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How to Reduce the Risk of inheriting a ‘Problem Tenant’

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Every now and again a TV programme is made that exposes the truly horrifying nature of some people and how they choose to act. Exposing ‘slum Landlords’ or ‘tenants from hell’ is salacious but popular TV and to some extent or another many of us have a guilty secret when it comes to cheap TV!

The bad news is that sometimes a landlord will find themselves with their very own ‘tenant from hell’.

The good news is that this phenomenon is much less common than you might think from watching the telly – and with some sensible precautions the risk can be greatly reduced.

Here are five ways to help reduce the risk of letting to a problem tenant.

1: Landlord’s and Employer’s References. If your tenant is unable to provide good references from an employer and former landlord, it is not a good start. There are some exceptions of course, but most of us are able to get someone of standing to vouch for us. If not, why not. Good personal references go a long way. Of course, you need to trust the references you get, so make it clear you intend to contact the referees to corroborate. It is simply a process, so no-one should get offended by it.

2: Personal References. Personal references from longstanding friends or family are, of course, subjective. That said, most people will think twice before writing a formal glowing reference that they know is highly misleading. Again, if you have a tenant that cannot find anyone to vouch for their good character, alarm bells should start to ring.

3: Credit Check. Like most professional letting agents, Duncan Yeardley undertake thorough credit checks on potential tenants. This should highlight previous County Court Judgements (CCJs) or non-payment of debts. A credit history (good or bad) is no guarantee of future behaviour, of course, but it helps to build a picture.

4: Take a Deposit and/or Request a Guarantor. Once a tenant stops paying rent, either because of a dispute or simply because they are trying to take advantage of you, it can become very expensive very quickly. In addition to the lost monthly income, most landlord still have a mortgage to pay and other bills such as building’s insurance and gas safety certificates. There is also the costs associated with going to court. Make sure you take a sufficient surety deposit and in addition, at least one month’s rent in advance. If the tenant has a weak financial history (perhaps they are just young and in vulnerable employ) ask if their parents or employer will stand as guarantor. All deposits now need to be lodged in accordance with the Government’s Deposit Guarantee Schemes.

5: Document Everything. Make sure that you use a proper tenancy agreement and do not allow tenants keys until such time as the agreement has been signed and you have rent and rent deposits secured. In England and Wales most new residential tenancies are Assured Shorthold tenancies. The tenant has several legal rights relating to his/her occupation as does the Landlord. In addition, a detailed list of contractual rights and obligations covering everything from collection and payment of rent through to decoration and maintenance should be clearly defined in the tenancy. Most tenancies will have an inventory and/or schedule of condition attached. This should be signed by both the Landlord / agent and the tenant at the beginning and end of the tenancy.

If you take these reasonable precautions you will reduce the potential for a genuine dispute through an honest misunderstanding and protect yourself to a large extent from the rogue tenant looking to exploit their rights for financial gain.

Finally, be firm – but fair. As with your neighbours, a smile and a kind word can go a long way to keeping things on an even and civil footing. But remember, you are effectively running a business and you should expect to keep to your obligations as a Landlord as much as you require your tenants’ to keep to theirs. Communicate clearly and evidence anything you agree just in case you are required to prove it later. Most of all – take professional advice from the outset.

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