How to Avoid or Deal with Bad Tenants
Here at SMHQ Leeds we understand that many landlords have placed a large amount of their savings into their properties, if not all. Therefore, as a landlord your rental property is not just an essential form of income, but also a long-term investment. Having a bad tenant can a lot the handwork you have put into your property. It can also heavily disrupt your revenue stream and ruin the profitability of your investment. This blog has been written to give landlords a bit of advice on how to avoid/deal with bad tenants.
How to Avoid bad Tenants
Prevention is the best approach to dealing with potential problems. Spotting and avoiding bad tenants is much easier than evicting them. Here are just some of the steps you can take to avoid bad tenants.
1 – Remember it’s a Landlord’s Market
In most areas of the country, it’s a landlord’s market right now. It’s been that way for a while, and it looks as if it will stay like that. With rising house prices and a housing shortage there are a lot of people looking for somewhere to rent. So, don’t take the first tenant to come along, keep your options open so you can pick who you think will be best tenant.
2 – Referencing
You want to know who is moving into your property and build up a picture of that person. The few minutes you spent showing them around the property isn’t enough to properly do this . Getting good references are key to this. Get at least two, one from a previous landlord and one from and employer
If someone can’t provide a reference from a previous landlord then that can be a big red flag. It can mean that a previous landlord won’t provide one because they have nothing positive to say or that the potential tenant knows that they won’t be able to get a good one. However, there can be a perfectly reasonable explanation to why someone can’t get a landlord’s reference. They could be young and just moved out of their parents, or maybe they simply have never had to rent before. Use your judgement to think about this one. If you have anyway of contact the previous landlord try that, they may be willing to say more in and informal conversation over the phone.
Any employer will provide a reference for an employee. So, if a potential tenant can’t get one then it means they don’t have and employer. It’s that simple so don’t believe the excuses someone might make. If they aren’t working, how can they afford to pay rent?
3 – Financial Checks
Following on from above, a landlord needs to know how and if a tenant can pay. A credit check can tell you a lot about your potential tenant. Just make sure you get their permission first
They Want to Pay in Cash
Someone who want to pay in cash, could be harbouring criminal intentions. Many criminals will want to pay in cash a few months up-front. As convenient as this may seem it could be someone avoiding a paper trail. They also be planning on using the property for criminal activity and don’t want you to have an excuse to visit. However, they could just be looking to take attention away from their poor history as a tenant. A large upfront payment might be designed to make you feel more at ease.
They Have a Poor Financial/Credit History
If someone has a poor financial/credit history, it’s a good indication that they struggle to manage their finances. Someone who can’t manage their finances is more likely to miss rent payments.
4 – Always take a full deposit
A full deposit gives a landlord a level of security, but it also shows that the tenant has the means to pay for the rent. A tenant asking to pay a deposit in installments could mean that they can’t afford the tenancy or something more sinister. Also, a deposit paid in instalments adds complications to following the tenants deposit legislation. See this post by Landlord Law Blog to read more on this.
How to Deal with Bad Tenants
OK, so the part above doesn’t help because you already have bad tenants. So, what do we do now?
1- Try to Work it Out with Them
Depending on the issue, you could try talking to your tenant and working with them. For instance, is a tenant that usually pays rent on time falling behind? If they are facing some financial difficulties as we all can, it might be better to work with them on a different payment method while they get their finances in order. If you remove them from your property you might be replacing an otherwise great tenant with a worse one.
2- Understand your Obligations as a Landlord
If you are thinking about pursuing the route of a Section 21 or Section 8, then you need to make sure that you are also standing on the right side of the law. If the tenant has proof that you as a landlord haven’t been upholding your end of the agreement, then you could struggle in court to remove them from the property. This handy guide from Which can tell you your obligations as a landlord
3- Letters and Documentation
Make sure you document all correspondence with the tenant and give them receipts when they pay their rent. This is one of the best ways to show that you have taken a fair and legal approach to being a landlord.
4- Serving a Section 21 or Section 8 on Bad Tenants
Section 21 – Notice of Possession
This means that you are taking back possession of your property at the end of a tenancy agreement, or are triggering and agreed break clause. A section 21 can be easier to use as it is allowing the tenancy to come to its natural end, and more importantly you don’t need a reason to a valid Section 21 notice.
Section 8 – Notice of Eviction
This means that you have grounds for eviction, for instance the tenant may have broken the tenancy agreement by not paying rent, damaging the property or is causing a nuisance. By serving a section 8 you can end the tenancy before the fix term. A tenant can dispute a Section 8 and take it you court, which is where you will need to provide evidence.
If the fix term on the tenancy is coming to an end soon it might be better to serve a section 21, however you can serve both at the same time.