The 6 Signs To Look Out For In A Nightmare Tenant
So despite the financial meltdown you’ve managed to secure a commercial mortgage and have gone into the buy-to-let market, all you need now is a decent tenant, but is this where all the problems start?
A Survey taken by the National Landlords Association this year has reported that 43% UK private landlords are owed rent, that’s an incredible 400,000 landlords that are unsure how to get their money back. Landlords and tenants have always had a volatile relationship. Buy to let investments can be lucrative for many, but it does involve a lot of hard work and time consuming for each and every landlord. It is unfortunate that there are “Bad Tenants” and is part of the bigger picture when looking at investing in property. The aim here is to identify the 6 worst types of tenants and how to minimise the impact of non paying tenants.
The Socialites: What type of tenant would you expect from this term? Normally the worst, these tenants have a tendency of being complete party animals; they are normally young just left 6th form or college without a care in the world, these students can be from low income to high income families. So what are your responsibilities as a landlord? Well you are relying on the students to behave themselves in your property, as one of the main concerns when renting out to students is the noise control, if your neighbours make complaints to the local council about the noise in certain instances they can take over the management of your property, the best way to minimize this risk is to let the students know they are on a short lease, say 6 months and if all is ok at the end of the six months you will renew their contract.
The Professional Bad Tenant: These types of tenant are exploiting the UK legal system, by moving from one property to another and leaving total destruction behind them, they will utilise this system to its fullest extent. The landlord would have given them say a 6 month tenancy agreement, if at all any form of paperwork, they will start coming up with excuses of why the rent is late and promise to pay it off within a certain period, which they never do, by the time the landlord gets round to the property they normally would be 3 months in arrears if not more and has also the cost of replacing the items that have been removed. What can a landlord do about this? Well they can use a management company to do reference checks on the potential tenant, the is a cost to this but is well worth it, the management company will not allow the tenant to move into the property until all references are back and they are happy with them. Alternatively if you have already rented the property out and your tenants are in arrears then you can apply to the local court for a County Court Judgement (CCJ) against the tenant, but you have to way up whether or not it is worth it as there are costs involved doing this and the chances are the tenants do not have a means of repaying the arrears.
The Late Payers: Landlords hate this term because it will put them in jeopardy of losing their property unless they have sufficient capital in the background. Tenants of this type can be the most difficult to pay on time, they come up with excuse after excuse, now there could be a legitimate reason for a one off missed payment but the landlord will have to keep an eye on this situation as before he knows it 6 months could have passed and it could take time to evict these tenants. Landlords have to put there case before the courts for them to make a ruling on an eviction notice.
The animal lovers: Recently shown on ITV a documentary about landlords and their tenants pets, it showed that one of the tenants had racing pigeons in the landlords home, when he came around to the property to check everything was ok, the tenant had abandoned the property and his pigeons had left the home in such a state that the landlord had to get expert cleaners into the property to clear the mess up at his own cost. Most landlords in the UK are now stating that they do not want potential tenants to have pets in their homes, but what is going to stop a tenant from sneaking a pet or two in once moved in? It is down to the landlord or management company to do regular checks on the property at least quarterly, you do have to get permission from the tenant to gain excess, but there are usually tale tale signs that pets are in the home, check the garden and see if any faeces are there, check bins to see if pet food packets or tins are in them, you can usually get a feeling if there are pets in the house.
The extended family: This title can be a bit misleading. When a tenant arranges a meeting with the potential landlord he or she might go on their own, or with their partner. Once moved in, your local neighbours start to notice different types of people entering the property on a daily basis. You investigate and it emerges that the tenant has allowed family and friends to live in the property as well; as a result the property in question will become damaged and worn much quicker than normal.
The bureaucrat: It always good to get a tenant that understands that the property they are about to rent should be in the same state as when they took it over, but not all tenants understand that they may not get back their full deposit from the Deposit Protection Service, this could be down to something as simple as making sure that both parties agreed to an inventory check list and a Assured Hold Tenancy Agreement prior to taking the property over, the latter is a binding contract and has all the terms and conditions within it, so make sure you understand the small print. This will avoid confusion when the time comes to move on.
How to avoid the nightmare tenant? This sounds like quad mire, but if you do things right at the start you can overcome lots of obstacles. Therefore it is always important that you follow a list of criteria before you say yes to a tenant. Check the individual’s life style, their income, their current tenancy (if applicable) and their daily / weekly shopping habits to some extent. A great bit of advice would be to meet with the potential tenant for an informal chat preferably at their current residence, you would get some idea of how they where treating their current accommodation, this way you can get to know the potential tenant and you can observe them in their own environment. Ensure that you obtain references from both their employers and landlord or even their existing mortgage company as they may have sold a property and are moving into rented accommodation for the first time. Finally you could look at taking out some form of rental insurance cover.
Some important contact information that may also be of use:
- The Rent Assessment Committee (RAC) – This is an independent legal body that offers a fair way of settling rent disputes without going to court
- Landlord Action – This is a UK based organization which is designed to help landlords and property professionals to deal with problem tenants.
- Landlord Accreditation Schemes – These are voluntary schemes which are designed to help landlord to operate a successful business, provide tenants with safer, higher-quality accommodation and reduce the need for intervention from local authorities. These are available for checks on the individual managing the property, checks on the condition of the property itself and some will also check your past record of managing rented property. Your local council will have more information on this.
As a professional landlord you must always keep up to date with what is going on in this market place, always keep in contact with your local letting agent or the management company that has let the property out on your behalf as they will help and guide you in the right direction. Make sure that you have an up to date inventory and list down every single thing down on it even if it seems petty, this can save you time and money when it comes to signing off the existing tenant.
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