The tenant-owner relationship has always been viewed as potentially volatile. Although Buy-To-Let can be an extremely lucrative investment plan for many, it involves a lot of hard work and is time consuming. Not to mention, the amount of paperwork and legalities that must be considered regarding deposits and tenant security. It is an unfortunate truth that ‘bad tenants’ are sometimes an integral part of the complex maze of buy-to-let.
A survey conducted by the National Association of Landlords in August this year reported that 43% of UK landlords are owed back rent, representing a whopping 400,000 private landlords who don’t know how to get their money back. . The objective here is to identify the 6 most well-known tenants and give some advice on how to minimize the risk of being exposed to such tenants.
- The socialites: These are perhaps the most common type of nightmare tenants due to the increase in college-going students over the last decade. Although not just limited to students, there are party animals throughout the generations. These are perhaps the most difficult type of tenant to identify at the first meeting and are quite difficult to control unless complaints are made to the council. If you are involved in renting student accommodation, you should understand that it is your responsibility as a landlord to act on any noise complaints from neighbors or nearby houses. Otherwise, the town hall has the right to take over the management of the property. The best way to minimize this risk is to write a 6-month preliminary agreement, after which you can review the contract.
- Bad professional tenants: This type of tenant has recently emerged as a serious problem in the UK. These are a group of people who intentionally move from one rental property to another in order to exploit the legal system. After a few months of incurring rent arrears, they move on leaving a trail of destruction behind them. Not only do they put the owner in financial difficulty, but they usually leave the property severely damaged in one way or another. In essence, they lead a gypsy-style life and can make a living from it. The main difficulty with these tenants is that they rarely walk away with a black mark on their name, no matter how much they owe. This is because County Court Judgments (CCJs) are only recorded if the landlord takes action to enforce payment, and such tenants generally do not have the funds to make the claim worthwhile. It’s worth chasing them. It is strongly recommended that you do a complete and thorough reference check on a potential tenant before signing a contract with them. There are management companies available that charge a one-time reference check fee to the potential tenant to perform extensive reference checks and until these checks are clear, the tenant cannot move into their property.
- The defaulters: These can turn out to be the most difficult type of tenant, giving excuse after excuse as to why they can’t meet that month’s payment. Now, if it turns out to be only “unique,” then it’s excusable, although it can turn into a repeating cycle of different excuses each month. The problem with these tenants, aside from the obvious lack of money for the landlord, is that they are a nightmare to evict. This is because every excuse they make has to be investigated by the court before it can be dismissed. Therefore, by the time the tenant is finally evicted, the landlord may have arrears of up to 6 months.
- Animal lovers: Following an ITV Tonight show in August 2010 that exposed the worst tenants, owners have become increasingly wary of pet lovers. The show featured a tenant who kept racing pigeons as pets and the owner eventually found the abandoned house littered with bird feces and feathers all over the house. Most landlords now ban pets on their property, but this doesn’t stop some from secretly bringing their pets anyway. In an attempt to avoid this, ensure that you or the management company you deal with make regular visits to the property, usually quarterly. These have to be arranged with the tenant, but even if your pet is removed from the property, warning signs will usually remain, for example pet food.
- The extended family: This is perhaps a rather misleading title. Some tenants originally come together with their landlord to rent a property alone, or sometimes with a partner. Although, once they move in, the neighbors start noticing that different people come in and out of the house on a daily basis. Upon further investigation, it emerges that the tenant has also allowed family and friends to live on the property. As a result, the house wears out and damages much faster, especially the carpets and the kitchen area.
- The bureaucrats: Now, it’s great when a tenant arrives excited about following the rules exactly, as it signals to the landlord that they are likely to take care of the property to avoid being charged. However, when it comes to a tenant moving out, a somewhat volatile situation can arise if part of the tenant’s deposit is deducted for small amounts of damage to the entire property. The bureaucrat will no doubt reject reductions to his deposit and some feel the need to take the case to adjudication through the Deposit Protection Service. To avoid this eventuality, always have a written lease that details the rights of both you, the landlord, and the tenant.
How to avoid the celebration of the nightmare?
Most of the worst tenants can seem perfectly reasonable on your first meeting with them. Therefore, it is important to properly investigate the individual in all aspects of his life, his income, his current tenure (if any), his daily/weekly spending habits, and his social life (to some extent). Therefore, a great tip is to meet the tenant for an informal chat inside the tenant’s current accommodation. That way, you can get to know the person while also seeing how the current household has treated him. Be sure to get references from both your current landlord and his employer to get a better idea of ββhis lifestyle. Asking for a bondsman is also recommended, a family member or close friend is suitable. Lastly, it’s also probably wise to consider renters insurance coverage, as it will usually pay for itself if the renter doesn’t.
Some important contact information that may also be useful:
- Landlord Accreditation Schemes β These are voluntary schemes that are designed to help the landlord run a successful business, provide tenants with safer, higher quality accommodation and reduce the need for intervention by local authorities. These are available for checks on the person managing the property, checks on the condition of the property itself, and some will also check your previous rental property management history. Your local council will have more information on this.
- The Rent Assessment Committee (RAC) – This is an independent legal body that offers a fair way to resolve rent disputes without going to court.
- Landlord Action β This is a UK based organization that is designed to help landlords and property professionals deal with problem tenants.
All experienced owners will know that wear and tear is an integral part of renting your property; it is simply making sure that you are realistic in your expectations. As long as you’re properly insured and keep a detailed, up-to-date inventory, you’ll be able to correctly establish basic wear and tear for more serious damage. Finally, and perhaps most importantly, stay in regular communication with your management company, who are effectively your backbone in the leasing world.