AIBU to worry my parents are undercharging rent on their flat?

[Gladdo]

My parents have lived in a 5 bedroom flat in a lovely part of their city for years. Now they have decided they want a bungalow closer to my siblings and I who have moved to another city. My mum doesn’t want to sell the flat and has decided to rent it out.

They have decided to rent it to the son of one of my mums friends, this son and his partner have 5 children, I believe the father works but the mother doesn’t (they may have a newborn if I listened correctly so this makes sense).
My mum has decided to rent it significantly below market rate (the other 5 bed flats in the area are mainly used for student lets but seem to make almost double), the reason being so it falls under the local housing rate for their universal credit.
It’s a beautiful property, probably needs a bit of redoing, but my mum said they can decorate.

Im really worried, I don’t want my parents to be exploited, I’m not sure they are taking any real advice and setting things up, when repairs are needed I’m worried they won’t be making enough from rent to cover it so be paying out of pocket.

I tried to tell my dad and he said they don’t need profit, they just don’t want to sell right now incase they change their mind.

AIBU to be really worried about this and fear they are taking advantage?

The OP says they’re claiming UC and the reason for the lower rent is to keep it within LHA rates…

You father has said they are not interested in profit. That is their choice so they aren’t being exploited. They know the people who will be living there and want to help them. I assume they know them well enough to trust them to take care of the property which is beneficial to your parents, as is the flat being occupied rather than left empty.

They seem to know what they are doing so there is no need for you to worry.

No no no. It’s taken us almost 4 years and more than £10,400 to get our tenants out. The stress has been unbelievable. The main complaint was they couldn’t find somewhere at the same rental price as we were charging under the market price. We are also full of praise for the housing officer who did her best to help them and us.
This has been a nightmare - the flat wasn’t being heated or aired. We are left with a huge mess to clean up before we can put it on the market to sell.

The market rent of a family home and a hmo can be really different. My cousin rented a place for nine months as owner planned to turn into hmo and double the rent.

Renting a place out to 5-10 working adults ( assuming some doubles) comes with its own issues. Parking, rubbish, keeping odd hours, the things that annoy neighbours. Also getting a house ready fire doors, getting a licence can be prohibitively expensive.

Some people are just kind, my mum and dad rent a flat out well below market rate because they feel sorry for their tenant who lost her husband. It’s nice to hear about people being generous for a change!

They really need to get clued up on landlord responsibilities and quickly. You can get in big trouble for missing things. Probably would not be able to get rent guarantee insurance unless there is a home owning guarantor. Would prepare for any eviction to take >1year via court with no rental income during that period so bear that in mind if situation with your parents if they ever needed to release capital quickly for any manner of reasons.

and never rent to friends or family.

It sounds like an absolute disaster in the making OP. 5 children are going to make a lot of noise (are the neighbours aware?) and also there's going to be a lot of heavy wear and tear on everything. I hope your parents are up for the ongoing maintenance alone. I would hope they've got a contract drawn up through a solicitor and aren't just relying on good will - the family could take years to evict if they don't pay rent and your parents will essentially be financing this family plus the cost of any legal fees could run into hundreds of thousands.

Rule no1 is never let to family or friends. For good reason.

But it glaringly obvious that neither the OP nor her parents have a clue about the Renters Rights Act or any of the other myriad of rules and regulations involved in being a landlord - nor the substantial penalties they might incur if they get things things wrong.

The student flats will be able to charge more as they can put 5x adults each paying rent in a 5 bed flat vs a couple (or in the case of your tenants, just one income).

Thats why HMOs are so popular with landlords…!

This

Grabby and wanting inheritance

True

I have a relative who rents out her childhood home as she didn't want to sell

She ensured she had all the right certificates and went through an agency

Despite agency pressure she won't raise the rent to market as the tenant is no trouble and she isn't greedy

Universal Credit.

We rented our house out to a good friends son,his girlfriend and her mother. For the first 2 years everything was fine, then they started refusing entrance for gas & electric checks, it wasn't convenient for us to do the checks on the property The the rent started being late, excuses every time. I told them I would start eviction notice and then it started coming in regular.
I saw a neighbour in the supermarket and she told me the horror story of 'those next door' 3 more people were living there, they had 2 noisy dogs and noisy parties most weekends in the garden. She lived next door and both sides were fed up with it all.
Anyway we got them out eventually and the whole house was ruined! Filthy, furniture broken dog sh*t all over and the carpets and doors were ruined by dogs scratching at them cupboard doors hanging off in the kitchen, I could go on. I just sat and cried, I loved that house and they had ruined it.
We got a team of cleaners in and decorators a joiner for the doors,but it still felt abused. We put it on the market and it sold in 4 hours.
OP I hope your parents make sure all checks can be carried out and the rent is paid, it's difficult to get them out these days, and I would hate for them to go through what we did.