HOW TO AVOID BAD TENANTS

Becoming a buy-to-let landlord might sound like easy work, but the truth is that there are lots of things that can make your job difficult. One of them is dealing with bad tenants. Bad tenants are without doubt, the most single biggest concern for landlords. After all who wants a tenant that is not going to pay, be a nuisance or wreck the property? NOBODY!

Luckily, we have compiled a handy guide of what to do, what not to do and a list of handy things to look out for when it comes to getting the right tenants in your property.

At RENTAHOLICS we believe in taking a proactive approach to avoiding bad tenants. As the saying goes, prevention is better than cure! So what can you do about it?

Create a tight tenancy agreement

Whether you’re going to manage your property on your own or work with a lettings agent, make sure that you prepare a well-written tenancy agreement before letting out a property. Outline what is expected of your tenants and what constitutes unacceptable behaviour.

Never accept a tenant or hand over the keys to your property without getting their signature on the tenancy agreement first; it’s an unnecessary risk that could prove costly.

Conduct thorough tenant reference checks

First and foremost, make sure you thoroughly reference ALL prospective tenants, which should include the following:

• Credit checks

• Employment status/history

• Current and previous rental details

• Employment references

• Landlord references

This will highlight any early warning signs about the tenants character and potentially their ability to effectively pay the rent. At RENTAHOLICS we will always provide you with a recommendation whether to accept or reject prospective tenants. Find out more about our tenant referencing checks.

Always get a tenancy deposit

ALWAYS take a full deposit. There are no “IFs,” “ANDs,” or “BUTs” on this one. Stay clear of tenants that want to pay in instalments; not only does it highlight their financial difficulties, but it also adds legal complications when it comes to the tenancy deposit legislation.

Once you get the fee, be sure to put it into an authorised tenancy deposit scheme. This is as much for your protection as the tenants.

Give adequate time for funds to clear

Firstly, insist on electronic transfers. This is an immediate transaction and allows the check-in process to run smoother. Don’t hand over any keys or allow the tenant to enter the property until you have the deposit and first months rent cleared into your account. Be wary of tenants who are looking to pay via cheque. If they insist. wait until the cheque has cleared before allowing the tenant to move in.

Many professional bad tenants will hand over a cheque (which will inevitably bounce), hoping that the landlord will immediately hand over the keys in good faith (before the cheque has cleared). Novice mistake.

As soon as a tenant has the keys and permission to enter the property, they legally become a tenant, despite whether or not the funds clear. At this point, it can take up to several months before they get removed.

Be wary of cash payers

Tenants may offer to pay rent upfront for a large period e.g. 6 months. While it may seem appealing and an ideal situation for a landlord, it may often be an evil ploy to disguise sinister activities.

It’s not unheard of for tenants to pay cash upfront for a few reasons, including to grow drugs, turn it into a brothel or some other legal activity. The tenants may also have a terrible rental history, so the offering of large some of cash can be a diversion for any of the latter reasons.

Of course, this may not always be the case, but it is something to be wary about.

Conduct a professional check-in and inventory

If you do have the unfortunate experience of being lumbered with a bad tenant, then the foresight of having a thorough check-in and inventory will become an invaluable tool, especially if the proper is left in a state of disrepair.

Having time stamped photographs with a detailed condition report of the property will allow any deductions from the security deposit much easier to obtain. This is the type of evidence a government authorised deposit protection scheme will require in order to deduct funds from the deposit.

Conduct the viewings yourself

A lot of landlords prefer to outsource this to their property management company. However, we believe this is one aspect that the landlords should ALWAYS do themselves, where possible. This is your opportunity to see who is going into YOUR house. Therefore there can be no better of judge character than you.

Often estate agents will just rent the house to the first tenant that makes the first offer, ignoring any warning signs. Although this can result in a faster tenancy, this short sighted approach can end up costing a fortune further down the line. We find that when landlords conduct their own viewings they are far more diligent in their approach, which in turn makes for better tenants. Having first-hand experience with the people you could be renting to will offer peace of mind - listen to your gut when making a decision.

Don't be afraid to say NO!

This can often be daunting, especially if confrontation isn’t your thing, which we can totally relate to. If a prospective tenant shows complete interest but you’re having doubts for whatever reason, have the courage to say no. Do NOT feel obliged to accept if you do not feel comfortable.

Simply inform the interested applicant that you have several viewings booked and you intend on taking them all before you make your decision. It’s a perfectly plausible and normal situation.

On that note, we do NOT recommend under any circumstances stop looking for tenants until you have completely secured tenants, which means someone has:

1) paid their deposit in full

2) paid their first month’s rent in full

3) signed contracts

4) moved into the property*

*this should not occur unless 1-3 have been completed.

Signs of a bad tenant

You may want to be wary of your prospective tenants if:

• They try to overly haggle with the price.

• They keep rescheduling and/or arrive late to the viewings, without apologising or giving you prior notification.

• If they have a scruffy appearance and/or bad odours.

If you follow the points we’ve outlined in this blog post, your likelihood of experiencing bad tenants will decrease. If you have any questions in regards to the points raised or require some additional advice, give us a call on 0777 69 69 248 and we will be more than happy to help.