If you own a rental property, you may be faced with a decision of whether or not to let your property to family members or friends. While it may seem like a convenient and easy solution, there are a few things to consider before making this decision. In this article, we will explore the pros and cons of letting to family and friends and provide some tips to help you make an informed decision.

Pros of Letting to Family and Friends

Trustworthy Tenants

One of the biggest advantages of letting to family or friends is the trust factor. Since you already know the person, you are more likely to trust them with your property. This means you may not need to go through the hassle of screening tenants and doing background checks. Additionally, you can be sure that the property will be well looked after.

Free Landlord Resources

Familiarity with the Tenant

Another advantage of letting to family or friends is that you are already familiar with their habits and lifestyle. This means you will have a good idea of how they will treat your property and whether or not they are likely to cause damage.

Flexibility with Rent and Lease Terms

When letting to family or friends, you have more flexibility with the rent and lease terms. You can negotiate with the tenant to find a rental amount that works for both parties. Additionally, you can be more lenient with the lease terms, allowing the tenant to make changes or modifications to the property.

Cons of Letting to Family and Friends

Damage to Relationships

One of the biggest disadvantages of letting to family or friends is the potential for damage to relationships. If things go wrong with the tenancy, it can create tension and cause strain on the relationship. Additionally, if the tenant does not pay rent or damages the property, it can be difficult to enforce the lease agreement without damaging the relationship.

Unprofessionalism

Another potential disadvantage of letting to family or friends is the lack of professionalism. Since there is a personal relationship, it can be difficult to maintain a business-like attitude towards the tenancy. This may lead to problems with enforcing lease agreements, collecting rent or handling repairs.

Legal Issues

Letting to family or friends can also create legal issues. For example, if the tenant defaults on the rent or damages the property, it can be difficult to pursue legal action without damaging the relationship. Additionally, there may be tax implications to consider, such as income tax and capital gains tax.

Tips for Letting to Family and Friends

Set Clear Expectations

To avoid potential problems, it is important to set clear expectations from the beginning. This includes setting the rental amount, lease terms, and expectations for maintenance and repairs. It is also important to have a written lease agreement to protect both parties.

Treat it as a Business Transaction

When letting to family or friends, it is important to maintain a professional attitude. This means treating the tenancy as a business transaction and not allowing personal relationships to interfere. It is important to be firm but fair in enforcing lease agreements and collecting rent.

Seek Professional Advice

If you are unsure about letting to family or friends, it may be a good idea to seek professional advice. This includes consulting with a solicitor to understand the legal implications and talking to a property management company to understand the potential risks and benefits.

FAQs:

Q: Is it legal to let to family and friends?

A: Yes, it is legal to let to family and friends. However, it is important to follow the same legal procedures as letting to a stranger, including having a written lease agreement, protecting the tenant’s deposit, and complying with all landlord and tenant laws.

Q: Can I offer a lower rent to family and friends?

A: Yes, you can negotiate with family and friends to offer a lower rent than you would to a stranger. However, it is important to make sure the rental amount is still reasonable and that it does not create any tax implications for you as the landlord.

Q: How do I handle repairs and maintenance with family and friends tenants?

A: It is important to set clear expectations from the beginning regarding repairs and maintenance. This includes specifying who is responsible for repairs and how they will be handled. It is also important to keep a record of any repairs or maintenance to avoid confusion or disputes.

Conclusion:

Letting to family and friends can seem like an easy and convenient solution, but it is important to carefully consider the pros and cons before making a decision. While it offers the advantages of trustworthiness, familiarity, and flexibility, it also comes with the potential for damage to relationships, unprofessionalism, and legal issues. To make sure the tenancy is successful, it is important to set clear expectations, treat it as a business transaction, and seek professional advice if needed.

Free Landlord Resources