Whether you’re a seasoned property investor, someone venturing into buy to let for the first time or whether you’ve found yourself with a potential rental property somewhat ‘accidentally’ (after inheriting or moving out of it) I am sure you’ll have heard the stories related to “nightmare tenants”. While you can’t guarantee you won’t find yourself in a sticky situation with an awkward tenancy, there are definitely steps you can take to minimise the chances of something going wrong.
One of the big concerns for would-be landlords is; what if a tenant moves in, pays rent for a couple of months then stops paying?
Before starting a tenancy, carry out tenant screening – The best way to avoid being stuck with a non-paying tenant is by taking the right steps before entering into the tenancy and screen the tenant beforehand. It’s very important not to rush into letting someone sign a tenancy without adequate background checks. Prospective tenants might tell you what you want to hear. There’s definitely value in listening to your “gut” instinct when meeting prospective tenants but carrying out credit-checking and previous landlord/employer references further reduces risk by flagging up other issues. If a tenant does not meet the requirements of the credit and affordability checks then it’s not necessarily the end of the road. Depending on the reason (e.g. if they’ve moved to the UK recently so have less than 3 years credit history to check), you can request a guarantor to be added to the agreement who satisfies the screening process.
If rent payment stops, take swift action – If you’re unlucky enough to have a non-paying tenant it’s important you take swift action to bring the matter to a head before it gets out of control. In our experience, we would not advise waiting to see if the situation improves as the situation can drift out of control. A swift response will help end the tenancy sooner or reach an acceptable agreement with the tenant. I’d recommend doing the following:
- Contacting the tenant immediately to let them know the rent is not in.
- If after one week there has still not been a payment, regardless of the explanation from the tenant, arrange an inspection at the property and ideally meet the tenant if they can be there. This help you understand the situation up close and to assess the condition and circumstances at the property.
- Serve notice to end the tenancy if the rent is not in. This will take a few weeks to reach the end of the tenancy so gives the tenant time to clear their rent arrears. If they are unable to do so then you have the option to bring the tenancy to an end without the situation dragging on for months.
What about under the new Private Rented Tenancy (PRT)? – The mechanisms for evicting a tenant for non-payment of rent are much clearer than they were for Short Assured Tenancies (SAT). With a PRT, if the tenant has not paid rent then the landlord can give 28 days notice to bring the tenancy to an end. If the tenant does not vacate at the end of the notice period then the landlord can complete a straightforward application to the First Tier Tribunal (FTT – a much slicker way of dealing with private sector tenancies than through the cumbersome Sheriff Court) to evict the tenant on the following grounds;
Tenant has been in arrears for 3 or more consecutive months and;
- Mandatory – At a hearing the tenant owes the equivalent of at least one month’s rent & has been in arrears (for any amount) for a continuous period of 3 or more months
- Discretionary – At the hearing the tenant has been in arrears of rent for 3 or more consecutive months and it’s reasonable to grant the order
In summary – Minimise the chances of a non-paying tenant by investing the time up front to screen the tenants adequately.
If you are unlucky enough to find yourself with a non-paying tenant then respond quickly.
Under the new PRT regime it’s more straightforward to end the tenancy for grounds of non-payment of rent than it was previously.
For more information on our tenant screening processes, the new PRT agreement and for information on our award winning letting and property management service, just contact our office.