What to Do After Receiving Offers for Your Rental Property
Finding tenants for an empty buy to let property can be a difficult time for landlords to say the least. Searching for new ways to market the rental opportunity, assessing competing lets in the area and attending countless viewings can seem almost relentless for landlords; but it’s certainly not in vain.
With referencing for multiple tenants to juggle, agent fees to settle and an on boarding programme to run the new tenants through, once offers start coming through the door, it is of the landlord’s best interest to get the new tenancy going as soon as possible, helping them to prevent any further void periods and loss of income.
What Is the Negotiation Process?
When advertising your rental property online it is not uncommon for potential tenants to try and haggle themselves a better deal. Of course this presents a fantastic opportunity for landlords to start off their renting relationship with their new tenants on the best terms, but what parts of the tenancy agreement will tenants hope to negotiate and what is set in stone?
Negotiating Rent Price
Of course all tenants wish that they could pay a little less rent, but what is important to remember is whilst it is possible to negotiate a rental price with a landlord, the property owners are in no way obliged to adjust their figure. But, for landlords facing these requests there are a few things to keep in mind when setting and justifying your price to potential tenants and perhaps a compromise can be made.
Tenants may state that the monthly rental payments being demanded for the property are not in line with similar offerings in the local area. In these instances, the opportunities available in the surrounding rental community should have already been considered by the landlord when initially establishing the rental charge. However, rental demand is equally important to understand as if landlords in the local area are struggling to find tenants to occupy their vacant rental properties then potential renters will have more leverage to use to ask for a lower rent. With this being said, under these conditions it is in the property owner’s best interests to offer a lower rent in hope of retaining tenants for longer.
If negotiations surrounding the monthly rental fee are taking place a landlord could agree to reduce the amount paid each month in rent on the condition that the tenants make an advanced payment. It is a universal concern for landlords that one month a tenant will be unable to meet their rental payment, leaving the landlord in their own financial peril. If the tenant makes an advanced payment, offering to cover an extra months’ rent upfront perhaps, the landlord will have more confidence in the tenant’s ability to meet each future payment and of course reduce the monthly amounts in turn.
Addition of a Break Clause
For some potential tenants, the length of a proposed tenancy agreement may be too long and they are therefore reluctant to enter into a legally binding fixed term agreement with the landlord. For the tenant, the desired flexibility will come through the addition of a break clause to the agreement. A break clause allows the tenant to lawfully leave the property before the end of the fixed term; however, this flexibility is not exclusive to the tenant as the landlord is no also able to terminate the rental agreement early. There are some caveats to the implementation of a break clause that vary between landlords as it is ultimately their discretion that determines what the restrictions on enacting the break clause are. Typically a tenant will be unable to execute the clause if they have not occupied the rental property for a fixed period of time, usually around 6 months. Despite this restriction seemingly going against the nature of the clause, marketing a property and finding a new tenant can be costly so it’s understandable that landlords and property owners don’t want to been going through viewings after only introducing a new tenants 2 months ago. Additionally, some landlords may request that if a tenant wishes to implement the break clause and end the tenancy agreement early then some, if not all, of the tenant’s deposit will go to the landlord. While the tenancy agreement is in place it goes without saying that the tenant is legally responsible for ensuring that the rent is paid on time, to this end, another restriction landlords could place on the enactment of the break clause is that the occupying tenant has no outstanding rental arrears. Another popular restriction by landlords is enforcing a tenant’s obligation to supply “vacant possession”, meaning that once the rental property has been vacated, all of the tenant’s possessions are taken with them. With this being said, just because a break clause is in the tenancy agreement a tenant still has a duty to inform the landlord of their intentions. If a tenant simply leave the property without letting the owner know then this would be considered abandonment and the tenant would remain liable for any rental payments until the end of the tenancy period.
Length of the Tenancy Agreement
Advertising a rental property to find tenants can be an expensive and arduous ordeal for landlords and property owners. If a tenant is able to agree to a longer term, this will save the landlord huge sums in referencing, agency and marketing fees. Of course, if a rental property is not occupied by tenants then the landlord will not be receiving an income from that address; if tenants commit to a tenancy period of over the average 18 months, then this will provide phenomenal financial security for the landlord and stable lifestyle for the tenant.
Whilst we understand landlords longstanding reluctance to accept tenants that wish to rent with pets, this could be a greatly beneficial for both parties. Not only will the new tenant be able to continue living with their furry friend, but typically landlords will charge increased rent and a higher deposit when accepting pets into their rental property. These extra funds contribute towards any costs associated with repairing or cleaning the property once the tenancy period has ended. However, if you do decide to accept a tenant with pets it is important not to increase the monthly rental amounts excessively, you are still hoping to attract tenants and staying competitive with other lets in the area is one of the best ways to do so.
How to Choose the Right Tenant From Multiple Offers
Receiving multiple offers from potential tenants is the ideal outcome for landlords when they are trying to advertise their rental property. But, with only a brief face to face encounter during a property viewing, how can a landlord know which applicant will be their ideal tenant.
To this end tenant referencing is a vital component of any landlords letting process. Tenant referencing evaluates each potential tenant, providing the landlord with an outlook of the person’s compatibility with the rental opportunity they are providing. Many landlord and letting agencies hold the referencing process in high regards, citing it as the best protection property owners have against problem tenants.
When a potential tenant is going through refereeing, first and foremost their identification is verified, with government issued ID and official documentation being scrutinised to help safeguard landlords from rouge and ghost tenants. A landlords concern over if a tenant will be punctual with their rental payments is justified and undeniable, with missed rental payments leaving the property owner to navigate the issues of missing income and multiple mortgage payments. Each potential tenant that goes through referencing will have a meticulous inspection of their financial history, with their credit history, current employment and income being assessed to ensure they are able to regularly and consistently pay the landlord rent on time. Typically, referencing agencies demand that the annual earnings of the tenant exceed the yearly charge for rent by two or three times. Many letting agents and referencing companies will also obtain a reference from the tenants previous landlord, revealing an insight into their renting history and detailing how long the agreement was, how much the tenant had to pay in rent, if the tenant consistently paid on time, and the condition that the property was left in at the end of the tenancy period. Aside from a meeting with the tenant, a reference from a previous landlord is the best possible evaluation of a tenant’s previous rental behaviour.
However, many high street and online letting agents place an excess on this essential insight, with rates averaging anywhere from £15 to £30 per tenant. This can quickly turn a search for the perfect tenant into a financial burden for the landlord, encouraging them to rush the most important decision of their rental journey. When advertising your rental opportunity with PropertyLoop landlords do not have to pay a fee for each tenant that they wish to vet, meaning property owners can have full confidence in their rental decisions. Whilst the overwhelming majority of letting agents offer a single reference from a potential tenant’s most recent landlord, PropertyLoop provides a far richer and comprehensive insight, offering references from each of the tenants previous landlords, detailing their full rental history.
What Happens After You Accept an Offer?
Once an offer for the rental property had been accepted by the landlord it is time for them to start making any final preparations to the property before the start of the tenancy period. For landlords that offer their rental opportunity as an unfurnished let, this phase of the process will be slightly easier as they will not have to concern themselves with the amenities that would facilitate their tenant’s lifestyle. Of course, if the demographic that the landlord wished to rent to is families or older renters, it would be more opportune for them to do this as the tenants are likely to have their own furnishings they plan to bring with them. If this is not the case property owners usually keep in mind the needs of their tenants, ie students will be less concerned about having state of the art cooking facilities but will need space for studies. Whilst the property has no tenants it is also essential for landlords to ensure all the gas and electrical appliances are in working order and have valid safety inspection certificates that can be provided to the new tenants.
Whilst landlords are under no legal obligation to take a deposit from their tenants, it is with good reason that so many choose to do so. Taking a deposit from a tenant is a precautionary measure taken by landlords that wish to protect themselves against the possibility of future rental arrears, property damage and any maintenance or repair costs that may occur throughout the tenancy period. Some landlords also believe that taking a deposit acts as an incentive for tenants to keep the property in a good condition as to get the full amount back when the tenancy period draws to a close. It is important to note that if a landlord does choose to take a tenancy deposit from their new tenant it must be entered into a recognised tenancy deposit scheme. Unlike taking the deposit, entering the sum into a government backed deposit protection scheme is a legal requirement for the landlord, as per the 2004 Housing Act. If a rental property owner takes a deposit from a tenant and chooses to not enter it into a recognised scheme, the tenant would be able to claim up to four times the sum of the tenancy deposit from the landlord of legal action is taken.
Are you looking for an online property agent you can trust? Then check out www.propertyloop.co.uk today. Built by experienced property investors and landlords, the website connects renters with the owners directly. Why not sign-up to see it in action? It’s a free platform that only charges a small fee once you get your rent money in. Your property is featured on all major search and comparison portals as well as advertised by PropertyLoop everywhere else on the Internet. You don’t have to worry about finding the good renters, that’s the job for the platform. Receive offers straight to your mailbox and select the renters that are right for your property. Need access to busy London property market? No problem at all! PropertyLoop is the London market specialist with years of experience and unique knowledge. Whatever your needs are, you can always speak to friendly support staff. Renting property is made as simple as one, two, three.
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February 12, 2021
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