Should I rent my property to family members?

Renting property to family isn’t illegal and could be a great way to help them out. As a landlord, you still have responsibilities. See Darlow's advice for landlords looking to rent property to family members. 

Is renting my property to a family member legal?

Renting to family isn’t illegal - but first, you need to make sure you have the right mortgage in place. Some mortgage lenders see renting to family as a higher risk buy-to-let mortgage than non-family and may apply different lending criteria. 

Even though you may trust a family member more than others, lenders may believe you could charge them less than the market rent and be more lenient if they turn out not to be a good tenant, affecting your income from the property. 

The best advice is to speak to your lender about the criteria for renting to family before you make any promises to a family member. You are still subject to the same rules and responsibilities as any landlord, which we will go through in more detail below.

Can I give my family member a discount on rent?

As mentioned above, this is one reason some lenders do not approve buy-to-let mortgages for family members without specific wording in your mortgage documents. 

Advice from the Mortgage Advice Bureau suggests for a buy-to-let mortgage, the lender is likely to require you to charge rent at 125% or higher than the monthly mortgage cost. So it’s unlikely you’ll be able to discount rent for your family and friends and keep up with your mortgage costs. More advice from Mortgage Advice Bureau is available here.

Do I still need a tenancy agreement?

Yes, contractually you are still a landlord and your family members are tenants. Tenancy agreements are important, to help you agree on the terms of the tenancy and what’s expected from each other.

What should be included in a tenancy agreement?

Tenancy agreements should include things like:

  1. How much rent should be paid 
  2. On which dates rent should be paid 
  3. Whether pets are allowed

Tenant referencing and Universal Credit

Tenant referencing may not be necessary if it is a family member - but, be aware it includes a credit check. Darlow's property management services can help you with tenant referencing, making sure you have all the correct legal paperwork including Right to Rent. This will help you avoid any awkward conversations with your family and get everything ticked off!

Looking to take the hassle out of letting?

At Darlows, we understand you're busy and are on-hand to help you. Our Property Management services can be as hands-on or off as necessary. Get in touch with your local Darlows branch for a chat on what your options are as a landlord. Find your local branch here.