In our weekly series, readers can email in with a financial dilemma and enter the Money Moral Maze.
Are your friends racking up big drinks tabs and then trying to split the bill equally. Is your partner overspending on your joint account? No matter your dilemma, email in anonymously, and i‘s money and business team will do our best to answer. This week’s dilemma can be found below – email us at money@inews.co.uk with yours.
The dilemma
My 23-year-old son is moving into London this summer after finishing his university degree. He’s got a job lined up on a graduate scheme, which pays OK.
We live in Essex but have a two-bed flat in London that my wife and I lived in in the 1990s that we have rented out.
When the current lease ends in August, my son would like to move in with his friend.
Currently, I think the market rate for the flat is probably £1,800, possibly more. The current tenants paid a little under this, but they had been there a long time.
My son has suggested that he and his friend would pay £1,200, but though I’m happy to rent it for a little less than we would get on the open market, this feels very low. Am I being unfair by suggesting somewhere in the middle. Perhaps £1,500 for the pair of them?
Callum Mason, i’s Acting Deputy Money Editor, responds
I suspect that you’re right that your flat could be let out for well above the £1,200 mark that your son has suggested. I also think he’d be exceptionally lucky to find anything at all for £600 each, bar a large house-share in an outer borough.
However, it is also the case that – if you have owned the home since the 1990s – you were able to buy the property in much more favourable economic conditions. Unless you got an initial mortgage on a very long term, I’d also assume you have paid off the loan on the flat, and so your expenses on it will be fairly minimal.
What you have not suggested here is charging your son’s friend more to cover the extra rent – which I think is good. As a renter living in London, this is something I have come across before when encountering people who have parents that own flats, and it generally seems quite unfair.
Ultimately though, you are perhaps best looking at what the extra £300 a month would give you, if you charged your son and his friend £1,500 rather than £1,200. How important is that money? Are you set for a comfortable life and retirement anyway?
Would you later be using the extra cash to help your son buy his own home? If so, perhaps he would be better seeing it now in the early stages of his career?
This is of course a choice for you to make as a family based on your own personal circumstances, though perhaps a mark of closer to £1,200 is fair, if you can afford to offer the flat up at this level or similar.