New research from Hiscox suggests informal rental arrangements remain common among landlords renting to people they know, despite the risks of property damage, disputes and unclear responsibilities.
Almost two-thirds of landlords have rented a property to someone they know, while nearly one in five have done so without a formal agreement, according to new research from specialist insurer Hiscox.
The findings come as the rental sector adapts to changes introduced through the Renters’ Rights Act. Hiscox surveyed 164 UK landlords and found that 64% had rented to a friend or family member, although only 46% of those landlords used a formal tenancy agreement.
Among landlords who formalised arrangements, the most common protections included a written tenancy agreement, safety checks, deposit protection, an inventory report and specialist landlord insurance. Hiscox said these measures help set expectations and reduce the likelihood of disputes.
Michael Dear, landlord insurance product lead at Hiscox, said: “These findings suggest that while many landlords are open to renting to someone they know, most recognise the importance of putting formal structures in place.
“Clear agreements, safety checks and deposit protection help set expectations early and reduce the risk of misunderstandings. Ultimately, renting to someone you know doesn’t remove the responsibilities of being a landlord – if anything, having the right processes in place becomes even more important.”
The insurer also highlighted the experience of landlord Rachael W., who rented her property to a friend on an informal basis while trying to sell the home. Without a formal agreement in place, the arrangement relied on mutual understanding, but problems only became apparent after the tenant moved out.
Rachael said: “I was selling my home, so I didn’t want a full tenancy in place in case it sold quickly. My friend needed to move out of her parents’ home, so I offered her the chance to stay at a reduced rent, with the understanding she’d move out before the sale completed.”
She added: “I had cleaned and repainted the property so it was in excellent condition. But when she left, I found scuffed walls, broken freezer drawers, and a filthy cooker. The most frustrating part was a leak in the bathroom that hadn’t been reported, which caused further damage after an attempted DIY fix.”
The experience left her facing repair costs and damage to the friendship. Rachael said: “After just a couple of months, it looked completely different. I’d always taken pride in the property, so it was upsetting to see it like that.
“A formal document would have made things much easier. Even though it was temporary, it would have helped set expectations and given both of us more clarity around responsibilities.”