Renting To Family Members
published on 28/03/2019
It may seem like a great solution if you have a property to rent out, but if you are thinking about renting out your buy-to-let property to a family member, you should you should take into account a number of considerations.
Remember that a family relation doesn't necessarily translate to a model tenant, so we highly recommend that you still do the relevant checks you normally would on a non-family member. By following these steps, you can give such an arrangement the best possible chance of being a successful one.
1. Carry out tenant referencing
Follow the same process you would in any other professional letting capacity. One of the first steps is to initiate a tenant referencing process with regard to the prospective family member wishing to enter a tenancy agreement with you. By doing this, you’ll be more confident in knowing that rent can be paid in full and on time as well as having peace of mind that a reference has been provided by a previous landlord.
2. Draw up a tenancy agreement
Even if you’re renting to a family member, a tenancy agreement is essential. These agreements set out legal requirements for the landlord and the tenant, as well as the rights and the responsibilities of each. If you ask your family member to sign a tenancy agreement, you’ll both be clear as to what is expected of each party from the start of the tenancy. This way, you can prevent difficult conversations and misunderstandings.
3. Charge the right amount of rent
If you choose to rent your buy-to-let at market value, then finding out what level that is should be relatively straightforward. Look at similar properties in the vicinity, and compare the rental rates of properties that are a similar size to yours with the same amenities. If you charge a discounted rate make sure you check with HMRC the tax implications of doing this as you don’t want to be out of pocket at the end of the year.
4. Keep on top of maintenance
By visiting the property, you’ll be able to spot any developing maintenance issues, dealing with them before they become problematic and scheduling in any jobs that need to be carried out. That way you don’t get any nasty surprises when the family member moves out and avoids confrontation.
5. Have the right insurance
Finally, before your family members move in, ensure that you have the right level of landlord insurance. This helps to protect you against property damage, legal costs and missed rental payments (depending on the level of cover you opt for). This way, you’ll know your property’s protected.