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Just checking: Is it you or the close friend who would not consider a contract or a lease? On the one hand 'hey ... we're buddies .. c'mon!' On the other hand, there are securities each of you hasn't got. Some might be relevant. I'm not questioning whether you trust each other, rather "we're making a survival and security-related agreement, so let's do it right at the beginning and at least have thought ahead toward possible unexpecteds"
As for my thoughts on the matter as it stands. Yup. Pipe outside. Fact that s/he's a close friend gives added reasons for either sticking to the rules regardless of owner notices on this or that day, or having jolly good talk, of moving somewhere else. Two of you operating on trust, therefore trust to be honoured.
Check also whether, because you're close friends, you might encounter further expectations. Eg to have guests sleep in your room from time to time, like after a party, etc.
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