It is no secret that many landlords are now considering offloading their rental properties as they have just about had enough. Many have invested their hard-earned cash and countless hours in taking a step on the property investment ladder, whilst others have become accidental landlords and are just finding their unsure footing. So why the significant shift in appetite? From speaking to many landlords, it is concerning how they are feeling let down and disheartened at the perceived lack of support and fairness when dealing with issues caused by tenants. The feeling is that the balance of power sits comfortably with the tenant and not with the landlord when problems arise. That’s not to say that all tenants cause problems; vast numbers don’t.
For clarity, the focus of my attention in this blog will be how those poor decisions by some tenants adversely affect landlords – good landlords. I am well aware that some landlords do not provide safe and legally compliant properties and tenancies, either by choice or lack of knowledge; this blog is not about them.
It’s also important to share my views on tenants and the fact that, like landlords, they come in all shapes and sizes. Most tenants are great and behave as they should, don’t cause anti-social behaviour, look after the landlord’s property and pay their rent fully and on time. There will also be those tenants who need a bit of extra help and understanding. This blog is not about them; it refers to those tenants who wilfully behave in an untenant manner, cause anti-social behaviour, do not look after the landlords’ investment, and play the system, holding the landlord to ransom should they dare to object.
So what does a landlord look like?
- Portfolio investor from London (with loans/mortgages or none)
- Portfolio investor – local (with loans/mortgages or none
- International Investor – Cash Buyer
- 1 – 6 properties, also have a full-time job and family to support (with loans/mortgages)
- Single mum of 4, worked all of her life, has been growing her property portfolio (with mortgages and loans) to allow her to have an income so that she can care full time for her three grandchildren so that they do not go into care.
- Retired – single and inherited a rental property, accidental landlord
- The couple – who had two separate houses and now live together so rent out the other – just in case
- In essence – they can be anyone.
And what about a tenant?
- Single – professional
- Single – in receipt of benefits
- Couple – professional
- Couple – in receipt of benefits
- Family – professional
- Family – in receipt of benefits
- Student – with guarantor
- Student – without guarantor
- Again, like landlords, they can be anyone.
Interestingly, there are no clear-cut distinctions between any of the above – from my experience, you can get good and bad in all. Full stop. There is no merit in judging what sort of landlord or tenant someone will be based on their circumstances. Landlords need to have all of their ducks in a row regardless of their tenants’ demographics and social standing.
With the additional claims on the landlords’ coffers in the form of; more tax, tenant fee bans, extended/halted evictions, increased licensing costs, more costly repair and maintenance obligations, demanding regulations, not to mention the tsunami effects of COVID. Landlords are finding their profits squeezed to breaking point.
We all know of those super tenants who cause no issues and take care of the landlord’s investment. Unfortunately, we also know that not all tenants fall into this category regardless of their financial status or employment situation. Any tenant can be an absolute joy to do business with – or be an absolute nightmare.
Lest we forget, whilst Social Housing via the Council is becoming increasingly elusive, our private landlords are, without a doubt, providing homes for some of our most in need. Can we afford to lose them? Definitely not. Therefore, it is even more frustrating when landlords come to us with issues relating to tenants, for example, significant rent arrears, anti-social behaviour, damage to their property, etc. They cannot resolve them as their tenancy is not compliant. This is not because they are rogue landlords and is more often due to them not knowing what they don’t know – but believing that they are doing an excellent job as landlords. On the other hand, the tenants rush straight to the council and inform them what terrible landlords they have and how they are being threatened with eviction or that Environmental Health needs to inspect as the property is in disrepair. Tenants in this situation tend not to share that they have refused to let the landlord inspect the property or any of the trades personnel sent by the landlord to carry out routine repairs and maintenance. They often have preyed on their landlord’s vulnerabilities to ensure that the landlord does not insist on inspections, work being carried out, issue reporting by the tenant, rent being paid in full and on time. The council then has to attack the Eviction Notice/the landlord to keep their obligations to that tenant at zero. Which I understand, as the council needs to keep their costs to a minimum. In the meantime, the tenant continues building up their arrears and causing damage to the property or partaking in anti-social behaviour and still not letting the landlord in. Should the landlord decide to take matters to court, which will incur costs and fees, the tenant may be entitled to Legal Aid, and the entire process will be free to them.
I am finding that the most common issues relating to tenants are;
- Paying significantly below the LHA rates, let alone market rent – Claiming to the landlord that they cannot afford to pay more and often preying on the landlord’s vulnerabilities – whether personal or due to their lack of compliance/knowledge as a landlord. In every single instance where this has been the case, I have found that the tenant can afford to pay the reasonable rent. The tenant has therefore misled the landlord to the landlord’s cost.
Case Study: 3-bed house, LHA/Housing Element that would apply £623.30pcm, market evaluation rent £700 -£750, tenant paying £495 PCM (family let). The landlord is losing £1,539.60 per year based on the lowest achievable rent for this property. Should the rent be increased to the LHA rate, this would be considered affordable rent. Whilst the tenant is underpaying, the landlord continues to have mortgages/loans to pay, gas safety/EICR/ R&M costs/insurance etc. Providing that the landlord is compliant, there is absolutely no reason why the rent should not be brought in line.
- Do not report repair and maintenance issues – until they are in rent arrears or require an inspection or compliance visit, then claim that the property is in disrepair and that the landlord never inspects. At this point, they often contact Environmental Health or the Council as a deflection technique.
- Claim disrepair to Environmental Health/the council when they have caused the damage and decline of the property. In my experience, it occurred pretty frequently when a tenant is using this as leverage to move house to a council house. Fortunately, where I have faced this in any of our properties, I have demonstrated that the property is in good condition and that the tenant has not reported any repair and maintenance issues whatsoever and that the tenant has not behaved in a tenant like manner.
- Claim that the landlord does not do anything and that they have spent XYZ on improving the property – regardless that the property looks to be in a poor state at the tenant’s hands. It is a dangerous game to play when you give tenants’ jobs to do that are the landlord’s responsibility. It often ends up costing the landlord so much more.
- Giving the landlord a false sense of security – ‘My tenants are no trouble, I don’t know what agents do as all you have to do is collect rent, and they always pay on time.’ I have lost count of times a landlord has told me this only to find the place is trashed; they are subletting, it’s a grow house, there’s modern-day slavery going on, etc. Always carry out a minimum of 2 inspections a year and keep evidence.
- They are a family friend/friend of a friend/ saw their plight on Facebook and felt that I wanted to help them as their previous landlord was awful. So, they never checked their references or asked for guarantors – only to find that their last landlord may not have been the one at fault at all.
- Were lovely to the landlord before moving in – so the landlord did not carry out an appropriate check-in inventory, signed and dated by the tenant. This results in the landlord essentially kissing goodbye to claim losses from the deposit, assuming that they have taken and protected one.
- When the landlord finds that they need help to address issues with tenants – the tenants 1) criticise the landlord to the agent to cover their tracks and 2) criticise the agent to the landlord, hoping that the landlord gives up and goes back to how things were.
A good agent will sit right in the middle of tenants and landlords as this is the only way to ensure sustainable and viable tenancies.
Tenants will have safe and compliant homes at a fair rental price. Landlords will have an excellent rental income, well-maintained properties and better profits. The additional bonus here is that the community/neighbourhood is enhanced as a whole and houses prices tend to increase. Which is great news for the landlord. They may even wish to remortgage to to generate a deposit for another investment property.
It is always tricky to address issues with tenants; they know that the landlord is likely to be terrified that they will not be able to find new tenants and will incur voids and therefore have been able to behave in a un tenant like manner unchecked. Agents can always find new tenants. Once the tenants realise that they have been rumbled and things are likely to change, they tend to do the following;
- Make a complaint to the landlord about the agent hoping that the landlord goes back to managing the property themselves.
- Rush straight to the council to complain about the landlord, often citing disrepair.
Neither of the above should worry the landlord as long as they have their house in order – literally.
- Is your property legally compliant? Do you have the appropriate licence in place etc.? Example: Selective Licence/HMO?
- Is your property compliant? Do you have your Gas Safe? EICR? EPC? Smoke Alarms etc.?
- Are you charging a fair rent?
- Have you protected the deposit?
If you have done everything that a landlord should, addressing problems with tenants is relatively straightforward, not easy, but straightforward. If, on the other hand, you have been cutting corners or not been fully aware of what is required, life can be a lot more complicated and stressful and generally ends up with the tenant on the winning side regardless of whether it is right or wrong.
I find it unfair when a tenant does not pay their rent, not because they can’t afford it, but because they choose not to. I have known tenants to choose to spend money on a new car/holiday, etc., instead of paying their rent and feel wholly justified in doing so. They were then expecting the landlord to suffer the loss. This is very hard to stomach and, in my opinion, totally unacceptable. It is all about priorities, and paying your rent must surely be at the top of the list, along with food and utilities.
I recently recalled a situation whereby a student decided not to attend university at the eleventh hour; this happens and is their choice. What the student then did was, in my opinion, very wrong. They stated that they were suffering from mental health issues and couldn’t attend university or pay their rent. It then transpired that they had, in fact, taken a year out, got a job in a school and expected the landlord to suffer the loss. The media at the time were slaying landlords wholesale and saying how awful they were and not very understanding of students’ plight during COVID. What about the landlords who also have bills to pay regardless? And tenants who are less than open with the truth to try and fund a change of heart?
The following example is quite common; the tenant is paying way below market rent for their property and even significantly below the LHA rate. The house is trashed. They don’t let the landlord inspect or tradespeople attend to carry out EICR’s Gas safe etc. The landlord turns a blind eye because ‘at least they pay their rent every month’ – well mostly – or more accurately, only sometimes. The tenant either becomes aggressive or difficult – so the landlord backs off, or the tenant plays on the landlords good nature with a woe is me tale, so the landlord backs off. The upshot is that the property is not compliant and is deteriorating daily, rent arrears start to rack up, and the landlord could be prosecuted for none compliance.
Neither of the two examples above is unusual and are, in fact, very common. In those or similar instances, the tenant holds all of the cards and the landlord none, or at the very most, have a poor hand.
Whilst we can’t do anything about the changes to; tax rules, legislation, licensing, ‘bad tenants’ or the hoops that landlords have to go through, we can mitigate the risk. Here are a few pointers; however, this is not an exhaustive list:
- Choose your tenants with care and check them out – Even a friend of a friend.
- Keep your properties compliant – notices will be useless if you don’t
- Ensure that you have compliant tenancies – Right to Rent, How to Rent Guide, Deposit Protection etc.
- Have processes and policies in place – R & M, ASB etc.
- Don’t be judgemental/fooled – stick to facts about applicants/tenants. Is it affordable? If so, how? Just because they have a ‘professional job’ doesn’t mean that they are the best tenants.
- If you have an agent, check that they have solid experience dealing with all types of tenants when things go wrong. Beware of those that say ‘we only have professional tenants here’. Especially during a pandemic, anyone can end up in receipt of benefits. You need to know how to overcome any issues that may arise if circumstances change.
- Protect the deposit and don’t take more than you should – 4 or 5 weeks is acceptable and within the law.
- Check-in and check-out inventories – if you don’t feel the need to waste time or money on having professional inventories signed and dated etc. – don’t waste your time taking and protecting a deposit. You won’t have a leg to stand on if you are thinking of retaining any of it at the end of the tenancy.
- Don’t put unenforceable terms in your tenancies
- If providing electrical appliance – Prove they are safe and PAT test them every 12 months unless they are within the manufacturers guarantee period. If you provide them – they are your responsibility. The same applies to furniture – does it meet the fire safety regulations?
In conclusion, I do feel that landlords get a raw end of the deal and that tenants have far more rights than landlords. Please don’t twist what I’m saying here and assume that I feel that tenants should have no rights. That is not what I’m saying at all; I would like to see a more even balance in how issues are addressed when landlords face problems caused by tenants. More support for good landlords and more consequences for those tenants making poor choices at the landlords’ expense would make for a healthier private rental sector.