If you let a property that your own to family or friends it may initially seem like a great solution – you know the people who will be renting the property and assume they’ll look after it and pay the rent on time.
Don’t be fooled though. Particularly for people you know, a tenancy agreement is an essential document / safeguard for you as things can, and do, go wrong.
First and foremost, if you are letting a property, you are still a landlord and have to comply with the requirements such as gas safety checks, energy performance certificates, compliance with ‘Furniture and Furnishings (Fire Safety) Regulations’.
Once you’ve got the property up to scratch as far as current legislation is concerned you need to consider the implications of a shorthold tenancy agreement. Regardless of whether you need one in law, it is always preferable to have a tenancy agreement in place. This clearly defines the period of the rental, the amount of rent and when it has to be paid. There is nothing worse than letting a property to your son or daughter if they do not pay the rent on time, or not at all! The best plans come to a speedy end when somebody doesn’t pay rent and this is when relationships break down.
You may decide that as you know the tenant, the services of a letting agent is not required. If you take this on the management of the property yourself then you need to make sure each party knows where they stand regarding maintenance, redecoration, repairs, wear and tear etc. A tenancy agreement will make it clear who is responsible for what and it is in writing should you need to rely on it!
Picture a scenario where you have a rental property and let it to your daughter and her partner at a considerable discount. All is well for a few months until your daughter cannot stand her partner anymore, gets a job in a different area and moves out. This leaves an estranged partner in your property at a discounted rent. You don’t have a tenancy agreement and probably not much in the way of communication with the ‘ex’ partner. All this adds ‘hassle factor’ to an already stressful experience. This will leave you wishing you had a tenancy agreement.
If you are letting to family, remember that as a landlord you have to comply with legislation. Your insurer will also require that you comply with any legislation and this will likely be a condition of your insurance. Specific landlords insurance is also the best way to go, it can include cover such as loss of rent (following an insured loss), landlords contents insurance which you own – this can include anything from carpets, curtains, blinds and white good to a fully furnished property.