Letting buy-to-let property can be a worthwhile experience, especially if you have good tenants. Happy tenants who pay their rent and look after your property make your landlord responsibilities that bit easier. Unfortunately, it’s quite possible that you’ll find yourself with troublesome tenants at one time or another. This can make managing your portfolio difficult and can lead to the hassle of evictions, the cost of legal fees, and a loss in income. In this article we look at ways of screening for problematic tenants, methods of dealing with tenants who are causing problems at your property, and ways of protecting yourself with the right insurance.
- How can I identify a bad tenant?
- Warning signs that you have awkward tenants
- Are landlords responsible for tenants’ behaviour?
- What issues typically arise from tenants?
- How can I minimise the risk of bad tenants?
- Problems with tenants on Universal Credit
- How do you respond to an angry tenant?
- How do I evict a tenant?
- How can landlord insurance help me deal with bad tenants?
Often, you’ll be able to identify a bad tenant easily. For example, they might stop paying the rent, or neighbours may complain to you about noise or antisocial behaviour.
On the other hand, some problems can take a little longer to detect. For example, if your tenant is subletting all or part of your property you may not detect this until you conduct an inspection. Similarly, a tenant may be running a business from your property without permission – something that could break the terms of your mortgage agreement and invalidate your insurance. For these reasons, it’s important to be vigilant once you have let your property.
What is a difficult tenant?
There are many reasons for why your relationship with your tenant may become difficult. Later in this article, we’ll cover some of the most common difficulties landlords encounter, such as rent payment problems or malicious damage.
Sometimes difficulties arise through no fault on the part of the tenant. For example, you’re your tenant receives Universal Credit they may be experiencing problems in getting paid. This can result in unintentional non-payment of rent.
How do I find out if my tenant is bad?
By far the best thing you can do is find out as much as you can about a tenant before you hand over the keys. Always meet potential tenants face to face and don’t be afraid to ask them questions
Often, gut instinct will tell you when a potential tenant is likely to be suitable. However, it’s easy to make a decision you’ll regret. So, when you shortlist candidates always undertake tenant reference checks.
What checks should a landlord do on a tenant?
A full tenant referencing check should provide you with the following information:
- Employment history
- Residential history (plus a previous landlord reference where applicable)
- A credit check and affordability calculation
- Verification of identity, bank account details, and other relevant information.
You will also need to undertake a right to rent check to ensure the tenant can legally rent your property. This is important because if you rent your property to someone who does not have the right to rent in the UK you could be fined.
Once you’ve let a property, it’s wise to be on the lookout for warning signs that things aren’t as they should be. Some common ‘red flags’ include:
- Untidy garden / uncut grass. If the exterior of the property looks scruffy, it may be a sign that the tenant isn’t looking after the interior well.
- No maintenance requests. Things go wrong and need repairing in every house. If you don’t get maintenance requests, it could be a sign that the tenant has something to hide and doesn’t want you visiting the property. On the other hand, they may be worried to ask for help. If this is the case, reassure your tenant that you’d rather deal with maintenance issues early before they become a bigger problem.
- They never seem to be in. If the tenants never seem to be in when you schedule a visit, or someone you don’t know answers the door, it could be a sign that they’ve sublet the property without telling you.
- A terrible attitude. Be wary if a tenant suddenly becomes rude, aggressive, or evasive – or if they start blaming you for minor issues that aren’t your responsibility.
- Neighbour complaints. If you’re getting regular complaints from the neighbours about noise, antisocial behaviour, or other issues, it’s almost always a sign you’ve got troublesome tenants.
Normally no, you are not responsible for your tenants’ behaviour. However, if you let a property knowing that the tenants were likely to cause a nuisance, you could in theory be liable. Similarly, if you know that criminal activity is taking place in your property, you could be prosecuted. This happened to a commercial landlord in Lincoln who was prosecuted for allowing his property to be used for the sale of illicit cigarettes and alcohol. While you will not normally be responsible for your tenants’ actions, it’s sensible to run thorough screening checks before letting your property to anyone.
In our experience, these are the most common issues landlords have with their tenants:
- Rent arrears. 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, or with receiving their Universal Credit payments. For most tenants, a gentle reminder will be enough to ensure payments are properly made. However, if you start to get persistent late-payments, or repeat excuses, alarm bells should be ringing.
- Anti-social or illegal behaviour. Anti-social behaviour can be an inconvenience – particularly for neighbours. At worst it can cause real and expensive damage to your investment. Examples include making excessive noise, keeping the property in a state that’s a danger to health, or keeping an animal that’s causing a nuisance. Illegal behaviour could include growing or dealing drugs from the premises, tenants harassing neighbours, and vandalism.
- Subletting. For tenants, subletting might seem 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 sublet they are breaking the terms of their tenancy agreement. In some cases, a troublesome tenant may leave the property unsecured, meaning you later run the risk of having to evict squatters.
You may be wondering what possible remedies are available to you if you have an awkward tenant. These are our top tips for keeping problems to a minimum.
- Make sure you have a detailed tenancy agreement. Always use a professionally drafted tenancy agreement that clearly sets out what tenants can and cannot do. For example, you can add a general nuisance clause that prohibits the tenant from causing a nuisance to you or neighbours, a restriction on using the property only for residential purposes, plus a provision that the tenant will keep the gardens and grounds neat and tidy. You can also add very specific clauses, such as one that forbids the tenant from playing music between 11am and 7pm.
- Regular inspections. You are entitled to make regular property inspections as long as you give the tenant at least 24 hours’ notice. You have to be careful that these are not so frequent that they could be viewed as harassment. However, an inspection every three or six months should reveal problems such as malicious damage or subletting.
- Have a clear inventory. If you have a clear and detailed inventory, it’s easier to inspect for loss or damage. It also reduces the likelihood of disputes at the end of the tenancy.
- Build good relationships with neighbours. If you get to know the neighbours and have a good relationship with them, they are more likely to tip you off if there’s any unusual, suspicious, or anti-social behaviour taking place at your property. If possible, give them your contact details so they can get in touch quickly if there’s a problem.
Problems with Universal Credit happen for a variety of reasons, some of which will be out of your tenant’s control. This doesn’t make them a troublesome tenant, but rather one in need of some compassion. 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.
One potential solution would be to apply to the Department for Work and Pensions for a Direct Rent Payment or rent arrears deduction. If successful, rent and rent arrears can be deducted from the tenant’s Universal Credit and paid directly to you. However, always discuss this with your tenant first and explain you’re reasoning.
If a tenant gets angry with you, it’s important to stay calm – whether you think the tenant is justified or not. Keep communications with them clear and professional and stay rational. Don’t try to shift blame onto the tenant and always make it clear that you are willing to work together to find a solution. Ideally, get all communications in writing so you have evidence if you need it further down the line. Most importantly of all, always stick to the law. If you don’t, and you need to evict a tenant, it may make the process much more difficult.
There are two main ways of evicting a tenant.
Section 8 evictions
If a tenant has broken the terms of their tenancy agreement, you can serve them with a Section 8 notice under the Housing Act 1988. There are specific circumstances in which you can do this, including:
- Rent arrears
- Damage to the property
- Gaining the tenancy by providing false information
- Becoming a nuisance to neighbours
- Using the property for criminal activities
You can issue a Section 8 notice at any stage of the tenancy, as long as the grounds for issuing it are valid. When you send a tenant a Section 8 notice, you need to give them at least two weeks to vacate the property. If they don’t leave after that time, you can apply to a court for a possession order.
It is critical that Section 8 notices are served correctly, otherwise it can become extremely difficult to evict the tenant. There are also rules about the amount of arrears a tenant must owe before you can serve a notice on them. You can find out more about Section 8 here.
Section 21 evictions
However, until this happens, it’s possible to evict tenants using this method. However, serving a valid Section 21 notice can also be complex as you need to comply with a wide range of rules, including new rules for landlords. There are also restrictions on what point in a tenancy you can serve one of these notices, plus you must give tenants at least two months’ notice to quit. You can find out more in our detailed guide What is a Section 21 notice?
It’s possible to serve a Section 21 notice at the same time as a Section 8 notice, but we strongly recommend you get legal advice before serving any form of section notice. In the case of nightmare tenants who have broken the terms of your tenancy agreement, Section 8 generally offers you a quicker route to eviction.
If you end up in the unfortunate position of having bad tenants, having the right landlord insurance is essential. You can tailor your cover to reduce landlord risks and include:
- Landlord building insurance – to protect against standard risks like flood and fire.
- Rent guarantee insurance – to ensure you have income if a tenant stops paying rent. This can also cover legal costs incurred during the eviction process.
- HMO insurance – if you are landlord of one or more houses in multiple occupation.
- Multi-property landlord insurance – for portfolio owners.
Make sure you have all the information you need from prospective tenants with our interactive Tenancy Application form:
At Alan Boswell Group, we can advise you on the best combination of cover for your particular needs. For more advice and guidance, head to our landlord hub or contact a specialist adviser on 01603 216399.