•                 If you are taking a deposit, ensure you put it into a Deposit Protection Scheme; and

•                 You should have an Energy Performance Certificate in place regardless.

Your friends and family should appreciate that you are doing things properly.

A letting agent is managing my rental property. Which steps do I take with them?

If you are paying a letting agent to manage your property for you, make sure you discuss this topic with them and get copies for your own records.

General Advice

Your Legal Expenses Insurance with DAS provides access to a Legal Advisor 24/7. As part of your Legal Expenses Insurance you will also have access to DAS Businesslaw. DAS Businesslaw can help landlords create a range of landlord documents, such as ready-to-sign contracts (with built in e-signature functionality), tenant letters and guidance on a wide range of legal matters such as new legislation. To find out if you have access to this resource, please consult your policy documentation or contact your insurance broker.

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created.