Letting Business Or Charity

I often advise that if letting a property, family are the last people you should consider. Nothing breaks up a friendship, or affects family relations more, than becoming the landlord to a friend or family member. Having said that, on the face of it, it can seem like a good idea – you know them, you may feel that knowing the parents may give you a little more ‘clout’, if things start to go wrong.

Sometimes, it does. Sometimes you will get a tenant who is perfect. But beware – sometimes, it can go disastrously wrong and when it does, things get even more difficult than in the straight-forward, landlord-tenant relationship.

This was brought home to me recently when assisting a landlord. His tenant was a young lady and her child, members of his family. Because he knew her, he did not ask for a deposit. Nor did he ask for rent in advance. Nor a Guarantor, though this was the first property she had taken on her own – she was living with her parents and they kept a spotless home.

Warning bells to me – what preparation had she made to move out into the wide world on her own? Very little, certainly not to the extent of thinking that some savings would be useful for this adventure. Would the parents not have stood Guarantor? Perhaps, but ‘I didn’t like to ask – they are family’.

The tenant moved in and applied for Universal Credit. The rent was the same as the local housing allowance, so there should not be a problem. But there was.

The tenant did not make a case that she would struggle to manage as she had no experience of living on her own, so the housing element went to the tenant. She paid most of the rent to the landlord, only retaining £80 as she wanted to decorate the baby’s bedroom. The landlord was understanding – little girls should have pink bedrooms. The following month, there was a shortfall of £30, because the baby needed new shoes.

The rent was paid in full for the following 2 months, though nothing was paid off the arrears. The next month was December, and £120 was kept back to pay for Christmas. January was again a difficult month, paying off credit cards used over the Christmas period so only half the rent was paid. 

At this point, the tenancy converted to a statutory periodic tenancy. No firm letters were sent, no offers received of paying back the amount owing. 6 months later, the tenant is still there, paying in a hap-hazard manner and presumably, quite comfortable. The landlord is unhappy, so after several conversations, telling her she has to go, he watches for her leaving the property and then entered and changed the locks.

‘Illegal eviction’, was my immediate reaction. Yes, the landlord knew – because someone from the local authority had been in touch to tell him so and to ask that the tenant be allowed back, pending Court proceedings. The landlord refused and, fortunately for him, the tenant would not take him to Court – because they were family! Fortunate to escape Court proceedings, but what has that report done to his reputation with the local authority?

What did the landlord do wrong?

  • He let to family, without taking any of the safeguards taken with a stranger;
  • There had been no serious discussion on the rent arrears and possible consequences;
  • There were no firm letters, advising the tenant that the tenancy was at risk;
  • He allowed a tenant who had shown she was unable to keep to the terms of the tenancy, to remain in the property on a statutory periodic tenancy – he should have served a section 21 notice at the 4 month stage; he had no need to act on it, should this have speedily prompted the tenant to make a payment arrangement.

The landlord behaved like a family member, not a landlord. He is left with quite a high rent arrears figure and a slightly fractured relationship with family. It really is not worth it!

For advice on buy to let issues – Ask Sharon