Dilemma regarding rent charge for friend

Exactly this!!! If it's in a desirable area, you're likely to get desirable tenants willing to pay a desirable rent! You could have been building your sons 'pot of money' up each year from the extra rental income. YOU are the one doing a massive, I repeat MASSIVE solid, for your friend, over and above and way beyond, what should be expected! C'mon, she knows she's 'taking a lend'!!!

It’s not as simple as just telling the friend you want them out as you’re thinking of selling though. They’re a tenant and they have rights, whether you like it or not, and no matter how good the friendship is the law has priority. If the tenancy isn’t properly covered by a contract, safety certificates, deposit held in a deposit protection scheme etc, then things have the potential to go pear-shaped very quickly indeed. Yes, the friend MAY leave quietly and without a fuss, but what if they don’t…? If they decide to stay put then it’s a long and very costly process to get them out even if there is a proper tenancy in place. If there isn’t - if it’s just an agreement between friends - then the shit could really hit the fan, even more so when the Renters Reform Act comes into place on 1st May next year. The financial penalties for not complying with regulations can be huge and are set to increase after May.

As I said earlier, if this is the case, then whether to increase the rent or not is going to be an academic question. The OP hasn’t said whether it’s a formal tenancy or a friends’ agreement - I really hope it’s the former.

I voted YANBU as they knew the flat wasn't forever so realistically, should of been saving up what they saved on rent for the last 10 years

Wherever you rent you're paying someone's mortgage.

I think its less likely to come to qnything if this is an arrangement of 10 years and they are good friends and deal with it informally first.

just tell her friend she's looking to sell vacant and therefore giving early notice of her intention to serve notice.

It's as simple as saying "look friend, I'm considering placing the flat on the market and don't want to do so with a sitting tenant, nor do I want to shaft you with the minimum notice in the formal agreement so this is just a heads up that you're best off looking to find a new place sooner rather than later. I can wait til Feb to serve notice but that's about the limit unfortunately."

A decent, long term and regularly paying tenant is worth a lower than standard rent.

Obviously you can’t let at an actual loss, ie if the property is costing more than the income.

In your case though I think you need to decide your aims and priorities.

As you now know that your son will never occupy the property you need to consider if it’s the best form of income raising for your son. There are many safer ways to obtain an income from capital.

Unless you never intend to sell, and are prepared to rent to your friend forever, not addressing the rent now is just kicking the can down the road. Actually it’s worse than that as the gulf between the rent you are charging and what she would need to pay elsewhere will keep increasing, making it impossible for her leave voluntarily.

Agree with this totally

Google HMRC and the fact that they don’t look kindly on charging less than the market rate for friends / family. At any point they can ask you to pay tax on the full ammount the property rent is worth.

Pretend you have got an accountant and that they have told you this. (Or even that it’s happened)

@Plantyshazfan if you're in England you will have significant extra costs from next May because of the Renters Reform Act. If your local council is bringing in licensing that will be more significant costs. That's on top of the maintenance costs that aren't covered at the moment. Tbh it probably makes more sense to sell, pay off the mortgage and any capital gains tax and put what's left in the disabled trust. Speaking from direct experience of both renting and setting up a disabled trust. You have enough responsibility with your disabled child to be responsible for subsidising a friend. They've had a very good run.

But this means that at some point in the future they will have to face up to having to move? The asset only works for you if you are able to sell it to release the cash for your child?

I think in your shoes I would set a time frame - be that 5 years or when your child turns 21 etc - so that you can sell the asset and use the money for your child.

I think you and your friend need to have an honest conversation: a) not so much about the rental income (so long as you are breaking even after tax, if not you may actually need to discuss raising the rent annually over the next few years); and b) because you are not - and never were - providing them with a home for life: it is an asset purchased and managed entirely with your DC’s wellbeing and care being the purpose. That may mean agreeing a times-scale to your tenant friend moving out so that you can sell.

It really is a dilemma, OP.

We have two properties that we rent out, we’ve always charged significantly under market value to our (good) tenants as we pay 40% tax on the rental income and it seemed fairer to keep in the tenant’s pockets.

Over the last 18 months, when it became known that Renters Rights would be stiffening, we’ve put the rents up twice to bring it more into line with appropriate values. Its still a bit under, and we are very attentive landlords, but it would be too problematic to have a big disparity in rent, and ultimately locks you and the tenant into a situation that would be very difficult to change.

Exactly this.

I am in the same boat as you!!! If I could turn back time I would have got a stranger in it. My advice to you (although I can’t take my own) is you need to out your family first and tell her things have changed now and you are putting the rent up. Technically speaking rent goes up each year by I think 4 or so percent. You can do it that way or drastically.

my issue more so would be does she know that flat will eventually be your sons? Start planting the seed now so she can start looking else where

Your friends knows that you've had to spend on the property this year, so I would use this opportunity to put the rent up by £100 a month as a compromise. They are still getting a very good deal.

I've been dealing with my late mum's rental property, which hasn't had an increase in rent in 15 years. Consequently the tenants were paying half of the market rate and my mum hadn't made any profit over the last three years.
I had to serve them notice to sell the property to meet mum's debts, but the gap made me feel terrible, as the tenants would not have to pay double the rent to find anywhere else.

If you don't put the rent up now, @Plantyshazfan the gap will just grow and grow, and make it even harder when you have to serve the friends notice. Also the new regulations will make it almost impossible for you to close the gap even slightly.

You are failing your son if you put your friends before him. Explain to the tenants that the work you've had done means that you need to put the rent up, but that it will still be kept well under market rate.

I think the honest chat is the way forward.

Your friend knows the situation ie that this is an asset for your DS. You can tell her that you now know DS will never use it but he does need to earn an income from it. Tell her that you appreciate she has cared for this flat over the years and you want to keep her as a tenant but that you will also need for the rent to cover all the costs associated with the flat, which is more than just the mortgage as it needs to include building a fund for maintenance etc. Such as has been needed this year on the alarm. So you will need to put the rent up a bit to cover this.

Come to a view on a reasonable rent amount which reflects her good standing as a tenant but also doesn't leave you out of pocket. This is an asset for your DS and so you need to have a financial head as well as a friend head.

Also make sure youve done all the needful landlord things like securing deposit etc

Did you buy the flat as an investment, or did you buy it to do your friend a favour?

you should have increased the rent every year by the market amount, and should increase it now immediately, as much as you can under the current rules, and then further increase it each year. New regulations are coming in, so make sure you know what you are doing.

you should be doing what is best for your child's future, not what is best for your friend.

I had a terrible experience with my flat after I stopped letting it to friends. Rent didn't increase dramatically, i paid for management and had a string of awful tenants who repeatedly trashed the place. (One turned ot into a crack den, i recovered it then another left filthy puppy pads all over the place.) I would have paid £3k per year to have costs covered and a decent tenant.

I think you can increase the rent by £50/mo every other year.
To have had rent frozen for 10yrs is a huge benefit you’ve given them.
They have to have read the news and know that you’ve borne a lot of extra costs over the years due to government changes.

I don’t think you can jump the rent to full market value, but your friend would surely understand a small rent increase is warranted every now and then?

As a PP mentioned, there is a renters rights bill that comes in in May 2026. You may want to take some professional advice as to how this will affect you.

I echo my previous post that I would seriously consider selling, especially considering this.

I would be honest with your friend and give them a choice. Say the rental income is less than it's costing and it was supposed to be of benefit to your DS. Ask them if they would prefer to pay the increased rent or find somewhere else at a lower rate. Give them 3 months to look around and help them make the decision about whether they pay more with you or less elsewhere (or more elsewhere as rents are high). Then if they decide to stay increase the rent as you proposed. If not, serve them the correct notice and advertise it at the new rate.

Good tenants who pay on time and look after the place are worth hanging onto. While on the open market you could get another couple of hundred a month, you also run the risk of a tenant who does a runner, a tenant who causes outrageous damage, tenants who change frequently leaving you with gaps in rental income, or a tenant who you constantly have to remind to pay.

If your current tenant is a good one and the costs such as mortgage and water rates are being covered then you'd be mad to potentially lose her as both a tenant and a friend.

If you really want some extra cash then why not just increase the rent a little - say another £50 a month.

Ultimately though, it seems like you both get a good deal out of the current situation: you get your mortgage paid each and every month with the end goal of a fully paid-off property and your tenant isn't getting price gouged (unlike an awful lot of tenants these days).

I know what I'd do, but it's entirely your choice.

The easy option is to sell the flat and invest the proceeds elsewhere…

What is the long term plan for the flat? For it to be income for your son and someone (when you are not around) will manage it for him? Assume when that happens the rent will increase massively as their job will be to look after your son's best interests? In the meantime I don't see why you can't increase the rent slightly. I am a landlord and have lovely tenants and I felt bad raising the rent but they totally understood. I presume if your place is rented under market rate and you are paying the mortgage and the income tax that you probably aren't making any money at all on it and that doesn't allow for repairs etc and if you aren't breaking even then that seems pretty silly to be subsiding your friend rather than saving for your son's future

surely what you are suggesting is now illegal though? You can't re let a property for 12 months after evicting to sell a property if the property doesn't sell

so you're left with an empty property for 12 months

I've only read the OP's posts and skimmed the rest. I'm pretty sure others have mentioned it but you must get advice specific to the tenancy OP, most solicitors can only give an overview, but joining the NRLA would give you everything you need very quickly. If you don't act by 30th April you will have changed your circumstances and that of the tenant for a very long time. Have you got all your paperwork and protected the deposit? There are also several landlords' Facebook pages the moderators give free advice:

www.nrla.org.uk