The press are very clear that landlords are the stuff of fairy tales – generally the not very nice ones, the ogres, the trolls! We read about ‘beds in sheds’ in some of the London Boroughs with appalling standards. For the great British public, this will colour how they view all private sector accommodation. This is so far from the truth to be laughable, as was demonstrated by a landlord I spoke to recently. So says Sharon Betton, landlord advisor with the Bolton Bond Board and author of The Landlord Good Management and Practice Guide.
He had taken sympathy on a young woman known to a member of his family. (Because of this, he did not take a deposit). The tenant very quickly fell into rent arrears. Apologies were profuse, housing benefit would be paid …… but eventually, the landlord served a s.21 notice. The one good thing to be said of the tenant was that she vacated before the landlord had to go to court. The landlord knew where she had moved to and his question was: How do I recover the money I am owed? Which happened to be a little over £1200.
The tenant was on housing benefit and in no paid employment (50% of the benefit dependent are in work). Therefore, there was no possibility of an Attachment of Earnings order. No deposit, so no help there. The only option for the landlord was to take the tenant to the Small Claims Court, though with little disposable income, the judgement was likely to be that a small weekly payment be paid, which was unlikely to clear the debt in less than a couple of years – hardly likely to be of much use to the landlord.
‘What a pity you didn’t get a guarantor’ was my mournful comment. ‘But I did’, he said. What a relief, the landlord could take him to the Small Claims Court. Except – he was also on housing benefit.
This was a steep learning curve for the landlord. Was there any way he could have safe-guarded his investment?
He could have insisted on the guarantor geing a home-owner.
He could have insisted on the guarantor having sufficient means to cover any debts.
He could have interviewed the guarantor, to ensure he understood what his responsibilities are, in the event of the tenant leaving.
He could have credit referenced his tenants and guarantors – the only way to get some idea of the credit worthiness of both.
Finally, he should not have accepted someone who did not meet his normal requirements for deposit, rent in advance and acceptable references.
Landlords cannot be the fairy godfather to everyone who presents to them. Their properties are their investments, sometimes their only income and many landlords find that rather than the goose that laid the golden egg, their private letting business provides little return for their efforts.
Don’t move on your minimum requirements for a tenant, don’t have sympathy, stick to your business plan – it won’t always avoid the bad tenant, but it might avoid some.
For advice on buy to let – Ask Sharon