Renting to a family member seems like the perfect solution to two similar problems. They need somewhere to live, and you’ve got somewhere available. Seems straightforward, right?
Well, maybe not so much. Although it seems like the best option for all, it may not be. If you’re renting to a relative, there could be large financial and emotional implications stemming from your decision. Some of these are covered in this HomeLet blog post and on Shelter’s website.
So, with this in mind, before you decide to hand over the keys to your property to a family member, here are some things you should do:
Carry out your usual checks
Your property is still an essential part of your business, so you’ll need to protect yourself in case the worst should happen (although fingers crossed that it won’t).
Due to this, if you’re renting to a family member, you’ll need to follow the same procedures that you normally do with any other tenant, including tenant referencing and a credit check.
By carrying out these checks as normal, you’ll provide yourself with the peace of mind that you need; knowing that your business is protected. You’ll know that the rent should be paid on time without issues, just as it has been in the past.
There’s a chance that a family member may be asking you about property because they’ve been defaulting on rent and know they won’t pass referencing elsewhere. Protect yourself against this. After all, if they’ve got nothing to hide, it shouldn’t be a problem.
Create a Tenancy Agreement
A tenancy agreement is an essential no matter who you’re letting to (and you can download a draft one here if you need one). There are a number of different tenancy types in the UK, but the majority of new tenancies require a tenancy agreement.
A tenancy agreement is an essential because it lays out the rights and responsibilities for both you and your tenant. This way, if there are any problems, you’ll know exactly who is responsible for them. Plus, because both parties must sign it, you’ll both avoid arguments about ‘not knowing’.
Take a deposit
Finally, make sure you take a deposit. Having a family member as a tenant means you probably have a mutual trust before they move in. However, if there are any problems with paying the rent, or if any accidental damage is caused, you have the money available to fix it. Remember, you’re just securing your business assets.
As stated, renting to family members can be a great solution. However, you should still take the above steps like you would with any other tenant to make sure it’s a success.