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I have a very close friend and we've agreed that she will move into the spare bedroom of my flat - viewed as her being an equal resident with me in a shared accommodation, not as a lodger in my spare bedroom.

However, I do not wish to charge her rent. To her, a year's rent is half her net pay. To me it is pocket change, an amount I could spend on a whim. I would feel terrible charging her such a significant sum when to me it would mean so little. I would prefer her to put that money aside for a house deposit so that if she ever chose to leave this arrangement she might be able to afford the deposit on a shared ownership scheme (staircased rent to buy) and then get a foot on the property ladder, if she so wished.

Should I still create a tenancy contract in this case? Is there any benefit to this for either of us if I don't intend to charge rent?

(I live in a leasehold flat with no mortgage. The leasehold agreement specifically permits subletting).

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    Consider what makes her legally a tenant vs. a guest, and if in your country being a tenant gives her rights, such as you needing to go through formal eviction to throw her out. That would be my concern from the USA perspective. I understand she is a dear friend and you can't even think of throwing her out, but you are asking on a law QA site. – Damila Jan 27 at 20:03
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    You've added the UK tag, but what jurisdiction is this in? England and Wales, Scotland, or Northern Ireland. There will be different law in each one. – bdsl Feb 4 at 22:55
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    If you do decide to have a contract you must charge her some rent - 'consideration' - or the contract could be invalid. But it need only be a 'peppercorn rent' or low, nominal, insignificant amount. – Lag Feb 5 at 8:08
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I am assuming you are in England and Wales. Other parts of the UK have separate legal systems, so the below wouldn't necessarily apply.

I don't believe it's possible to have a tenancy agreement without charging rent. Shelter says that rent is one of the hallmarks of a tenancy as defined by the House of Lords judgement Street v Mountford. There are other hallmarks and your friend should take advice if she wants to be sure that she is genuinely going to be a tenant.

You say that a year's rent is half your friend's net pay, but as a potential landlord and tenant you are free to negotiate rent at any level you choose. You could decide to charge rent at a rate of e.g. £1 per month, enough to buy an entire bag of peppercorns.

At such a low rent there would be no direct advantage to you in charging rent, but your friend might benefit from extra peace of mind and housing security because she would have some additional rights if there is ever a dispute between the two of you about the housing, or you decide to ask her to leave.

Citizens Advice has a guide to rights of subtenants who live with their landlord.

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So I understand you own your flat but there are stipulations in the leasehold against sub-letting, my first question is whether those can be challenged or waived on a case-by-case basis - who controls it? If a housing association then they might simply allow you it if you ask them.

My query legally would be that if your lease forbids sub-letting, does it allow you to have a tenancy agreement? Surely you ARE sub-letting the moment you sign legal paperwork of any sort? Having a signed tenancy agreement may be useful if she needs to prove her address but ultimately the point of it is to protect the landlord and the tenant in terms of rent, damages, etc. It means you have to give notice if you'd like her to move out.

In your shoes I would simply invite her to live with me if we had the trust it wouldn't turn ugly - you have a fight and kick her out for instance. Or you develop a non-platonic relationship and break up, etc.

Does your leasehold allow you to allow someone to cohabit with you who is not family or your partner is the only other thing to check?

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  • This answer relies on a mis-reading of the question. OP states that sub-letting is permitted by their lease, not that it is forbidden. – AXH Mar 6 at 14:10

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