The property column
December 2004
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 Liz Hodgkinson
on
renting to friends
It may be the season of goodwill, but here’s a word of warning:
if you are considering letting your lovely property to a friend or
even a family member, the resounding advice from all quarters is:
don’t!
In many cases, the friends in question are likely to be
temporarily homeless, either because they are between properties
or have had to move out of their homes for insurance work. It is
very tempting to take pity on them and let them in to your
property on a casual arrangement.
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On the face of it, it seems to make
sense to let to your nearest and dearest. It’s obvious that you
can save on fees to agents when renting to friends. Another positive
aspect is that you already know how your friends look after their
own home. If they are neat and tidy, it removes the landlord’s main
fear, which is that an unknown tenant, however impressive their
financial references, may end up trashing the place.
But renting arrangement done through
friends or family is almost always a recipe for disaster,
according to estate agents. They make the following points.
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Most people don’t like discussing
money matters with friends, so there is a temptation to be relaxed
about the tenancy agreement.
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Friends or family can be equally
relaxed about paying the rent on time.
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They often expect a reduction in the market rent, which may be
acceptable to you, but you have to take it into account.
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Liz Hodgkinson is a prolific author
and journalist contributing to many publications. She
has written over 40 books on a wide variety of topics
and has a background in national newspapers. She now
falls into the 'later-life' age category and in
recent years has started writing for this 'older'
market, and contributes to Saga magazine, among
others.
Liz has two sons and four grandchildren. She is
divorced and now lives in London and on the
SouthCoast. She has written three books on property
matters and her interests include snooping round
other people's houses and viewing showhomes.
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What
to do if you plan to rent to family or friends:
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Unless you can afford or wish to be charitable, tell them from
the start that you have to treat them exactly as you would any other
tenant.
This means: go through an agent, get a proper tenancy agreement in
place, and insist on the usual reference and inventory checks.
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Take the standard deposit.
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If the contract states that there will be a rent increase after one
year, draw attention to this at the start.
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Advice from an agent:
Even with such precautions, agents report that they are often asked to
intervene over disputes. In one case, when the year was up, the
tenants insisted on a rent reduction, as many repairs were needed
which they hadn’t previously liked to mention.
‘The tenants did not want to speak to the landlord – their
friend - directly about it, so asked us to handle it instead’, says
the agent. ‘This is the kind of issue that crops up with any tenancy,
but can cause serious tensions between friends.
‘If you don’t draw up a proper contract, you could then create
a sitting tenancy. Your friends may say they can’t move out because
they haven’t got any money. The result of this is that the friendship
is severed but you remain stuck with the tenant.
‘I would say, don’t ever rent to friends or family unless you
can make it a hundred per cent purely business deal. If you feel you
cannot subject your friends to the humiliation of referencing, checks
and deposits, steer clear of the temptation to rent to them.’
Anna Hayton decided to move in with her boyfriend just as close
friends were having to move out of their home for four months for
insurance work.
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"My
friends approached me and as a higher than normal rent was being
paid through the insurance, they suggested we split the difference. I
stupidly agreed to this, even though it meant I was getting less rent.
Then the problems escalated. They brought their cat, moved in
some of their own furniture, moved their son in and refused to leave
after the four months as work was continuing on their own home.
They took the attitude that I was turfing them out, when I
should be happy to let them stay as long as they liked.
I had taken a deposit, but then they got behind with the rent.
After the four months were up the insurance company refused to pay out
any more. In the meantime, several of the appliances, which were only
a year old, broke down. By the time they eventually left, the place
was such a tip I couldn’t remarket it.
Yet because they were friends, I couldn’t bring myself to say
anything. Eventually I sold the flat. But after such an
experience, I would never rent to friends again under any
circumstances.
You can be more forthright – even rude – with people you don’t
know. "
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laterlife interest
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