Nearly one in five landlords who have rented to a friend or family member did so without a formal agreement, according to new research from Hiscox, which says informal lets can still leave owners exposed to disputes, repair costs and compliance gaps.
Hiscox surveyed 164 UK landlords and found that 64 percent had rented to someone they knew, but only 46 percent of those landlords said they used a formal tenancy agreement. The insurer said informal arrangements often rely too heavily on trust even though the legal duties around safety, deposits and documentation still apply.
For landlords, the timing matters because the Renters’ Rights Act has pushed paperwork and process higher up the risk list. A casual arrangement with a friend may feel lower risk at the start, but it can become harder to defend if the tenancy goes wrong and there is little written evidence of what was agreed.
Hiscox says trust often replaces basic tenancy safeguards
Among landlords who did formalise the arrangement, Hiscox said the most common protections were a written tenancy agreement, safety checks, deposit protection, an inventory or condition report, and specialist landlord insurance. That still leaves a large minority skipping some of the basic safeguards that would normally be treated as standard practice.
Michael Dear, landlord insurance product lead at Hiscox, said clear agreements, safety checks and deposit protection help set expectations early and reduce the risk of misunderstandings, adding that renting to someone you know does not remove the responsibilities of being a landlord.
The insurer also highlighted the experience of a landlord who let to a friend on an informal short-term basis while trying to sell a home. After the occupier moved out, she said she found scuffed walls, broken freezer drawers, a dirty cooker and further damage linked to an unreported bathroom leak.
This follows Residential Landlord’s earlier coverage of Paragon warning that landlord checks are tightening under the new regime. The latest Hiscox findings suggest some smaller owners are still taking the opposite approach in practice, especially where a tenancy starts as a favour rather than a business decision.
Landlords can review the underlying source in Hiscox’s casual renting risks research.
Informal lets can still create formal liabilities
The practical issue is not just property damage. A landlord who skips the agreement may also weaken their position on deposit deductions, repair responsibility, notice expectations and insurance claims. In a more regulated market, that kind of loose setup can turn a small favour into an expensive argument.
There is also a scale point here for portfolio landlords. Informal or family lets are often treated as one-off side arrangements, but they can still affect wider risk management if the property is financed, insured or operated inside a limited company structure. Lenders, insurers and tribunals are unlikely to treat a friend-based let as exempt from normal standards.
Opinion
This is the sort of story that sounds obvious until a landlord gets caught by it. Renting to someone you know does not reduce the need for paperwork – it usually increases it. If a tenancy begins with trust alone, the landlord may be the one left carrying the cost when that trust breaks down.
