Good Tenants, Bad Tenants… and Amateur Landlords
A recent report by a leading Insurance Company claims that one in seven tenants break the rules of their leasing agreements.
The most common offences include a failure to pay rent on time, smoking and keeping a pet; but perhaps of even more concern is that it is claimed that one in eleven (or almost 10%) of renters are living contract-free.
25% Failing to pay rent on time (or at all)
21% Smoking in the property
18% Keeping a pet in the property
17% Damaging or making alterations to the premises
16% Changing the locks
14% Caused disturbances or a nuisance to neighbouring properties
14% Sublet a room without notifying the landlord
13% Failed to clean accessible windows
12% Redecorated without permission
10% Failed to check smoke or carbon monoxide alarm
The most common sanctions for breaking tenancy rules include losing some or all of the deposit (52%), followed by having to pay for any damages (22%) and in some extreme cases, tenant evictions (4%). However, more than one in five (21%) tenants say that the landlord never found out about their misdemeanours.
This lack of transparency can hurt both the landlord and the tenant. The renter risks exploitation and even summary eviction if they do not have a binding agreement to protect them, whilst the landlord is exposed to potential misuse of the property and possibly even a sitting tenant who can’t easily be removed.
In a professional world, the tenant’s behaviour is defined and bound by their contract, and a good landlord will actively manage and nurture the relationship to protect their investment.
Any failures for both sides to act responsibly can be very expensive; for example, a separate report published last week highlighted the risks taken by landlords who don’t properly deal with repairs requests by inhibiting the ability to serve a section 21 notice.
So what should landlords (or their letting agents) do as a minimum? A few simple rules may help:
Ensure that this is appropriate, signed and dated. Writing your own contract will save some money, but may miss out important aspects – it is best to get proper advice, or employ a solicitor or letting agent to assist.
If you inspect as opposed to expect, it is much more likely that the tenant will follow the rules. Always ensure that you give the tenant fair warning of your intentions to visit the premises so as not to breach their right to privacy.
There are increasing legal requirements on both landlords and tenants, and ignorance will not be a suitable defence if something goes wrong!
Respond in a Timely Manner:
Living with broken or poorly working appliances can be very frustrating, particularly when the tenant is paying significant rent. How long would you put up with a hotel room where the lights or plumbing does not work? Therefore, you should deal as quickly as you can with requests from tenants for repairs and improvements, even if the answer is ‘no’.
Legal disputes can quickly get expensive, so the ability to discuss any issues openly and rationally may reduce the stress and potential cost. Remember that very few tenants set out to get themselves evicted.
See Both Sides:
You need to think of the property as a business investment and not as your home. Your tenants may have a different lifestyle and tastes to you, and are paying in hard cash for the right (with few guarantees and little or no financial return) of borrowing your property; also, don’t forget finding new tenants can be expensive so you may want to bend occasionally over the small stuff.
With average yields now at about 5% across the UK, taking the time to find a good tenant and looking after them properly (avoiding constant personnel changes and voids) may be the best investment you can make in your rental property.
Also, the legal requirements in relation to letting are now so onerous that having a professional manage your rental affairs might be the best solution in the medium term.