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Jul, 2014

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  1. #1

    Default Renting to Friends

    Hi,

    I have a small dilema, I am about to rent my house as I will be overseas for a while and I have 2 options.

    1. Rent to a friend + girlfriend for £550 pm and I will leave all my furnishings in the house together with my 40" tv etc, this saves me putting stuff in storage and as I know him very well as a best friend, i could trust him. He would be getting a great bargain and i would have peace of mind.

    2. Rent through agency I will get an agent round, but I think i could get £650-700pm as it is now a 3 bed house where I converted a double garage into a living room. After 10% fees taken off the rent I would be left with £585-630. as you can see I would gain an extra £35-90pm more.

    I know there a pro's and cons in both and some people say it is always better to rent to friends, if i did rent to my friend then i would do it properly with contracts, solicitor holding the deposit etc.

    What are your opinions?

    ps: my plan is to relax on a greek island living off the rent.

    Paul.

  2. #2
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    Default

    Renting to friends: You would still need a proper AST contract (because they get one in law, so may as well have it written down so you both know the rules). You would need to supply an address in England/Wales for the service of documents, friends would have to pay a percentage of rent to the tax man (inconvenient) - unless you get exemption http://www.hmrc.gov.uk/cnr/nr_landlords.htm. You would still need a thorough inventory/condition report that would stand up in court. Deposits would not be lodged with a solicitor - you can use the free DPS at www.depositprotection.com

    Renting through an agent - they will do the above, and the increased rent should cover their fees. This way you don't lose friends if the thing goes bad - and it can do HOWEVER agents are unregulated - you could become one tommorrow even with your current level of knowledge. So get one who is recommended, and it is often better to get one who is a member of a trade association like ARLA, though it is no guarantee.

    I take it you are aware that you can't just tell the tenants that you want the house back? Make sure you know the processes and the timescales.

  3. #3

    Default

    thank you snorkerz, good advice.

  4. #4
    Join Date
    May 2009
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    14,115

    Default

    What about management? You need to consider how you are going to fulfill your legal repairing obligations whilst abroad, annual gas safety check, etc.

    Whilst your friend might say he is happy to organize this (assuming that's what you were planning), this wouldn't get you off the hook legally, so if, say, the friend decided he just didn't fancy the hassle of organizing repair of a broken boiler, or didn't have time to wait in for the contractor, you'd still be legally responsible for arranging the repair.

    Alternatively, the friend might decide to hire the world's most expensive boiler contractor (being ignorant of or indifferent to the average cost), or he might choose a dodgy contractor who tells him the boiler needs replacing, so friend agrees to pay £3K for a new one....etc

    Meanwhile, friend might ask for a rent reduction because of the lack of heating... All I am saying is that having a friend as tenant doesn't guarantee 'peace of mind' and if you value your friendship you should be aware that there is considerable scope for disputes to arise between T and LL.

  5. #5

    Default

    Thanks Westminster, but the house will be managed while I am away, so that any repairs or problems are dealt with within 24hrs, I am leaving a pot of money to cover any problems that may arrise.

    also i will be contactable daily.

  6. #6
    Join Date
    Jan 2011
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    Default

    How long will you be travelling on that Greek beach?
    An AST is min fixed term 6 months and poss further delays if T decides not to vacate when requested.
    Choice 2 involves renting to unknown Ts thru unproven LA. This forum is full of poss complications
    Choice 1 If friend is reliable, poss best option but same risks as 1 can still apply
    Do you need to get permission from mortgage lender to rent out?
    If property is your only / main residence you may be able to rent a room and shared facilities to friend+gf as lodgers and avoid some AST pitfalls if you keep 1 bedroom for self.Thus you could return at any time without having to gain re-possession first.
    You may need to set ground rules in writing eg resp for C Tax, utility bills payment etc and get friend to sign. In effect a 'house-sitting' arrangement with all costs, inc mort covered.
    I leave the legal ramifications for this last suggestion for others to discuss.

  7. #7
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    Quote Originally Posted by Snorkerz View Post
    You would need to supply an address in England/Wales for the service of documents, .
    I didn't make clear the reason why this is important - without such an address (which can be the agent) then no rent is collectible.

  8. #8

    Default

    Mariner,

    your last comment is very interesting, it may suit both my friend/girlfriend and me as they could house sit for me and rent the house while I am away and i could keep a room for when i am back, the only problem is i would want to not pay council tax or electric etc.

    would it be possible for the house to be rented out with me as a live in landlord (keep one room) and all the utility bills to be transferred?

  9. #9
    Join Date
    May 2009
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    Quote Originally Posted by danjou View Post
    Mariner,

    your last comment is very interesting, it may suit both my friend/girlfriend and me as they could house sit for me and rent the house while I am away and i could keep a room for when i am back, the only problem is i would want to not pay council tax or electric etc.

    would it be possible for the house to be rented out with me as a live in landlord (keep one room) and all the utility bills to be transferred?
    The friend/GF would not be 'house sitters' if they paid you rent.

    How long are you planning to be away, because if it's for several months/a year +, then it's highly unlikely you would qualify as a resident (live-in) landlord so that, regardless of the contract agreed with the friend/GF, they would have an assured shorthold tenancy by default.

    If you want to explore alternative possibilities I would strongly advise you to take specialist legal advice as landlord & tenant law is complex and you could easily create a legal mess if you don't.

    Re management; in your first post you seem to be saying the alternative is rent to friends OR via an agency, so who is going to be doing the management, if not an agency?

  10. #10

    Default

    Quote Originally Posted by westminster View Post
    The friend/GF would not be 'house sitters' if they paid you rent.

    How long are you planning to be away, because if it's for several months/a year +, then it's highly unlikely you would qualify as a resident (live-in) landlord so that, regardless of the contract agreed with the friend/GF, they would have an assured shorthold tenancy by default.

    If you want to explore alternative possibilities I would strongly advise you to take specialist legal advice as landlord & tenant law is complex and you could easily create a legal mess if you don't.

    Re management; in your first post you seem to be saying the alternative is rent to friends OR via an agency, so who is going to be doing the management, if not an agency?
    Thank you for your help, it looks like i will use an agency and not rent to my friend, they will manage the property for me, i will be overseas for no longer then 6 months and i will have a registered uk address.

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