Problem tenants and how to deal with them

February 15th, 2017

PROBLEM TENANTS –  ‘all guns blazing’ or ‘softly softly’? 

Many landlords and agents panic when a tenant misses one month’ rent.  Getting to know your tenants payment habits helps very much when deciding what action is needed to be taken.  Do you go in ‘all guns blazing!’ or with a more ‘softly softly’ approach?

To begin with it is always beneficial to have a good working relationship with your tenants, be good to them, respond to their emails in a timely fashion, communication is key!  Respond to maintenance issues quickly and update the tenant where possible on the progress and the outcome.  Managing tenants expectations works wonders, for example inform the tenant that maintenance is dealt with as quickly as possible, and once they report a maintenance issue then they should expect the ‘trades-person’ to be entering in the next day or two.  Drop them a text if you can to let them know when they are due- this would be a perfect scenario. Tenants get to trust you and know that you are looking out for them.  On this basis, when things gets tight, and their rent is late, they will communicate with you.

When tenants don’t respond to a gently text reminder that the rent is late, or ignore your emails – this can be a warning sign.  At this point we go our of our way to make contact.  We gently ask them to respond, and to let us know ASAP if there is an issue, so we can help them find a solution.  In 99% of case there is always a solution.

Here is a step by step approach for you:

FIND OUT WHAT IS GOING WRONG

Make contact ASAP, give them a couple of days grace following the missed payment. Always take things softly at this stage, don’t be aggressive.  There can be many reasons why a payment is late, they may have swapped jobs and their employer pays later, and they just need to get back into the swing of things.  Maybe the standing order failed – and it will go out on the second attempt.  We all occasionally misjudge funds in and funds out.  In desperate situations, such as loosing a job, the tenant may need prompting to start a housing benefit claim.  If  the claim is started, it can even cover them for a few weeks.  Better to be proactive!

Speak with your tenant, find out as much information as possible to do with their current situation, so you can determine whether this is a blip, or a larger issue. Maybe they would prefer to vacate, don’t suggest this yourself! However the tenants questions may lead to this.  For example ‘how much notice do you require?’ . You the landlord will know if they still have months to go in their fixed term.  Sometimes its easier to re let, than to force a tenant to stay committed when it is going to get them in a worse position.

DOCUMENT EVERYTHING.

Keep a record of letters, texts and emails – you may need to show at some point, what steps you took to get the tenant to pay;  these  come in handy if you have to  evict the tenant at a later date.

With students, who are jointly and severally liable, if their payment is more than two weeks later, it is always a good idea to let the rest of the group know, in a joint letter to all parties.  If the tenant has a guarantor in place, let the tenant know my email and letter, that your next steps are to inform their guarantor, unless they make contact and arrange a payment schedule.  This usually pushes tenants to make contact!

PAYMENT SCHEDULE/OFFERING A SOLUTION.

Hopefully this is just a blip with your tenant, and with a little help and patience from you, they will get themselves back on track with a payment schedule.   Work out what they can afford to pay and when, and get them back on track ASAP.  If they are making a housing benefit claim, ask for evidence every step of the way.  Ask them to give the HB department permission for you to track the claim.  This is very important, as you can ensure its not be left in limbo!

It an be helpful to the tenant to agree to spread a debt over a few months, and tag it on to each months rent moving forward.  Ensure that this won’t delay the inevitable, by asking them to show you how they will be managing their income and expenditure moving forward.  They may not be too keen on this idea, no one likes income and expenditure sheets!

BEGIN THE NECESSARY STEPS TO GAIN POSSESSION – LEGAL ACTION.

Explain to the tenant, that you are issuing a section 21 notice to quit, and that if they get up to date with their payments or adhere to a payment schedule then you will not pursue the notice. However this notice sits in the background in case they fail to keep to their agreement.  It saves time later, when you are left no other option to get them out.

KEEP GOOD RECORDS OF ALL THE TENANTS PAYMENTS. 

Make a note of all the payments received by the tenant, and forward a receipt to them.  Up date your tenant regularly, so they can see what they owe.  It is better to keep an accurate record from the off, rather than trying to work it out later.  This can lead to a dispute also, and is unnecessary.

TAKE THE RIGHT LEGAL ADVICE.

Ensure the paperwork you issue is correct.  Use the proper forms.  Do  not try and wing it, this is fatal!  Any mistake in the paperwork or its content can  result in you not being granted possession of the property.  There have been many legal changes in the last year, so it is worth checking and getting the correct advice.

REMEMBER.

Landlords should not go to the property unannounced, too many visits can be construed as harassment. It could be argued that you are preventing the tenant from having ‘Quiet enjoyment of the property’, so always ensure if you are visiting to give 72 hours notice.  Stay professional, don’t give the tenant ammunition to pursue a claim for damages. 

 

 

 

 

 

 

Share

Letting agents worth the fee?

November 10th, 2016

Buy-to-let investors have traditionally had two choices when it comes to finding tenants and managing properties – pay a letting agent a sizeable fee or do it themselves.

Lettings agents will typically offer a “let-only” service, where they will find, interview and vet tenants, do the paperwork and take the deposit and first month’s rent for a fee of around £600 plus VAT. Then there is a “full management”service, which can cost 10 per cent of the rent or more. Here, the agent will continue to collect rent and deal with the day-to-day running of the property.

An agent’s services can be essential for landlords who have properties far away or a large portfolio to manage. But for those seeking a more hands on approach, Railton-Meeks can offer a more bespoke option to the landlord, see our list of services in our management section.

Happy to discuss your personal requirements.

Share

Are you protecting your deposits within 30 days, if not you are breaking the law!

September 21st, 2016

As a landlord who manages your own properties, are you insuring  your tenant’s deposit’s within 30 days?  If not, you are breaking the law, and you may have to pay a fine of up to three times the amount of the deposit and or the inability to serve a section 21 notice – which actually makes it a lot harder to get your tenants out!

You have a choice you can either insure the deposit with one of the schemes  and keep the funds in your bank account or send the deposit amount to a custodial scheme.

Pass the tenant proof of the protection (called the Prescribed Information) within the same 30 days of receiving the deposit.

The scheme provide you with the majority of this information for you to pass on.

Pass the tenant proof of the protection (called the Prescribed Information) within the same 30 days of receiving the deposit.

Don’t be caught out!   If you have many properties, consider using an agent who is up to date with law and requirements.

Try one of these: –

https://www.mydeposits.co.uk/

https://www.thedisputeservice.co.uk/

http://www.depositprotection.com/

 

 

 

 

 

 

 

 

 

Share

HMO Licence – Does your property need one?

May 10th, 2016

HMO Licence and Licensing

An HMO licence is granted to a landlord if an HMO property meets certain standards that ensure it is safe and suitable for the tenants. In addition most HMO landlords only need to obtain a licence if the property falls into the following criteria:

  • it is a three-storey house (including cellars, attics, basements, mezzanine floors and loft conversions). The definition of storeys includes habitable basements and loft conversions.
  • it is occupied by five (5) or more people from two different households or more
  • tenants share the kitchen, bathroom or laundry area
  • in some cases, a maisonette in a house or above commercial premises may need a licence if similarly, occupied

If your property is smaller and rented to fewer people, you may still need a licence for your HMO. This will depend on the area your property is located so is it always best to check with your local council for more information. 

Your HMO licence is valid for 5 years and therefore must be renewed before it comes to an end.

How to apply for an HMO License
The landlord must submit one (1) licence application for every property that will be rented out. A fee will be charged by the council for the processing of licence applications. Processing time can take anywhere between 6-8 weeks. The council will consult with individuals who may be interested in the property and deliberate whether licence conditions should be imposed for the HMO in question.

All licensed HMOs will be inspected to identify any need for repairs, or to assess fire safety, amenity or other safety concerns. Landlords must comply and bring their property up to standard within timeframe that is determined by the council.

The gov.uk website has an HMO guide that covers everything you need to know as property manager or HMO landlord.

New to HMO’s? Looking for a reputable property management agent to manage and maintain your HMO properties? Call HMO specialists Railton-Meeks today to discuss our specialist HMO management services. 

Share

Considering an HMO property as your next investment purchase?

May 9th, 2016

Are you considering an HMO property as your next investment purchase?

The Housing Act 2004 introduced a new definition of a House in Multiple Occupation (HMO) from 6th April 2006 in England and 30th June 2006 in Wales.

When you let a property which falls into one of the following types, it is an HMO:

  • An entire house or flat which is let to 3 or more tenants who form 2 or more households and who share a kitchen, bathroom or toilet.
  • A house which has been converted entirely into bedsits or other non-self-contained accommodation and which is let to 3 or more tenants who form two or more households and who share kitchen, bathroom or toilet facilities.
  • A converted house which contains one or more flats which are not wholly self-contained (i.e. the flat does not contain within it a kitchen, bathroom and toilet) and which is occupied by 3 or more tenants who form two or more households.
  • A building which is converted entirely into self-contained flats if the conversion did not meet the standards of the 1991 Building Regulations and more than one-third of the flats are let on short-term tenancies.
  • In order to be an HMO the property must be used as the tenants’ only or main residence and it should be used solely or mainly to house tenants. Properties let to students and migrant workers will be treated as their only or main residence and the same will apply to properties which are used as domestic refuges.

Whilst there has previously been no specific definition of an HMO in Planning legislation, changes introduced by Government to the Use Classes Order in England only mean that there is now a legal definition for planning terms which means that an HMO has the same meaning as in Section 254 of the Housing Act 2004.

Two specific sets of Regulations have been introduced in England taking effect from 6th April 2010. They are The Town and Country Planning (Use Classes) (Amendment) (England) Order 2010 and The Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2010

Any new property to be occupied as an HMO in England will need planning consent under class C4 (HMOs), but planning consent will not be needed for any HMO reverting back to class C3 (dwelling houses). The Regulations do not apply retrospectively to any existing HMOs.

Tired of the maintenance headaches and regulations that come with managing HMO’s? Let HMO specialists Railton-Meeks manage and maintain your HMO for you, call Sylwia our Property Manager to discuss your requirements. 

Share

How to choose a letting agent?

November 1st, 2010

When I started investing in the late 1990’s, I was lucky enough to be working in a letting agency, where I had all the expertise and knowledge to hand. During this time I saw many Landlords turn to us once the novelty of managing their property had worn off; in particular after the first instance of their tenants calling in the middle of the night!

It is still true today that the majority of new Landlords whether it is an accidental or a planned investment strategy, choose to manage the first property themselves. They think they would rather save themselves the fee, believing that agents don’t work hard enough for their money.  This may be true of some agents, but the good ones work very hard indeed!  With all the possible pitfalls, and new legislation to keep abreast of, it makes financial sense to hand the job to professionals.

Here are some pointers to guide you when looking for a good agent, and some things to consider….

1. Do you have a recommendation?  Do you know someone who has had a positive experience to report, and then a recommendation is an excellent way of beginning the search.

2.  Is the letting agent proactive?  The best of letting agents will always be proactive in everything they do, from advertising to inspection. How to tell if they are proactive? Put them on the spot; ask them to outline how they ensure that your property is being looked after by the tenants.  Do they check on the property at regular intervals, as this is very important! Tenants, who know that they will be checked upon, will make an effort to look after the property. Does the agent keep in touch with the tenant (not just when the rent is overdue!). Tenants, who don’t clean their property, have problems bringing it up to the condition they took it when it is time to move out!) 

3. Other points to take into consideration are, how much is the letting agent charging, and what for exactly? Do you think you are going to get value for money and the best possible service? Do you think you will be able to get on with the agent? Good relations with your agent are important. What level of service are they offering you?

4. Ask the agent to provide contact names and telephone numbers of their current clients; the agent will need to get permission, but if they have a good working relationship with the client this will not be a problem.  Current clients will be more than happy to give the full story behind the service they receive.

Questions to ask the client: a. How many void periods have you experienced? b. Do you receive your rent pay out in a timely fashion on a set day each month? c. Is the cost of your repairs good value?

5. Does the agent appear to be a stickler for the Law?  All properties require an EPC (energy efficiency certificate) prior to being advertised.  They must also have a current Gas Safety certificate and a PAT test (Electrical Appliance Test). Is your furniture fire safe?

6. Is your agent associated with one of the professional lettings bodies for example ‘The Property Ombudsman’? www.tpos.co.uk

7.  Does the agent have Professional Indemnity Insurance? This is important you need to know that this is in place in case of any recourse.

8. Finally, do you need to go with a high street agent?  No not necessarily, exceptional service does not start with a shop front.  As long as the agent uses the majority of the large advertising property portals, and has a proven track record of letting your type of property, with happy clients; then these are the important factors.

You will also find that non high street agents have fewer overheads and will pass these savings on to you! You may also find that you receive a more tailored service, and smaller agents will be far more committed to their clients.

Railton-Meeks are of course biased, but we have been servicing very happy Landlords for many years.  Our clients feel they receive the best service out there.  One very important point – when our clients want to see us, we pay them a house visit, no more parking problems on the high street!!

Share

There are definite signs to look out for to help identify an improving market

October 27th, 2010

There is nothing new about recessions – they have been with us since time immemorial. They form part of what is termed the ‘economic cycle’ – periods of growth and decline which have happened throughout history. These have an effect on all markets and industries including property.

A successful property investing strategy involves buying at the bottom of the cycle, and therefore maximising the financial return. But how does an investor identify this critical moment which determines success or failure for the property investor?

Most economists agree that the economic cycle consists of five distinct stages, each of which flows into the next. These are defined as the peak, contraction, recession, recovery and prosperity. At the peak of a boom property is considered to be overvalued. Credit providers are heavily burdened with debt. As the contraction stage starts, sources of credit dry up, and property sales grind inevitably to a halt. The price of property and shares is at a low ebb and credit is difficult, if not impossible, to obtain. Recovery commences when credit facilities again become available. At this point institutional investors become involved in the market, moving rapidly to purchase undervalued property and shares. The next stage is prosperity. Prices rise once more, the workforce’s salaries rise and credit providers become more amenable to risk.

So when was the last time we experienced this economic cycle? The last significant correction in the UK housing market occurred in 1991. At that time, banks and other lenders frequently offered 100% mortgages – yes, I know it’s hard to believe but it really did happen. This more-than-generous financing fed the strong desire to own property which inevitably led to the peak of the housing ‘bubble’. But as the economy slowed a total of 75,540 repossessions followed, partly due to the burden of sub-prime debt – does that sound familiar? This represented the highest recorded in any one year (so far) and spelt obvious heartbreak and misery to those concerned. The market did not seriously begin to recover until 1994. At that time the UK economy was registering 4.2% GDP growth, the highest level for six years. The sustained economic growth, combined with rising incomes, meant people could afford larger mortgages. Consequently, demand for housing rose.

Most people view property as essentially a stable asset, despite the peaks and troughs that occur at the various stages of the economic cycle. Unlike investment in shares, a property owner has a tangible asset of bricks and mortar. A constantly expanding population will always need somewhere to live, and therefore there will always be demand.

Knowledge of economic cycles and the property market means one can begin to predict the upswing in a market. The current financial crisis has strong parallels with that of the 1991 crash. The beginning can be traced to early 2007, when the total value of sub prime mortgages was estimated at US$1.3 trillion. Rising property values resulted in lenders taking more risks. The number of credit providers began to collapse under the weight of defaulted loans, with the most notable example being the once mighty Lehman Brothers. The scale of the problem was becoming horribly clear. As the flow of credit between banks dried up, the knock on effect included reduced lending to consumers and thus a slowdown in the housing market. Once interest rates are low enough, credit flow becomes liquid once again. At this point institutional investors enter the market, confidence returns and the upswing begins.

Usually upswings begin in the same place the downturn began. The US housing market is therefore key – as soon as it begins to pick up then it can be seen as a sign for the rest of the world. Standard & Poor, the ratings and analytical company who produce the US Case-Schiller housing index, stated in that in 2009 property would reach the bottom of the cycle.However it is clear that the US housing market has not started to recover in all of the US States. For example Florida houses prices are still going down 12 months after this statement was made.

The UK now has the Coalition goverment, Cameron and Osborne have announced the wide spread cuts to be made to the public sector; and there is certain to be increased localised unemployment. However if one is to listen to the media then we are heading back to a dip in house prices. Maybe…. however one thing is for sure, rents are rising, and if Cameron & Osborne can get the banks lending properly again, then give it 12 months and we could be on the recovery end of the sectrum once again.

Share
Get available property updates from Railton-Meeks