Family and rent

[Emz1212]

Long time lurker - but would appreciate opinions on this. Going to try and keep brief so isn’t outing.

My sister split up with her husband just over 2 years ago and we rented her one of our properties. Market rate would be £2200 pcm - but we let her have it for £800 as her ex hadn’t left in a good situation.

Anyway fast forward two years and she is back on her feet. She doesn’t earn a lot - but about 6 months back asked if she could move her partner of a year in to which we agreed.

partner earns circa 60k per year and has a
flat which he now rents out.

my husband thinks the peppercorn rent is no longer enough and the fact she has a partner there means they should pay more. As it’s my family he wants me to approach it.

two things

1. great relationship with sister and partner also
   a very nice guy we get on with. (No kids on either side)

2. sister is aware we don’t really need the money and don’t need to increase the rent.

I agree with your DH - the circumstances are very different and they should pay more rent. Personally would have addressed it when partner moved in but reasonable to address it now as their relationship is clearly ongoing.

And sorry to drip feed - but husband doesn’t even want market rate. He is happy for them to pay 1500
as its family.

If you don't need the money, I don't see any need to increase the rent. The market rent is irrelevant, in my opinion.
My mum has been "renting" from my aunt's husband for the last 10 years. She doesn't actually pay any rent at all, only for the upkeep of the property including all the repairs. Everyone seems happy with that arrangement so my view may be biased by that.

1500 seems fair.

Surely they pay each what dsis was paying? Or you are a mug imo.

I would have addressed this when she asked you if he could move in.

I would say you were going to put it on the market and see what she says.

Probably depends on how well off you and your husband are and how much your sister is struggling financially. It's hard when it's a sibling and you want them to be comfortable. I think for me the priority would be my siblings comfort. You said one of your properties and if the other properties are bringing similar amounts of money in you're probably pretty well off financially. If that's the case I would let them stay on the cheap rent. If you're not super well off though then would definitely ask for a higher rent, especially with the partner getting and extra income in the rent payments from his own flat. Not an easy dilemma though.

I definitely think they should be paying more- it’s the principle and her/ him building up a debt is only likely to breed resentment. He’s on a decent salary and it sounds like she’s in a much better place. You may not need the money now but who knows what could happen in the future and I assume the properties were only bought to generate an income. I’d explain this to her, say that you’re really glad that she’s in a much better place and in a new relationship and that you’ve been really happy to help her out so far but you really need the property to generate an income for the future. Give them the option of either paying the market rent (or at least somewhere closer to it) or finding their own place and you renting to someone else.

I actually think your sis and her partner should offer you more, I think they are cheeky if they dont.

But I dont think your oh is unreasonable in asking for more rent since your sis is in a better circumstance now.

I don't see why you should subsidise the partner. Charge them 800 each.. or they can move somewhere cheaper. It was kind of you to help your sister. Whether you need the money now is not relevant really - effectively you are giving your sister and partner £1400 a month. Which is fine for a sister going through a hard time - less so for an independently wealthy person you hardly know. Oh course there is some benefit letting to family in terms of reduced risk. So there's a balance. But under half the market rent is very low. Is it a huge house?

Well the partner is profiting massively from your generosity

Yes but if your mum moved in a new boyfriend on 60k a year who also owned another property (and let it to some other tenants at market rate and kept all the money from that)... Would that change things?

My mum does share with her boyfriend. They live between two houses. He also welcomes my family on a regular basis, looks after their dog when they are on holiday, and lets them spend the summer in his country house. Not to mention that my mum has her own flat but our grandmother currently lives there and, intermittently, my aunt's (but not her husband's) sons stay with her when they travel to the city. I think we are good.

If I genuinely didn't need the money I'd never dream of charging my family more rent.

@Emz1212 yes and perhaps a new lease too!

Surely she’s being a cheeky f not offering more even before partner moved in? She is taking money from you every month. If I was her I would be mortified. You need to give them reasonable notice of it going up, but I would personally but putting it up to market rate.

Your AIBU is unclear so the vote will look weird.

It’s totally reasonable increase the rent

I’d increase the rent, there is now 2 people there so he can contribute. Why should they pay £800 between them and you loose out when you could be earning more whilst he is renting out his flat and making a profit?

Define "don't really need the money"?

What would the extra £700+ a month bring you?

£1500 doesn't seem unreasonable.
What are your costs for that property?
Ages since I studied tax on rental properties, but from memory, if you had several properties and let one at below market rent, you couldn't pool any losses on the below market rent one to reduce the overall tax bill.
(that's from around 35 years ago, might have changed)

Nothing - and she knows that

Your husband is right.

Nah she doesn’t nobody knows the ins and outs of anyone else’s finances.

i would tell her you’ve been really happy to help her out thus far but with inflation/cost of living/some of your investments not generating as much as you thought you are going to have to put the rent up. I’d agree keep it below market rent -she’s still your sister! But up to something like your DH suggests is still a good deal for her, she’s still getting a hefty discount and you get to feel like less of a mug.

Your DH has a point - by keeping it at the same rate, it could be seen as you putting her needs above his - for example, that extra £700 a month could mean you retire a lot earlier!

Your DSis is a bit of a CF for not offering an increase now her DP is moving in, when it would seem he can afford to contribute and considering how much you have saved her in the past 2 years (over £36k - just let that sink in)

Do you own the property outright or is there a mortgage?
Who pays for any repairs?
Do you cover the landlord insurance, gas/elec checks etc?

I have some experience in this as a family member rents from us, and whilst their rent has always been way below market value, it's not less than half market value. (It's a bigger house in a much better area for them, which is why we bought it in the first place)

You definitely need to raise it. Why should your sister's partner, essentially a stranger, benefit so much from your generosity and be able to line his pockets. You may not feel you need the money but neither does he if he has a good job and a rented property with barely any housing costs to pay.