Nearly one in five landlords have informally rented to someone they know – with one landlord left facing property damage

Almost two-thirds (64%) of landlords have rented to someone they know, with nearly one in five (18%) doing so informally, according to new research from specialist insurer Hiscox. 

The findings come after one of the most significant reforms to the UK rental market is decades, with the Renters' Rights Act published in May. 

While renting to friends or family may feel like a practical option during a time of change, these arrangements can carry added risks if not handled properly – particularly when clear agreements and boundaries aren't in place. 

Hiscox surveyed 164 UK landlords to explore attitudes towards renting to someone they know. The insurer also spoke to a landlord whose experience informally renting to a friend led to both a breakdown in their relationship and damage to the property.  

See the full research here: https://www.hiscox.co.uk/landlords-blog/casual-renting-risks  

UK landlords favour formal agreements when renting to someone they know 

Most landlords take steps to formalise their rental agreements, according to Hiscox's survey. Among those who have rented to a friend or family member, only 46%  still used a formal agreement.   

For those who opted for a formal arrangement, the most common provisions included: 

• A written tenancy agreement (69%) 

• Safety checks e.g. gas/electrical (54%) 

• Deposit protection (46%) 

• An inventory or condition report (41%) 

• Specialist landlord insurance (40%) 

Michael Dear, Landlord Insurance Product Lead at Hiscox, says:  

"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." 

"A formal document would have made things much easier" - the risk of renting informally 

Nearly one in five landlords (18%) have rented to someone they know without a formal agreement. Rachael W. is a landlord who experienced the risks of this approach first-hand in 2023, when she allowed a friend to stay in her property on an informal basis while it was up for sale. 

She shares: "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." 

With no formal agreement in place, the arrangement was based on mutual convenience. However, issues only became clear after the tenant moved out. 

Rachael continues: "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 Rachael facing unexpected repair costs and personal disappointment.  

She says: "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." 

Six essential steps for landlords renting to someone they know 

To help landlords avoid similar issues, Hiscox has compiled a checklist of key considerations – from conducting right to rent checks to ensuring you have the right level of insurance cover. 

1. Use a written tenancy agreement 

Even when renting to someone you trust, having a formal tenancy agreement can help prevent misunderstandings. A written contract clearly sets out responsibilities, rent terms, and rules, protecting both parties. 

2. Conduct safety checks 

Landlords are legally required to complete certain safety checks before a tenancy begins1, and should stay up to date with wider regulatory changes, including the Renters' Rights Act. 

3. Right to rent checks 

Renting to a friend or family member does not remove the requirement for landlords to carry out right-to-rent checks.2 Some landlords also complete referencing to ensure the necessary checks and documentation are in place.   

4. Protect the deposit 

Where a tenancy requires it, landlords must place a tenant's deposit in a government-approved scheme within the required timeframe. This typically applies to most private residential tenancies, including when renting to friends or family. Doing so helps protect both parties and ensures compliance with legal requirements.3 

5. Carry out an inventory 

Documenting the property's condition before the tenant moves is important. A detailed inventory, including photos, can reduce disputes over damage or missing items at the end of the tenancy. 

6. Check your insurance 

Check your landlord insurance adequately covers both your property and rental activity. Some insurers may outline additional conditions during a tenancy. 

How one landlord protected their property and friendship with a formal tenancy agreement 

Rachael also took a formal approach, renting her property to a colleague and her partner in 2016. 

"I had rented to strangers before, but when the property came up for renewal, a friend from work asked if she and her husband could view it," she says. 

To ensure clarity, Rachael formalised the agreement with written terms and defined responsibilities: 

"We downloaded a six-month Assured Shorthold Tenancy (AST) and added a clause to have an end-of-tenancy clean. The agreement clearly outlined which bills the tenant was responsible for and when rent reviews would take place. We also paid for credit checks and referrals." 

The tenancy lasted 18 months without issue, and Rachael believes this structure was key: "Having everything set out from the start helped protect both the property and the friendship." 

Michael Dear, Landlord insurance product lead at Hiscox, says: 

'Renting to friends or family may feel convenient, but it can quickly lead to misunderstandings, property damage, or disputes if arrangements aren't formalised. Even with people you trust, having a proper tenancy agreement in place is essential. 

'Clear contracts set expectations around rent, responsibilities, and property care, providing landlords with a concrete reference if issues arise. Combined with safety checks and documentation, this approach can help protect both your property and your personal relationships, ensuring the tenancy runs as smoothly as possible.' 

This research forms part of a wider Hiscox study exploring the risks and considerations of renting to friends or family. The full study is available here: https://www.hiscox.co.uk/landlords-blog/casual-renting-risks