Dave,
Provided you are paying rent as part of a formal rent agreement with your freind, there is no need to be unduly worried, I would suggest you do not mention that your friend is in fact your landlord, all you would need to show is a bona fida rental agreement with your landlord, and that you have adequate accomodation for your girl to live with you, and your landlord is agreeable to your girl living there, this would then represent no problem.
The ECO's are well aware of UK property costs, and with the credit crunch and mortgages being so unnatractive these days, its obvious so many will now be renting and looking for lower housing costs, its better to rent in something you can afford than strap yourself up to the top on mortgages that only bring misery.
BEST OF LUCK
