By Hannah Ricci
The buy-to-let market may have lost much of its shine over the past four years but there are still long-term profit opportunities for savvy landlords.
While the vast majority of tenancy agreements are without hassle, it only takes an awkward tenant or negligent landlord for relations to breakdown and turn into a headache for either party. Although both tenant and landlord have contractual responsibilities, usually under an Assured Shorthold Tenancy (AST), it is landlords who are set to lose out financially if tenants turn rogue.
“The key to avoiding nightmare situations is to self-manage your portfolio,” advises James Davis, CEO of UPAD.co.uk and an experienced landlord. “Tenants are your clients so it is imperative to keep up good communication and frequently inspect the property so you can nip any problems in the bud before they get out of hand.”
It is also crucial to protect yourself and the tenant by registering their deposit with a deposit protection scheme. “Failure to do this will mean that if things do go wrong, you cannot give the tenant a ‘Section 21 Notice to Quit’ to regain possession of a property at the end of the AST,” explains Nitej Davda, an associate at law firm, Cripps Harries Hall. “By not registering the deposit you also give the tenant the right to bring a claim against you, which can result in a fine of up to three times the size of the deposit.”
However, if you do fulfill all of your landlord responsibilities and problems still arise, what can do you if…
Tenant refuses to pay rent
Set yourself a monthly reminder and contact the tenant immediately if the rent doesn’t arrive on time. “Find out what the problem is and try to figure out an amicable solution,” advises Davis. “If financial difficulty or redundancy is the issue, try restructuring the rent. If there is three months remaining on a £1,000 a month rental agreement for example, it might be worth accepting £800 a month rather than nothing at all and the cost and hassle of eviction proceedings which can take up to three months.”
If a solution cannot be reached, the landlord can take legal action. “If this happens before the fixed term is up, you must serve the tenants with a written Section 8 Notice specifying your grounds for regaining early possession,” explains Davada. A Section 8 Notice differs from Section 21 Notice in that it is served when a landlord wants to regain possession of a property during the fixed term of an AST. A Section 21 Notice can only be used for regaining possession at the end of a tenancy agreement.
“You must then wait two weeks before applying to the court for a possession order, and usually a further six weeks for a court date,” adds Davada.
Discretion lies with the court to decide the outcome of the possession order. If it is granted, tenants will be ordered to vacate in 14 days, or up to 42 days on the grounds of hardship if the tenants are elderly or include young children, for example.
Tenant damages the property
Regular inspections will keep you aware of the upkeep of the property and enable you to act upon any problems promptly. If it is a one-off issue, discuss with the tenant for them to pay compensation to cover costs of repair or replacement. However, if problems persist or they refuse to pay, you can take legal action.
“Under the terms of an AST, the tenant is required to keep the interior of the property in good condition, including walls, carpets and furniture,” explains Davada. “If they fail to do so and you want the tenants out, you can bring an order for possession under several grounds of Section 8. The process is the same as with rent arrears and the landlord must wait two weeks after issuing the notice to tenants before proceeding to court for the possession order.”
Tenant leaves without notice
A tenant doing a moonlight flit with no notice is one of the most frustrating outcomes, particularly if there is no way of contacting them. “In this case you really have to consider whether it is worth pursuing,” advises Davis. “If there is only one month remaining on the agreement, or the tenant obviously has no money, there is little point in going to the small claims court.”
If a tenant leaves during the fixed period of the AST, they are still liable to pay the remaining months rent and you are not obliged to find a new tenant. However, as you cannot recover loses twice, weigh up the time and cost involved to pursue the rogue tenant through the courts or to simply cut your loses; terminate the agreement and find a new tenant.
Tenant is growing or selling drugs from the property
Drug issues can vary widely in severity from the tenant growing a small amount of marijuana for personal use to the property being used for a cannabis factory or as a base for dealing hard drugs and organised crime.
“The key point to remember is that if you tolerate criminal activity you are guilty of a criminal offence,” explains Davada. “And if you take rent you are seen as benefitting from the proceeds of crime, which means the police or Crown Prosecution Service can recover costs from you.”
So report any criminal activity to the police as soon as you discover it and serve a notice to claim possession under Section 8, stating Ground 14 of using the property for illegal or immoral activities. “Unlike with other grounds, you do not need to wait for two weeks for the notice to expire before proceeding to court,” adds Davada.
Tenant neglects cleaning leading to a pest infestation
As with damage to the property, failure to keep the property clean and tidy is a breach of the AST. Regular inspections help to prevent this kind of problem before it occurs. If rubbish is overflowing and food is left on worktops, talk to your tenants about cleaning up their act. A pest problem is not good for the tenant or landlord.
“If uncleanliness has lead to a mice or rat problem, it is the tenants responsibility to rectify the issue and cover costs such as calling in pest control,” says Davis. “However, as a gesture of goodwill, you might want to cover the cost initially but warn that the tenant will be liable if further call outs are required.”
If problems persist and you are not happy with the care and upkeep of the property, you can once again bring an order for possession under several grounds of Section 8 of the AST. The process is the same as with other non-illegal breaches and the landlord must wait two weeks after issuing the written notice before proceeding to court for the possession order.
This article was written by Hannah Ricci and originally published on money.aol