Regardless of if you are running a single rental property or overseeing a comprehensive property portfolio ensuring that every tenancy you establish runs smoothly can certainly seem like a tall order at times. But, knowing the common issues that landlords face and how to effectively deal with them can go a long way in avoiding the shortfalls that can come with letting out a buy to let property. Here we offer some advice to rental property owners looking to tackle the common problems faced by landlords.
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Do All Tenancy Deposits Need to Be Protected?
When moving into a rental property it is common practice for the landlord to request the new tenants provide them with a tenancy deposit, sometimes referred to as a security deposit. Whilst renters already in dismay about potentially paying rent in advance and supplying the landlord with a holding deposit, they will be pleased to know the tenant Fees Act introduced a limit on how much a landlord can take for a security deposit. The act dictated that if the annual rental charge for a property was up to £50,000, the landlord could request a maximum of five weeks rent; however, where the annual rental fee exceeds this amount the tenants may have to pay up to six weeks rent for their tenancy deposit. Whilst a landlord does not have to take a tenancy deposit, to say the practice is widespread would be an understatement, but if they do any taken amounts must be entered into a government approved tenancy deposit scheme.
Once the landlord has received the appropriate amounts from their tenants, they have 30 days to enter the amounts into a protection scheme. The landlord can enter the tenant’s deposits into either an insurance based or custodial deposit protection scheme, with the difference being the party that physically holds the amounts taken from the tenant. If the landlord has neglected their legal obligation to protect their tenant’s security deposits and the occupants of the rental property decide to take legal action, the owner of the rental could be ordered to pay back up to three times the amount originally taken from each tenant.
What Happens in a Deposit Dispute?
The reason as to why so many landlords choose to take a tenancy deposit from their tenants is because this acts as an additional safeguarding measure against their rental income. If at the end of the tenancy period it is revealed that the tenant has caused significant damage to the rental property and its furnishings, the costs associated with replacing and repairing the effected items will be deducted from the tenancy deposit. As previously mentioned the landlord is also able to use this amount to recoup any rent arrears the tenants may have at the end of the fixed period.
With this being said, the landlord is not able to make deductions from the amount being returned to the tenant for every scuff and blemish found on the final inspection of the rental property. This is regarded as fair wear and tear and comprises the expected deterioration of a property and its furnishings over time; as this will not have been caused by the negligence or malicious intent of the residents the landlord is not able to recuperate these costs.
If the owner of the rental property intends to make any deductions from the amount of the tenancy deposit being returned they must inform the tenants at least 10 days before the close of the rental period. Within this period the tenant is able to assess these deductions and voice any challenges to these charges they wish to make. Any amounts that are not being disputed must be returned to the tenant, with the remaining amount being paid back into the protection scheme (providing the landlord chose to protect the deposit under an insurance based scheme). The property inventory, documenting the condition of the rental property both at the start and close of the tenancy will be consulted throughout the dispute. If the landlord and tenant are able to reach an agreement in regards to the amount that should be deducted from the deposit, the deposit protection scheme will distribute the finds accordingly. However, if neither party of the tenancy agreement is able to reach a resolve in the dispute over proposed deductions, the dispute resolution service offered by the scheme. In this instance the dispute will be overseen by an impartial assessor provided by the dispute resolution service. This representative will help a middle ground be realised, or when this is not possible reach a verdict themselves on how the remaining amount should be distributed. The assessors verdict cannot be overruled and is final, seeing the deposit protection scheme distribute the remaining amount to the appropriate party.
Dealing With Rent Arrears
It would be safe to say that almost all landlords at some point in their rental journey have been apprehensive about a tenant’s ability to meet their rental commitment. Of course, if the occupants of the property are unable to pay their rent, the landlord is left with a significantly reduced income. Whilst recent months have done little to quell such worries, offering struggling renters a reduced income and stripping landlords of their ability to remove problem tenants, the advice for landlords and their tenants has largely remained the same. It is recommended that above all, the owner of the rental property should try and negotiate with the tenant that is facing financial difficulty. It is understandable that the tenant may not be immediately forthcoming about their situation, however leaving the landlord to find out by missing a rental payment will do little to help a compromise be met.
With recent research revealing that a significant number of landlords within the UK are dependent on income from a single rental property, the detrimental effect of rental arrears isn’t difficult to see, landing rental property owners in hot water alongside their tenants. Of course it is easy to see how both parties may be vulnerable and emotional during this time, but negotiations are often the best way to proceed for both parties of the rental agreement.
If the tenant is able to establish a payment plan with the landlord, meeting their usual rental commitment whilst making smaller contributions to settle their rent arrears this would be ideal for the landlord. However, it is more common for the landlord and tenant to settle on a period where the amount the tenant must pay in rent is reduced, allowing them to get back on their feet and not leaving the landlord totally absent of a rental income.
If any payments are made by the tenant, the landlord should detail the amount contributed and the date on which this amount was provided. Further to this, if any reduced rental period, or repayment plan has been agreed, this must be clearly stated in writing with both parties signing the document as an acknowledgement.
With this being said a landlord is able to recover any missing rent through making a deduction from the tenant’s security deposit. Whilst this does provide the landlord with some comfort in being able to recuperate rent arrears, it does come with some caveats. Due to the nature of the tenancy deposit, and the Tenant Fees Act 2019 placing a limit on the amount a landlord can request from their tenant for a tenancy deposit, making a deduction from the amount being returned to the resident will only cover a minimal amount of rental arrears. After the introduction of the tenant fees act, in most cases the owner of the rental property is prevented from requesting more than the equivalent cost of five weeks rent from their tenants, only making this a viable method of recuperating any lost income if only a single payment was missed. Additionally the landlord is unable to access these funds to make a deduction until the end of the rental period, meaning that if the tenant begins to neglect their obligation to make these payments early into the rental period, the landlord may want to consider an alternative means of addressing the situation.
If the amount the tenant owes to the landlord begins to accumulate, the owner of the rental property may consider reclaiming possession through eviction. To this end the landlord may issue the resident with a section 21 notice, permitting the transfer of possession at the close of the tenancy agreement. This is a common choice amongst landlords that are dealing with rent arrears towards the end of the tenancy’s fixed period, as they will only be able to gain possession once this period comes to a close. The section 21 notice is further favoured by landlords as they do not need to state the specific grounds upon which they would like the tenant to vacate the rental property. This is because the section 21 notice disregards any violations of the tenancy agreement and is simply the landlord stating their intentions as to the possession of the property at the end of the tenancy.
However, for landlords potentially facing significant arrears earlier into their tenancy period, they may choose to serve their tenant a section 8 notice. When issuing the tenant with a section 8 notice the landlord will be required to detail the specific ground on which the tenancy agreement has been breached. The severity of the rent arrears will allow the landlord to use different grounds to compel the court to evict the tenant from the property. If the tenant refuses to vacate the property even after legal action, the landlord is able to pursue enforcement through bailiffs.
My Tenants Won’t Let Me Into the Property
Another common landlord issue is gaining access to the rental property when needed. It is expected of landlords to perform routine inspections and maintenance of their rental property to ensure that it is in a good state of repair; however, regardless of the landlord’s intentions it is essential that they respect the occupant’s right to quiet enjoyment of the property. Any action taken by the landlord that is found to “substantially interfere with the tenant’s freedom of action is exercising” their rights, would be considered an infringement on their “quiet enjoyment”. This right entitles the tenants to undisturbed and unhindered use of the rental property, granting them the authority to dictate when parties can enter the property. To this end if the landlord, letting agent or other relevant parties wish to enter the rental property they must first gain the permission of the occupants at least 24 hours before entering. The residents of the property would be well within their rights to dismiss this request, however this is rarely done. It is far more common for the tenants to simple find a more mutually beneficial time for the visit to take place. However, if the landlord is faced with a tenant that is consistently refusing to grant them access to the rental property, if the issue persists the landlord can be absolved of their duty for repairs, as the tenant is preventing them from attending to these matters.
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