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Landlord Headaches and How to Solve Them PART ONE
Recommended by Tony Booth
- Landlord Headaches and How To Solve Them PART TWO
There are often simple remedies to lifes problems, though we may not always realise what they are until its too late and that can be expensive, if you just happen to be a landlord. Read PART 2 here ...
Landlords and buy-to-let investors operating in the UK can save themselves time and money, and prevent problems developing into major headaches, by following a few simple tips:
1. Discord Amongst Joint Tenants
When a group of friends or colleagues decide to share a property, it is usually to help offset the rent burden. By sharing the cost, they each get to live in a more spacious property or one that is in the best location for their particular needs. Unfortunately, they invariably assume their individual circumstances will remain the same throughout the period of tenancy – when in reality, things tend to change. It might be that one or more amongst the group have an irreconcilable argument or that one of the group become emotionally involved with another person outside the tenant house share.
In any event, it is not uncommon for one of the group to want to leave the property before the natural end of tenancy is reached. This creates a tricky dilemma for the vacating tenant, the tenants that remain AND for the landlord, because the resulting legal situation is not as straightforward as most sharers seem to think.
The tenant that leaves early is rarely aware that he or she can be made liable for the ongoing rent obligation through to the end of the pre-agreed tenancy term, whether or not they actually continue living in the property.
The remaining tenant group can also be made liable for the vacated tenant’s share of the rent, if the vacated tenant refuses to make payments.
The landlord does not have to approve a replacement tenant (which is a resolve most remaining joint-tenants suggest), because unless that person is referenced and confirmed acceptable, the landlord would be forced into having an ‘unknown quantity’ living in his property and someone he himself would not necessarily have chosen as a tenant.
And the problems don’t end there. There will also be issues over the security deposit paid at the outset. The vacating tenant will undoubtedly want his or her portion repaid, but that would leave the remaining tenants under-deposited or leave the landlord with a greatly reduced amount held as security against damages and/or future rent arrears.
The answer to this all too common scenario is to ensure the first tenancy is legally ended. This can be achieved by all the joint-tenants offering voluntary surrender and by the landlord accepting early termination with no financial penalty. With the first tenancy ended (and the tenant leaving that wanted to leave), a new tenancy can be created with the remaining group plus a replacement they might suggest. The replacement tenant can be referenced in the usual way before a new tenancy is granted and, of course, a new deposit collected as security.
By ending one tenancy and starting a new one - the landlord, the tenants and the vacating tenant are all protected and the legal situation and rent obligations are simplified.
Read More About Joint Tenancies
- Shared Tenancies are Not for the Feint Hearted
When friends or work colleagues decide it may be a good idea to pool their resources and rent a property together, it almost always proves to be a recipe for disaster both for the tenants and for their landlords...
2. The Management of Rent Arrears
Cash flow is king to a landlord, so any interruption to it has the potential of inflicting a fatal blow to annual income. Rent arrears are the bane of the buy-to-let investor’s life and something to be avoided if at all possible. Of course, any and all tenancies can suffer from a rent arrear period, regardless of how many pre-tenancy checks you might make. Like us all, tenants can suffer financial hardship, sometimes through no fault of their own, and in turn their problems can have devastating knock-on effects on their landlords.
It is how rent arrears are managed that is important here – and some landlords provide their tenants with far too much time to sort their problems out. This unfortunately often results in the size of debt rising to unmanageable levels. Sadly, it is often the tougher and faster approach towards dealing with tenants’ rent arrears that leads to a better outcome (for the landlord at least).
Much depends on the existing relationship between landlord and their tenant(s). In some cases, the landlord may feel he knows the tenant(s) well enough to predict they will be able to resolve their financial problems in the short term, given a little leeway. However, most landlords should take a more expedient route and start managing the debt from the first day it arises.
Landlords that are uncertain how to proceed might wish to consider hiring a professional agency to take over the management of the rent arrear situation. This has the benefit of detaching the landlord from any direct confrontation with his tenant, while the debt itself is dealt with in a fast, proper and legal manner. The landlord doesn’t need to concern himself about complex form-filling, county court possession procedures or the eviction process. He merely has to wait for the process to complete, whereupon he will have the arrears paid and/or have his property delivered back empty for re-letting to alternative tenants.
This type of service can cost between £100 to £200 or more, depending on the complexity of the case and how much input is required by the agency employed. There are a number that now provide set-fee regimes, which is useful for those that like to know exactly what the maximum expense is likely to be. A quick scout around the Internet should provide you with a contact list of debt recovery agencies, if this is something that interests you.
3. Issuing Notice to Tenants in England & Wales
While the Section 21 Notice issued to tenants seems at first glance to be very simple and straightforward, it actually causes a number of problems for landlords. The biggest of these involves the entry of appropriate dates. The dates entered MUST BE correct, otherwise the Notice will be deemed invalid in a court of law and any subsequent possession claim is likely to be thrown out.
The typical scenario involves a situation where two months Notice is necessary under the requirements of the Housing Act. The tenant must be provided with two full rental period months, not just two calendar months. It can therefore be understood that in some circumstances, two months Notice can involve having to give almost three months Notice, depending on when the Notice itself is completed and issued. Failing to get this requirement right can delay or, at worst, prematurely stop a possession claim from proceeding any further.
The potential for novice and even more experienced landlords and agents to get this aspect of the process wrong is huge. An answer to the problem lies in a little-known but clever ‘saving-clause’ entry. A properly and professionally drafted saving-clause can eliminate the necessity to write in any date entries on the Notice form, because a formula takes the place of the normal requirement for calendar dates.
When buying-in Section 21 Notice forms, check and confirm they include such a formula, as this is far more preferable than having to work out the complex date entries.
4. Easy Maintenance Before a New Tenancy Begins
Once a tenancy ends, it is vital to present the property in the best possible light to potential new tenants coming to view it. The faster viewings can be undertaken, the better, because voids (empty periods) are costly and reduce the overall annual profit a property can achieve.
Invariably, vacating tenants will have caused some damage to the fabric of the internal décor. This may just be a few scuffs on the walls or a few tears to wallpaper as furniture was moved in or out of the dwelling, but regardless of how it might have been caused, any signs of disrepair will be off-putting to anyone that subsequently comes to view the place.
The simple but effective answer here is to redecorate between tenancies, though this may seem excessively expensive and time consuming when an entire dwelling is wallpapered. So, obviously, it is preferable not to use wallpaper in the first place. Painting the walls of a property is both cost and time-effective. It can be undertaken quickly and easily and, in most cases, any leftover paint can be kept for future use to paint over minor scuffmarks when tenants vacate.
5. Reduce the Necessity and Expense of Maintaining a Garden
Let properties purchased with garden areas can be the root cause of problems (no pun intended), unless care is taken at the outset to make maintenance much easier and cheaper over time. Grassed areas need constant attention, soil borders need weeding and flower beds need clearing and re-planting. All of this costs time or money while the property lies empty, because leaving it will only result in a dishevelled first impression when viewings take place. And when tenants are occupying the property, you take a chance on them having the necessary ‘green-fingers’ to cope with garden maintenance. If they don’t have this quality and lack any interest in keeping the garden neat and tidy, your property will be returned resembling a jungle at the end of the tenancy period.
Hard landscaping is the easiest answer to this thorny (there I go again) issue. By employing neat and hard wearing paving and other easy to care for materials, the difficult to maintain organic garden can be transformed into a chic, stylish and practical patio area that your tenants can enjoy.
That said, various local authorities are currently considering the impact residential hard landscaping has on rainwater drainage systems – and some councils have already included new projects to pave garden areas within the local planning regime. As a result, landlords in some regions may require planning consent before they can undertake any substantial changes to their let-property’s garden area. Check with your own local authority before proceeding with this type of project, regardless of size.