Should we? Landlords.

PurpleGoldFish

Hi All 👋 

We need to know what we don’t know, and MSE forumites have advised and guides for a long time. 

The Situation.

My partner and I have been together a year and I’ve asked him to move in here and he’s accepted! 

He has his own house with £40,000 left in the mortgage. House value is £85k ish.

My house is shared ownership with Riverside, I own 30% (mortgaged). 

The Plan.

He’d like to be in property and this could be the start, he’d like to rent his place out. I have a friend that I’ve had over 20 years and she’d love to rent the house as it’s bigger than hers and we’re not wanting an arm and a leg for the house. We’d just like the mortgage paid off in x years. 

Please tell us what we don’t know! 

sammyjammy

Quite simply friends and business don't mix.  Renting out a house is running a business.

Slithery

Even if the numbers do add up letting it to a friend is a big no-no.

Don't mix business and pleasure.

Read...

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

canaldumidi

PurpleGoldFish said:

 I have a friend that I’ve had over 20 years and she’d love to rent the house as it’s bigger than hers and we’re not wanting an arm and a leg for the house. We’d just like the mortgage paid off in x years. 

What if

* friend loses job. Will he (/you) evict for rent arrears? Or be 'nice' but pay the mortgage yourselves?

* friend doesn't look after the poperty quite how he'd like.....

Treat the letting as a business.Keep friends out of it (unless you are happy to risk losing their friendship).

Now read:

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

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

Post 9: Letting agents: how should a landlord select or sack?

theartfullodger

Rent to people other than friends or family

london21

Business and family/friends do not mix well.

If they do not pay rent, will you be comfortable evicting them?

Most of the time it does not end well.

HampshireH

All above are right. There is a huge risk renting to friends and family.

But I'd suggest the risk is higher for you.

You have only been together a year and this is YOUR friend.

Will you be blamed if your friend doesn't pay up as she is your friend and not your partners?

Also may your partner resent offering cheap rent in a market where rents are quite high and good rentals are hard to come by. It's unlikely he needs to rent it it on the cheap.

Just something worth considering.

Rent it out at market rate and the mortgage will be paid off quicker and all your landlords financial obligations can be met along the way.

SavingPennies_2

HampshireH said:

All above are right. There is a huge risk renting to friends and family.

But I'd suggest the risk is higher for you.

You have only been together a year and this is YOUR friend.

Will you be blamed if your friend doesn't pay up as she is your friend and not your partners?

Also may your partner resent offering cheap rent in a market where rents are quite high and good rentals are hard to come by. It's unlikely he needs to rent it it on the cheap.

Just something worth considering.

Rent it out at market rate and the mortgage will be paid off quicker and all your landlords financial obligations can be met along the way.

Yes it's unlikely he needs to rent it cheap in the current market and he may resent this...but then he wouldn't be able to rent it out if he wasn't moving in with the OP, so this is the leg up he needs to get into property which the OP says he wants to get into. OP will be be contributing to your costs? There are some risks involved here too. I agree involving family and friends in "business" could get messy, I there's a lot to think about this situation before you go ahead. Personally Id say maybe he moves in for a few months before rents out his house.

lr1277

I know the relationship is great at the moment. But if for whatever reason you split up, where is your partner going to live? Is your partner going to evict your friend to get their property back? At the moment, unless the tenant is willing, evictions can take a year or more. As said above business and pleasure don’t mix.

if your partner is going to be a landlord to whoever, I would urge your partner to put a LPA in place. Being a landlord doesn’t stop if the landlord is mentally or physically incapacitated. As said above this venture needs to be run as a business.

I don’t think you get tax relief on mortgage interest payments. So your partner needs to calculate how much tax will need paying when the rental income is added to all sources of taxable income. Then after deducting tax and other expenses can the mortgage still be paid? Is there still a profit after all these deductions? If not, unless your partner is determined, they may find the venture dispiriting and want to wind it all down. Depends on your partner’s personality and their reason for starting this venture. As said above your partner needs to do these calculations, for both mates rates and market rates and see if they make sense.