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.

when you say “nothing” Do you mean you are already:

totally mortgage free
kids in private schools (assuming you want that)
driving Tesla’s or similar
and holidaying at ikos / Disney / on safari etc x 3 per year
pensions maxed out
isas and jisas maxed out?

that money is significant it’s an annual holiday to Disney or similar or private education for at least 1 child…I say this as someone who has a gross hh income of about 300k who is clearly significantly poorer than you!!!!

if you are that wealthy I’d charge her the rent then gift it back to her either as a deposit for a house when she moves on or use it to buy her one outright later on…

Op you can just explain that as its an investment property you will need to.increase the rent.. remember you need to cover repairs and if any major work comes up.. it's not always about making profit , you are within your rights to want to safeguard money for the property. Gas safe or other certs you must cover. Even at the increase you mentioned you won't be charging them full market rent. Your sister needs to respect its not just up to you , your partner also has a say and the truth is there is no obligation to give them such a big discount.

That's lovely but an entirely different situation and not really comparable

I think it's lovely, conflict free and reciprocal exactly because it's not tainted by money. But I did say in my first post that my view is biased.
In contrast we once needed to live somewhere for a few months and asked my brother in law if he could let us stay in his flat and pay his mortgage. He was living with his gf and the flat was empty. He said he wanted to charge us market rent. We thanked him but declined and never asked nor offered any help again.

Is her boyfriend named on the tenancy agreement?

If not, this could be a discussion that leads onto talking about rent.

Personally, I'd be cautious about souring a good relationship with family just for the sake of it, since you dont need the money. So long as your costs on the property are covered. Market rents are massively inflated these days and not really a good indicator on what is a fair rent. The amount she is paying is similar to what a social housing rent would be, which is deemed an affordable rent.

I think it would be reasonable to increase the rent . I Maybe wouldn't go from £800-£1500 as that's a big jump but a figure in the middle.
Maybe ask yourself why you have the property to begin with, did you intend to be landlords to make a profit ?

@Emz1212

I think its perfectly reasonable for you to ask for more rent - especially now her partner has moved in - at the moment, he's living rent free AND receiving income from renting out his own flat!! You're effectively funding his living situation!!

This

It would be awkward now but your sister knowing she was getting a cheap rent should have offered more when her partner moved in , especially as he is now pocketing his own rental income .

Why did he move in with her and not the other way round? Does he know the arrangement you have in place?

The way I would look at it is that he is benefitting from your generosity by allowing him to rent out his former home which is either paying off his mortgage or going into his savings, whereas she gains nothing. The relationship could end and he walks away quids in. You didn't set this arrangement up for the benefit of this man. She could be saving some /all of her rent to help build up a pension or other savings.

How long did you envisage this arrangement to last ? Forever or until she could afford to support her self? Did you consider what might happen if she got into a relationship?

I would ask him to start paying rent partly just so hes not getting a free ride courtesy of her/you. If you don't want or need the money then put it aside and give it to her/ set up a pension or just save it.

Charge more - partner shouldn't be profiting off you.
Also I find it strange that he moved in with your sister not the other way around. Unless there's a pressing reason (e.g. your sister has kids in a family home and he's in a small flat) it seems like he's done it deliberately to make £££.

As PP pointed out your sister gains nothing from the partner feathering his nest. But you can save his rent for her.

So it's not about the money - it's a principle of the thing for your DH. Is he feeling taken advantage of? Unappreciated? Does he feel you're being taken for granted? Wondering about his motive. You seem very rich and yet here is worrying away at a small (for you) amount of money. Is he OK generally?

I guess you are supporting them a lot now in comfort - it's not the life saving ring you threw her any more, it's a small yacht you're providing.

But £60k and (guessing here) £30k gross salaries would make the £2200 market rate rent tighter (I know people have worse margins) but his £1500 suggestion is reasonable. Your DH seems a nice guy.

It's a big jump though from 800 to 1500. They will feel 700 from their new budget. They may even have made plans based on it.
Jan 2025 would be a good time to increase. Time to adjust.
I think if you're clear in your own mind why it's needed then it will be easy to explain. But you're not so it isn't.

I spoke with her - they are paying 1300 from next month. Everybody seems happy - and we were worrying about nothing.

thanks for all the replies