Not all tenancies go to plan and there may be occasions where you face troublesome tenants. If that’s the case, landlord insurance can help you manage the consequences but it’s always a good idea to prevent problems in the first place. Here, we explore ways you can identify potential issues, how to deal with them and what you can do to stop them happening again.
We’ve broken the article down into the following sections so you can quickly find the information you need:
- Identifying bad tenants
- Top tips to minimise the risk of bad tenants
- How to evict problem tenants
- How can landlord insurance help deal with bad tenants?
It’s impossible to predict the future but tenant reference checks can help you identify potential issues even before you hand over the keys. As Steve Cox, one of our Property Insurance Specialists says:
“It is strongly recommended to arrange for tenants to be properly referenced before they move into your property. Having this sort of information enables you to make an informed decision regarding whether they are suitable tenants for you.”
Checks can be carried out by a tenant referencing firm or letting agent. But while checks aren’t fool-proof, they will give you a good idea of the type of person your tenant is, particularly if you’re able to speak to them yourself.
The consequences of insufficient checks on a regular basis often include:
Problems with rent can escalate quickly resulting in financial loss to you. In some instances, it will be a genuine case of forgetfulness on behalf of the tenant or a problem with setting up a transfer at the bank and for most tenants, a gentle reminder will be enough to ensure payments are properly made.
But if you start to get persistent late-payments, or random excuses, alarm bells should be ringing. While there may be genuine reasons for rent arrears (especially due to covid-19) it’s strongly advisable that thorough tenants checks are carried out and guarantors put in place to reduce your exposure.
Issues with Universal Credit
Problems with Universal Credit happen for a variety of reasons, some of which will be out of your tenant’s control. Issues with admin or frequent changes in what they’re entitled to, can make it difficult for tenants to manage their allowance from month to month.
Needless to say, while this is inconvenient for you, it’s important to bear in mind that it can be distressing for them too.
Anti-social or illegal behaviour
At best anti-social behaviour can be an inconvenience – particularly for neighbours. At worst it can cause real and expensive damage to your investment.
In these circumstances, it’s important to keep a record of incidents which can be used as evidence if you’re considering eviction.
For tenants, sub-letting might feel harmless and innocent – especially if they’re helping out a friend by letting them stay in the spare room. But unless you’ve expressly agreed that they can sub-let, you can take legal action against your tenant.
A comprehensive tenant referencing check is your first and most important tool for preventing problem tenants. This typically includes carrying out a basic credit check as well as reviewing their previous rental history.
In addition to this, practical steps that can help you avoid problem tenants include:
Ensuring you have a comprehensive tenancy agreement
This might sound obvious, but you can’t underestimate the importance of having a detailed tenancy agreement.
Most shorthold tenancy agreements contain fairly standard clauses that set out the terms of the tenancy, such as:
- Name of the landlord and tenant/s
- Dates for when the tenancy starts and ends
- Cost of rent and the date by which payment needs to be made
- What is included in rental payments (Council Tax or utilities)
- Notice period
- What happens after the tenancy ends, for example whether it continues on a rolling monthly basis
- Specific tenant responsibilities for example, making sure the garden is maintained
If you provide any contents, whether that’s furniture or electricals, it’s worth adding a point about what happens if those items become unusable or breakdown. Generally speaking, if you’ve provided those items as part of the let, it’ll be up to you to change them if they need replacing because of wear and tear. In some cases, if they were left from a previous tenancy you might want to specify this and set out what happens in the event of damage.
Regular property inspections can help you identify potential problems early on. These could be to do with maintenance such as spotting leaky gutters or damaged fencing, as well as tenant upkeep. Remember – just as it’s your responsibility to provide a safe and habitable property for your tenants, it’s up to them to take care of it and repair any damage they or their guests cause.
Inspections can also help you build a constructive relationship with your tenants which can help you resolve problems quickly and effectively without resorting to legal action.
Comprehensive inventories often go hand in hand with tenancy agreements and one doesn’t replace the other. Ideally these should include time-stamped photos that can be used as evidence if you need to make any claims.
When it comes to putting an inventory together, no detail is too small. From the state of walls, carpets, fixtures and fittings, the more you can accurately record, the better prepared you’ll be if something does go wrong.
Apply for direct Universal Credit payments
If your tenant’s rent is covered by Universal Credit, you can arrange for payments to be made directly to you. This applies to rent as well as rent arrears.
The application is known as a Managed Payment to Landlord (MPTL) and you can apply to do this online at GOV.UK at any time.
Build relationships with neighbours
If you don’t live on the same street as your rental property, building good relationships with the people that do can help you monitor your investment. While it’s understandable that neighbours might not want to go on the record for fear of reprisals by bad tenants, they can least notify you if something’s amiss.
In rare situations, you may be unlucky enough to have to deal with genuinely bad tenants. In these circumstances, eviction is likely to be your only course of action.
However, before you even think about starting the eviction process, it’s vital to speak to your tenants first. Resolving matters amicably should always be your first port of call.
If you decide to evict, consider which route you want to go down. One option is to issue a Section 8 notice which can be issued if tenants have broken the terms of their tenancy. This could be for a range of issues but commonly includes rent arrears and malicious damage to property.
Alternatively, if the tenancy is nearing its end, you might decide to issue a Section 21 notice instead. Essentially, these simply notify the tenant that you wish to regain possession of your property at the end of their tenancy. If you choose to do this, you must make sure the notice is legally valid and served correctly – you can find out how to do this in our guide to Section 21 notices.
Landlord insurance can’t prevent bad tenants, but a comprehensive policy can help mitigate the financial risk if you’ve been unlucky.
At Alan Boswell Group we tailor our landlord insurance policies to suit your needs – whether you’ve got one property or a portfolio of rentals, we have the expertise and experience to help you keep your investments safe and secure.
As well as buildings and contents cover, we also offer legal expenses insurance which can help pay for professional advice if you need to arrange an eviction. Plus, for extra peace of mind, don’t forget you can add rent guarantee insurance to your legal expenses policy which can compensate you if your tenant defaults.
For more advice and guidance, head to our landlord hub or contact a specialist advisor on 01603 216399.