Letting to someone you know. Win Win or Maybe Not?

18.03.13 041-1024

A landlord let a property to a work associate. At the time of the move in he needed an injection of cash so did not protect the deposit. The landlord was pleased with his choice, the flat was filled, he knew the guy, surely this was going to be a great tenancy, “I’ll get the rent in, he’ll look after the place and pay the bills. Sorted,” he thought.

Unfortunately this was not to be.

The tenant for whatever reason started to get behind in his rent. As they knew each other there was an amicable conversation, “oh don’t worry mate, pay me when you can, I know your good for it!”.

The tenant didn’t make any further full rental payments, there were bits here and there but never a full month.

Then came the final blow, or maybe blessing in disguise, the tenant vacated. He advised after he had gone of course, no notice was given.

The landlord visits the property, it’s not in a bad state but certainly not as clean and pristine as when it was handed over to the tenant.

There is a build up of post, bills, unpaid bills. It seems the tenant was in a financial pickle and had not paid any utilities for 9 months!

It was at this point that the Landlord contacted me. We had met a few times at networking events, everyone knows my door is always open to offer advice to fellow landlords.

Help help! I’ve got enormous utility bills and the property is going to be cut off. Help help!

I told the landlord to simply scan the AST and email it to the providers, along with a meter reading from today and advised the utility provider that the tenant has vacated today, the outstanding debt is not his responsibility.

What can we learn from this story, this real life story, that could happen to you.

1. Always fully reference your tenants. Whether you know them or not you want to be sure they are good honest tenants with good credit history and references.

2. Consider a rule that you do not let to people you know. I have seen many cases where familiarity does equal a successful tenancy.

3. Chase your rents.
Make sure you are firm with tenants who fall behind with their rent. Be firm, make them know that if they don’t pay the rent they will be given notice. If they are one day late, be on to them straight away.

4. Keep your paperwork in order. File your copy of your AST and take meter readings. If this landlord did not have the AST he would not be able to prove he was not liable for the utilities.

5. Perform inspections. Maybe if the landlord had visited the property he could have got a sense of the tenants worsening situation. You are allowed to inspect, as long as you have given 48hrs written notice.

6. Protect your deposits! Everyone should know this by now, there are no excuses. mydeposits.co.uk are an excellent scheme if you wish to hold the funds and the DPS an excellent easy to use scheme when you hand the money over. This landlord was lucky, if this tenant knew his rights he could have sued the landlord for three times the value of the deposit.

Many lessons learned here. I am delighted to say we have now relet the property for the landlord. The deposit is protected, the meter readings are logged, the AST is filed and our first quarterly inspection booked.

Oh and the landlord is spending more time with his new baby. That’s how we want a story to end!

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