Renting to family members (2024 Update)

Letting to a family member can have financial implications, and you have to ensure that arrangements such as deposit collection are in line with legislation.

In addition, a family relation doesn't necessarily translate to a model tenant, so the right checks should still be carried out.

By following these steps, you can ensure that renting to family is a straightforward and stress-free experience.

If you’re renting to a family member, you need to follow the 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 knowing that rent can be paid in full and on time.

A tenancy agreement is essential even if you’re renting to a family member. Tenancy agreements set out legal requirements for the landlord and the tenant, as well as the rights and responsibilities of each. 

If you ask your family member to sign a tenancy agreement, you’ll be clear about what is expected of each party from the start of the tenancy.

This way, you can prevent difficult conversations and misunderstandings.

While it may feel formal to request a deposit before occupancy, by doing so, you’ll allow for any accidents such as furniture breakages, damaged paintwork or stained carpets. 

This way, you can avoid putting any unnecessary financial pressure on your family member to pay for damage as it can be deducted from the deposit. 

Make sure you’re familiar with the 30-day deposit registration legislation beforehand.

We’ve written a blog on this exact topic if you would like more information: Tenants’ deposits: how and why you should secure them.

If you choose to rent your buy-to-let at market value, finding out what level that should be is 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’ve bought the property specifically as a buy-to-let, your mortgage provider may have specified the amount of rent you need to charge. For many, this is around 120% of monthly mortgage repayments.

Financial implications are often attached if you decide to charge a reduced rent or no rent at all, so make sure you receive advice from HMRC or a financial adviser about the tax implications of this. 

Your tenant should also seek advice from somewhere like Shelter if they’re receiving housing benefits.

By visiting the property regularly, you’ll be able to spot any developing maintenance issues early. Deal with them before they become problematic, and schedule any jobs that need to be carried out.

People often ask us, “Do I need Landlord Insurance if renting to family?” To which our answer is always: yes.

Before your family members move in, ensure that you have the right level of Landlord Insurance in place.

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.

In a similar vein, it can be advantageous to take out Rent Guarantee Insurance to ensure your rent payments are covered in case your relative falls into rent arrears. In a cost of living crisis, this is a very real danger.

In May 2024, the HomeLet Rental Index, which provides the most comprehensive data on rental values in the UK, found that the average rental price had reached £1,297 per month – the highest since our records began.

Tenants are now paying exactly £300 more per month on average compared to 2021. In the current climate, Rent Guarantee gives you a financial safety net should your family member struggle to pay their rent.

If you’re renting property to family, it pays to partner with a trusted insurer with a proven track record of providing tailored insurance policies for private landlords. An insurance provider like HomeLet.

With more than 30 years of experience to our name, we are the leading go-to expert for the lettings industry.

Our Landlord Insurance policies are trusted by thousands of satisfied landlords across the country. 

In 2024, we were awarded a Feefo Platinum award and a 10 Years of Feefo Trusted Service award.

This means Feefo reviewers rated us above 4.5 out of 5 throughout 2023 and at least 4.5 for the last ten consecutive years.

To find out more about Landlord Insurance from HomeLet or to purchase a policy, please contact us on 0800 035 8258 or request a callback to discuss your needs at your convenience.

NB: This blog was first published on 11 August 2021 and has since been updated to provide the most accurate and up-to-date information available.