Letting to a friend or family member? Read our guest blog…
I’m sure we all have customers who insist on renting to their family members, personally I couldn’t think of anything worse. It’s not that I’m against family but renting to family never seems to end well.
I have a close friend a few years ago who asked me to go and value his rental house. As a friend I was brutally blunt with him about the mess, dirty nappies and even worse dirty underwear. I went on to mention that I thought the parents were border unfit to bring children up due to the overall mess, dog mess in the garden etc etc. SO! you can imagine my worst nightmare when my friend says “Bloody kids hey,,, who`d have them?” It was only his son and daughter in law! What do you say to that??? We went onto let the property successfully after a slightly red faced conversation. NOW for the true cost of this issue.
The rent was “Family Rates“ so was £150 under market value, they were in the house for 18 months so the loss of rent was £2,700. The cost of repairs, clearing and cleaning a further £500. Obviously there was no bond. Lets face it, how awkward would Christmas dinner be when you’re sitting there demanding your bond from your son!! Total loss of monies £3,200 and a lot of stress. This assumes that they actually paid all the rent, and the added stress of how do you chase your kids for rent?
Another friend of mine has a small portfolio, he recently purchased a house. Against my advice he let the property to his 21 year old daughter and boyfriend. After four months they had fallen out. On a good point he told me they have both moved out. No bond taken, again under market value, so around £500 lost rent. However they had a lodger, my friend has now admitted that he agreed to draw up a quick contract with the lodger whilst all was ok so he could claim Housing benefit. So the issue now is that he is only getting £50 a week for the house, he has to pay ALL the bills and the council tax as these bills were included. So now he is around £400 a month out of pocket until the “lodger” moves out , he has 4 months left on his contracts so he is £1600 out of pocket , add this to the £500 and he is now at £2,100. Off course this assumes that the lodger moves out! We will have to wait and see.
There is also the issue of familiarity. Come Christmas time or little Johnnies 1st birthday, which parent will say NO you must pay your rent!? Not too many I’d guess.
Also there is the bigger question, how will the kids learn to grow up and understand what they will one day inherit if it’s handed to them on a plate?
The last part of this is “mates rates” what does this actually mean?
In most cases a friend will ask for a discount as you know them. Do you really know them (see above) also when did you last actually talk to them? Go out for a drink socially? etc etc. Was it last week or two years ago. Have they ever recommended you to anyone else? If it’s a new house to let then it makes sense, if it’s a tenant fee does it make sense?
Here’s my point, you discount your fees so they save £100. In affect you are now £100 down out of your own pocket. Would they in turn the next year walk into your office give you £50 as it was a nice day? Also friends often are more demanding expecting more than you would normally offer. They will only talk to you and not your staff.