With approximately 2,700 evictions taking place in the closing months over 2021, the number of households that are facing eviction since the eviction ban was lifted soared by 400%. But with the so-called, no-fault evictions coming to an end, we ask how landlords can reduce the risk of problem tenants.
ContentsPerhaps the most widely praised and used method of determining if an aspiring tenant will be a good fit for the rental property is the process of tenant referencing. Put simply this is a series of assessments that not only evaluate the renter’s current suitability for the property but also their rental and financial history. The tenant referencing process will see prospective renters complete a series of affordability tests, with the landlord requesting they reveal their current income, employment status and credit history to ensure all historic lines of credit have been cleared. Whilst the affordability checks may allow the owner to be increasingly confident that the rent will be constantly paid on time, they offer little insight into other aspects of the tenancy.
With this in mind, prospective tenants are often required to provide their new landlords with a character reference from the owner of the property they previously rented. This offers owners a brilliant perception of the conduct of the applicant throughout their most recent tenancy, reassuring them that the renter not only avoided accumulating arrears but maintained the condition of the property and was not the cause of any antisocial behaviour complaints.
Not only will periodic property inspections ensure that the landlord will be able to accurately determine if the occupants are taking good care of the property, but will allow them to identify any areas of damage, or risks to the tenant’s safety and address them before the situation is exacerbated. In most cases landlords or letting agents will arrange for their rental property to undergo an inspection approximately every 3 to 6 months as to not infringe upon the tenant’s right to quiet enjoyment of the property.
When looking to protect against a problem tenant, unfortunately, those without sufficient landlord insurance will be left exclusively seeing the benefit of such policies through hindsight. Although owners are not legally obligated to take out landlords building insurance, if the property was purchased through a buy to let mortgage, many lenders will demand that the landlord obtains such a policy to sustain their insurance cover.
Whilst building insurance will protect against events that cause damage to the structure of the property, this will have an underwhelming impact when dealing with a problem tenant. Whilst landlords will be able to make deductions from the tenancy deposit for any missing rental payments and damage caused to the property and its contents, both of these instances can be covered through the appropriate landlord insurance policies.
It is safe to say that perhaps the greatest apprehension of any landlord when heading into a new tenancy is the accumulation of rent arrears. Of course if the occupants of the property fail to pay the expected amount each month then this will not only leave the landlord without an income, but mean that they will have to pay any mortgage interest payments, repair costs, letting fees and management charges all from their own pocket. For this reason, many landlords choose to take out rent guarantee insurance, allowing the landlords to have a dependable income and in some cases, have their legal cost covered when chasing the tenants for missing payments.
Upon moving into a rental property, the occupants will be expected to pay their new landlord a security deposit. Similarly to the holding deposit paid to reserve the rental opportunity, the security deposit, sometimes called a tenancy deposit, can be refunded to the tenants, however, this is typically done once the tenancy comes to an end. This delay in when the amounts provided for the security deposit will be returned to the tenant is because the landlord is able to make deductions from the amounts being refunded if the tenant has failed to pay their rent, or has caused damage to the property or its contents.
With this being said it is worth noting that landlords are prevented from requesting their tenants pay more than five weeks rent for the security deposit, due to the implementation of the 2019 tenant fees act. However, if the amount each occupant pays in rent each year is more than £50,000, the owner of the property can request as much as six weeks rent for the security deposit.
Naturally many owners and letting agents will choose to take a security deposit from their tenants as this will be a significant monetary incentive for the tenants to adhere to the terms of the tenancy agreement, whilst giving the landlord recourse to protect against significant losses or expenses incurred through the tenant’s negligence.
Going hand in hand with tenancy deposit deductions is the need for landlords to curate a comprehensive property inventory. This document summarises the condition of each space within the rental property, alongside the appliances and furnishings found throughout. Each description is accompanied by dated photographs, accurately depicting the state of each room at the start of the tenancy’s fixed term.
But why is a property inventory essential for landlords? The property inventory will not only make it clear what the condition of the rental property was when the tenancy began, but, make it abundantly clear as to when the damage occurred and the party that is responsible for the occurrence of the damage. This means that if the landlord wishes to make a deduction from the amount of the security deposit that is being returned to the tenant, if any of the deductions are refuted, evidence can be presented that lends justification for the amounts being withheld by the landlord.
The way in which a landlord would be empowered to remove a problem tenant from their rental property would depend on the actions of the tenant and how the landlord would wish to proceed. In the case of rent arrears, it is common for owners to issue the problem tenant with a section 8 notice.
A section 8 notice can only be used in the instance that the occupants have been found in breach of the tenancy agreement. In the instance of rent arrears in order for the landlord’s grounds for possession to be upheld the tenant will have to accumulated at least 2 months of rent arrears on the day of the court hearing. After the hearing, if the landlord is successful the tenant will typically have around 14 days in which to repay the missing rent; but if this is not achieved then the landlord may use bailiffs to reclaim the property.
Alternatively, landlords are able to issue a problem tenant with a section 21 notice, simply stating that they wish to reclaim the rental property once the fixed term of the tenancy has come to a close. This is typically used if the owner wishes to sell the rental property at the end of the tenancy, or carry out extensive refurbishments and repairs, however, unlike a section 8 notice, landlords may service a section 21 notice without offering any justification for doing so and the tenant does not need to be found in breach of the agreement’s terms; making reclaiming a property from a problem tenant far easier for owners.
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