Renting out a property is a business and should be treated as such regardless of who the tenant is. Here’s how to put the right structures in place when renting to family.
Blood may be thicker than water, but this doesn't mean that a landlord should drop his guard by not insisting on a rental deposit or not ensuring a lease is signed when renting property to family.
Although it may seem like a fabulous idea to rent to someone in your family, things don't always work out and if you've simply allowed someone to live in a home without taking the necessary precautions, the fallout can be dramatic and the family rift can last a lifetime.
Unfortunately, there are going to be instances where the family connection is abused. Rent isn’t paid, or payments are received sporadically, the property isn’t well looked after or is even purposely damaged. While these issues are easily dealt with when they involve a regular tenant, things can - and often do - become more difficult when you are dealing with someone you love.
What every landlord needs to understand is that renting out a property is a business, and regardless of their relationship with the tenant, has to be treated as such. The rules basically remain the same and landlords will undoubtedly make things easier for themselves if they put the right structures in place before a member of their family moves in.
Sign a lease. This is not only a legal requirement, it will protect both the landlord and tenant if there is a dispute.
Always secure a deposit for both the property and utilities, regardless of the relationship. A deposit protects a landlord’s investment. It ensures that any damage to the home can be repaired without costly or drawn-out legal intervention. The same goes for deposits for utilities - there are some horrific stories involving tenants who rack up enormous bills for lights and water, so landlords should rather play things safe and ensure that there is a deposit sufficient to cover any eventuality. Don't get petty when it's time to do an outgoing inspection and attempt to penalise the tenant for fair wear and tear. If you do have to dip into the deposit for repairs, discuss it with the family member concerned and provide receipts for any work.
Conduct regular inspections. We're not suggesting that landlords become pedantic and conduct a thorough inspection every time they visit or pounce on tenants for minor issues. It is, however, important to keep an eye on the property and discuss issues as and when they arise.
Deal with problems in a timely manner. Landlords shouldn't ignore late payments simply because the tenant is a relative. Make it very clear in the lease that rent is due on the 1st of the month and address late or non-payment immediately.
Don’t ignore body corporate complaints. Have a quiet word with tenants who flout the body corporate rules. Furnish them with a copy of the rules and make it clear that the behaviour will not be tolerated and that there will be consequences if it continues.
Communication is always important between a landlord and tenant, however, it's absolutely vital when it comes to leasing a property to someone in your family. Remember, this is business and the same rules that apply to a stranger need to apply to family. Making everything crystal clear before the tenant moves in will possibly save you a great deal of stress and heartache later.