Agreement between family

Cherylrp

Hi, my husband and I are in the process of buying a property for investment purposes.  A family member will be living in it and paying a rent to us.  They will live there Indefinitely, well until such time as we feel we need to sell which hopefully won’t be for a very long time.  That’s the history behind my question which is we want to draw up an agreement and put their deposit into a bond, do not see why it cannot gain interest.  What type of agreement should we do.  Can we draw one up between us and then get our signatures witnessed? 

MaryNB

Are you getting a mortgage? Some lenders won't allow renting to family members under their BTL mortgage terms. 

You should do a full tenancy agreement and you will be required to protect their deposit under a regulated scheme. 

greatcrested

Do a standard tenancy agreement. (the gov one is bit over the top!)

Join a Landlords Association. (discounts on their TA and other forms + advice)

Learn what laws you need tocomply with.

If you have a mortgage, makes sure your lender accepts tenants who are family.

Look at the various deposit schemes and join one.

Read:

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

HampshireH

The deposit will need to be registered with an approved deposit scheme is that what you m an you intend to do?

https://www.gov.uk/tenancy-deposit-protection

When you say agreement you can find examples of tenancy agreements online and utilise one of those with your necessary amendments.

https://www.gov.uk/government/publications/model-agreement-for-a-shorthold-assured-tenancy

Don't forget about all the other stuff you need to do as a landlord.

Family /finances and assets aren't a good mix so you need to get it right

Cherylrp

No, we will be cash buyers. 

george4064

You should probably just setup a normal Assured Shorthold Tenancy, with the deposit held in an approved tenancy deposit scheme (TDP). 

On a side-note (not that it should make much difference), how much annual interest so you expect to earn in the deposit amount? In today’s savings rate you’re not going to make much at all, is it really worth the bother to evade the official channels to setup a secure and proper tenancy agreement over £5 a year?

lookstraightahead

Cherylrp said:

Hi, my husband and I are in the process of buying a property for investment purposes.  A family member will be living in it and paying a rent to us.  They will live there Indefinitely, well until such time as we feel we need to sell which hopefully won’t be for a very long time.  That’s the history behind my question which is we want to draw up an agreement and put their deposit into a bond, do not see why it cannot gain interest.  What type of agreement should we do.  Can we draw one up between us and then get our signatures witnessed? 

Your relatives will be tenants and you will be a landlord.
if you have a mortgage you will have to check with your mortgage provider if you are allowed to swap your mortgage over to a buy to let mortgage (I think), and also if the will allow you to have relatives as your tenants.
you will have to do the regular checks eg electrics etc and the deposit will need to go in a scheme to protect the tenant.
you will need to declare the income.

Cherylrp

I’m definitely not trying to ‘evade official channels’.  I trust my sister and just want to give her a home.  She wants the agreement not us and I just wanted to do it as simple as possible, that’s all and not sure the best way to do it hence contacting the forum.  

lookstraightahead

You need to read up on everything to do with renting out a property. There are lots and lots of legal issues that you have to abide by, and that protect both you and your sister. 

Cherylrp

lookstraightahead said:

You need to read up on everything to do with renting out a property. There are lots and lots of legal issues that you have to abide by, and that protect both you and your sister. 

Ok, back to the drawing board, thanks

princeofpounds

OK, if you're a cash buyer you can do this. But by saying 'gain interest' on a 'deposit.... in a bond', it's clear that you don't have a clue what being a landlord involves.

I don't mean that in a nasty way. Nobody is born knowing. But you really do need to know. The administration has got more complex over the years, and there is no simple way of doing it without opening yourself up to serious risks. You really must read all those links that greatcrested directs you to, in depth. 

You must understand deposit protection. You must understand how to report your taxes. You must understand you health & safety obligations. You must understand the situation you will be in if your sister stops paying her rent entirely (the reason doesn't matter - it could happen - nobody thinks renting to family is a great idea).