Tenant from Hell Walks Away After Wrecking Property

A landlord has been left picking up the pieces after a tenant wrecked his property and then walked away from court without paying a penny.  £20,000 of damage was caused in total rendering the property inhabitable until the damage is put right.

Teenage tenant, Lee Davis destroyed the flat he was renting in Darlington following a request to vacate the property due to non-payment of rent.  Most tenants would simply accept this as a fair request, but Mr Davis was intent on going on a rampage instead.

The Judge, whilst admitting that he would like nothing better than to make Mr Davis repay the costs of repairing the property, was only able to give the defendant 300 hours of unpaid community service as punishment.  He said his hands were tied as there was no way that Mr Davis could find the funds to pay for the damage.  The defendant walked away whilst the landlord was left open-mouthed and out of pocket.

These problems are actually fairly common in the rental world.  Often, when discrepancies arise between tenants and landlords they are settled amicably, but occasionally a tenant will take umbrage over a request or issue and set about destroying their surroundings in anger.  Many of these issues can of course be avoided by carrying out thorough checks of tenants before agreeing to let the property.  The good news is that the majority of tenants are law-abiding, respectful and honest and will give no cause for concern.

We don’t believe thorough checks were made in the case of Mr Davis and that if checks were made there was probably fraudulent information supplied or shortcuts taken.  A thorough tenant check requires credit checks, personal character references, financial checks, and employment checks to ensure the tenant is who they say they are and that they can afford to pay the rent each month.  £20,000 is not a figure that any landlord wants to think about coughing up and we think this landlord probably cut their losses and sold the property in the end.  A big price to pay for not checking up on a tenant.

Any landlord who has suffered losses because of malicious damage will understand how important it is to conduct proper checks of their tenants.  Of course, even a tenant that looks great on paper can suddenly turn into whirling dervish when tempers fray and there is little you can do in these cases.

In addition to carrying out the right level of checks you should also add malicious damage to your landlord insurance.  Many low price insurance policies won’t usually include this as standard so it’s worth covering your back and your property.

Landlords Warned of Winter Fire Risks

As the winter fast approaches more of us are switching on our heating and turning on the fire.  As a result, this time of year is often when the most fires occur in the UK.  As a result, Landlords are being advised to ensure they have sufficient provisions in place within their properties to ensure protection of tenants and the property itself.

Fire and smoke kill and also cause devastating damage to properties and it’s essential that measures are taken to avoid fatalities and protect against damage to rented property and those properties nearby.

Let Insurance Services has recently released figures stating that rented accommodation is seven times more likely to have a fire than owned property.  That’s an astounding statistic and one that can’t be ignored whether you are a tenant or a landlord.

It’s essential that smoke alarms are fitted in all rented properties to ensure quick warning systems are in place should a fire break out.  Whilst some flats and apartments have fire alarms in communal areas, it’s often too late once a fire in a flat reaches these devices to sound the alarm.  Smoke can kill in seconds and it may not reach the communal fire alarm until it has done its worst.

Surprisingly, it’s not mandatory for rented accommodation to be fitted with smoke alarms.  However, as a landlord you have your tenants, your property and your reputation to protect so is it really worth avoiding installation for the sake of a few pounds or a few minutes up a ladder?  Smoke detectors today are affordable and could make the difference between life, death and total devastation of your property.

Michael Portman, MD of Let Insurance Services, said: “Not having a working smoke alarm doubles the risk of death and with over 27,000 fires a year across the UK, there needs to be a change in legislation.

“Out of 50 people killed in house fires in West Yorkshire over the past five years, 48 were in rented accommodation. What’s more, one fire brigade said that they do 60,000 home safety checks a year and find many alarms that are not working.

“Landlords and agents have a ‘common law’ duty to ensure that their properties are kept free from hazards for the health and safety of their tenants, including fire hazards. We urge all landlords and agents to check that every smoke alarm is in working order and there are an adequate number of smoke alarms are installed.

If you are a tenant living in a property without a smoke alarm fitted it’s vital that you address the issue with your landlord.  Produce statistics from this article if you have to, but make sure your landlord fits a suitable device as quickly as possible.  Fire can break out at any time and you want to be sure you have the means to escape quickly when it does.  You should also familiarise yourself with escape routes so you know what to do should a fire start.

We’ve put together a checklist for landlords and agents that will help to protect your properties and tenants and keep them as safe as possible:

• Fit battery (or mains) operated smoke alarms in your properties. Show your tenants how to test them, and change the batteries between tenancies
• At the start of the tenancy check that the battery works and demonstrate to the tenant that the alarm works
• Check whether your tenancy agreement requires the tenant to ensure the smoke alarm is in a working condition
• At your regular property inspections check the smoke alarms work. If they are not working, produce a new battery at the inspection to fit to the smoke alarm and ask the tenant to pay for the battery there and then
• Check that any working chimneys have been swept

The nation’s home insurance policy holders see a decrease of 90.4 per cent

According to the latest analysis of MoneySupermarket contents insurance quotes, the UK’s homeowners have enjoyed a decrease in the cost of their policies by an average of 0.4 per cent.

This news comes at the same time as the news that home contents insurance policyholders on the island of Jersey have seen an average decrease in the cost of their premiums of 13 per cent, while residents of South London and East London seem also to be triumphing in the battle against the UK’s home insurance cost hikes, having seen a decrease of around seven per cent. The results show that these policyholders began enjoying these reductions to their home insurance premiums in Summer 2010, and continued to do so until Spring 2011.

Other areas in the top ten areas to have enjoyed the staggering discounts include Norwich Dorchester, Exeter, Leicester, Isle of Man, Walsall and Crewe, all of which have seen reductions in the cost of their home contents insurance premiums by between four and seven per cent.

MoneySupermarket’s Julie Fisher, head of home insurance, said: “Our research shows some areas have seen more of a decrease in the cost of their premiums than others. Unfortunately, postcodes can dramatically affect how much people pay for their home insurance premium.”

She explained the likely reasons for the discounts in Jersey and South and East London: “For example in Jersey, one fifth of the population is retired, and low crime rates coupled with mild weather conditions means that the cost and frequency of claims are likely to be lower than other areas of the country. East London is undergoing significant regeneration and infrastructure improvements and insurers may be adjusting premiums as a result.”

However, it’s a rather different story for residents on the Channel Island of Guernsey. While neighbouring Jersey residents have seen a healthy reduction in the cost of their home contents insurance premiums, Guernsey folk have suffered the highest increase in the cost of their home insurance premiums – a whopping 32.24 per cent. Along similar lines, home insurance premiums for residents of Orkney’s Kirkwall and the Shetland Islands’ Lerwick have been subject to soaring increases of 21.05 per cent and 20.10 per cent increase, respectively.

Julie Fisher continued: “In the case of Guernsey, Orkney and The Shetland Islands, home insurance cover in Summer 2010 was lower than the national average premium price. It is likely that insurers have brought these prices in line with the rest of the country, rather than responding to any specific ‘occurrences’ on these islands, although climate may play a part.

“If your property is classified as being in a ‘high-risk’ area – whether for crime, flooding or even fraudulent claims – it will be reflected in your insurance premiums. Living in a more affluent area will also increase premiums as property and contents values will generally be higher. Insurers use postcodes as a part of the overall risk factors when calculating premiums. Although there is very little you can do about the postcode in which you live, except move house, there are steps you can take to reduce your premiums, such as, installing a good home security system and security lighting.” For more information on building and contents information visit money supermarket.

Can I Rent Out My House in Secret?

If you are thinking about renting out your house then you could face an extra 1.5% of interest being added onto your mortgage rate and high administration charges.  That might make you wonder if you can get away with renting in secret.

Property transactions continue to slump and whilst some mortgage lenders are reducing their deposit criteria, many are still demanding large deposits in return for good deals.  This is making many homeowners consider renting to move, rather than selling up.

This process involves renting out your house so that you can rent another and gives owners a chance to ride out the slump and also avoid the high cost of moving home.  Unfortunately, the response from mortgage lenders has been fairly unsupportive in recent years.  Where once many mortgage lenders would grant a ‘consent to let’ and maybe charge a small admin fee, many now demand a significant rate hike in addition to larger administration fees.  It seems the mortgage lenders aren’t keen on the idea of renting rather than moving and with good reason from a business point of view.

So, back to the question – can you rent your home out on the quiet?  With many lenders forcing borrowers into expensive buy-to-let products and charging high fees it can be very tempting to rent without informing your mortgage lender.  However, according to the Council of Mortgage Lenders, you would be committing serious mortgage fraud.  Also, any tenancy agreement you draw up and agree with the tenant will be null and void should the mortgage company find out you are renting and wish to take matters further. There have been cases of tenants being served eviction notices for the next day and any agreement you have put in place will not be valid.

If you are serious about renting out your home for the foreseeable future then it’s very wise to tell your mortgage company. Not only will you sleep better at night, but you can also be sure you are operating in accordance with your mortgage agreement and tenancy law.  You will also need to advise your home insurance provider to ensure the right insurance is in place.

Rental Gold – Renting Out Your Property During the London Olympics

Holiday rentals aren’t just reserved to country cottages and beachside retreats.  If you have a property in London or the surrounding area then you could be in for some rental property opportunities during the Olympic 2012 season.  Thousands of tourists will be hitting our shores and with hotel rooms at a minimum or those that are left available at premium prices, these people will be looking for somewhere to stay.

If you have a flat or house available in Stratford or close to the Olympic Village then it could be a “nice little earner” for you next year.

But will your mortgage lender allow you to rent out your home or the rooms within?  Will you need special insurance?  What will demand be like?

Online holiday rental website Homeaway.co.uk predicts that many homeowners will use their website in order to cash in on the 2012 visitors.  Potentially, renting during this period could generate an average of £4500 over the 16 day-long event.  1 million visitors are predicted to visit from overseas destinations alone and this doesn’t factor in those travelling from other parts of the UK.

Let’s take a look at the mortgage issues when renting out your home to tourists.  A spokesman from the Council of Mortgage Lenders (CML), said: ‘If borrowers want to make any changes to their mortgage, because they want to rent out their property short term for example, they need to contact their lender to discuss the request as their contract is unlikely to cover this. ‘They would also need to contact their insurer as they would potentially not be covered in the event of a claim.’

One mortgage lender, Lloyds TSB said they would allow their customers to rent out rooms within their property or their whole property subject to a number of conditions.

A spokesman for Lloyds TSB, said: ‘If customers do wish to offer accommodation at the time of the Olympics, they can rent a maximum of two rooms to a maximum of two lodgers.  In this circumstance, we do ask that the customer let us know. In order to rent out their entire property to a tenant rather than a lodger, we require that this is done as an “assured short hold tenancy”, which protects the tenant, the homeowner, and the lender; the minimum legal time from for this arrangement, however, is six months. Customers should speak to their lender and consult legal advice if they are unsure of what action to take.’

Every mortgage lender is different so it’s important to contact your lender way ahead of time so that the necessary paperwork and arrangements can be made.  This will also ensure you have ample time to advertise your property for rent.

You will also need to arrange additional insurance. You’ll need to let your insurer know of your intentions as most standard buildings insurance won’t cover letting out your home and therefore won’t cover any loss or damage resulting from such an arrangement.  Even those living in flats and covered by their landlord’s insurance policy will need to seek additional advice and assistance.  It’s the worst case scenario, but if your house burns down and you don’t have the relevant insurance, your insurer will probably refuse to pay out.  Direct Line is one insurer launching temporary cover for its home insurance policies to ensure customers are clear on what is and is not covered if they do decide to rent their home out to Olympic tourists.

There is also the subject of tax.  If you want to rent a room whilst you stay in the property you can earn £4,250 tax-free.  However, if you are also cooking dinners, handling laundry or providing any other service then this will be seen as running a business and you will be subject to paying tax.  If the Inland Revenue suspects you are not declaring rental income whey may launch an inquiry and this can lead to substantial penalty charges.

If you think your property has good rental potential then this could be a great way of making some money in 2012.  Make sure you let all relevant parties know and choose a good website for advertising your rental property.

How to Evict the Tenant from Hell

A couple of weeks ago we published an article on how to avoid the tenant from hell, but what if they have already infiltrated your defences?  They may have passed all the credit checks, ticked all the right boxes, paid rent on time and shown all the signs of being the model tenant only for problems to suddenly occur.  Whether you are having problems with rent being paid or damage being made to your property there are procedures you can follow to evict a tenant if things have gone too far.

Keep Communication Lines Open

Communication is the key issue when problems occur between tenant and landlord and it’s important that you make your intentions clear from the outset.  If your tenant has fallen behind with the rent or is refusing to pay then you have every right to protect your rental income and investigate legal proceedings if necessary.  The good news is many problems such as this can be resolved by finding out what the issue is.  If your tenant has fallen behind the rent because of a certain misfortune you can give them a date by which they need to come good with the rent giving them a little leeway.  After all, it’s going to be a lot more hassle to find another tenant than wait a couple of weeks for the rent that is due.

If your rental property is mortgaged then you may have an obligation with your lender to keep your rental income above a certain level.  If you have no choice, but to start the eviction process then you need to check that certain procedures are followed.

Before you begin the eviction process you must ensure that both yourself and your tenant has a signed copy of the tenancy agreement and that you are confident of the rent schedule.  You should also check that the rental deposit is protected sufficiently and that there are no disrepair issues with the property in question.

Issuing the Paperwork

If your tenant is more than 2 weeks behind with the rent then it’s time to serve a Section 8 notice.  This notice must be responded positively within two weeks of receipt and if the tenant has not done so you should begin legal proceedings immediately.  It can take anything up to 8 weeks for a court order to be issued.

Before you process your claim you should ensure you have all the relevant paperwork and evidence available.  If there are any errors or false claims these will be brought to light at the hearing and could result in a second hearing or a dismissed claim.

Problems with Legally Evicting a Tenant

Of course, in our democratic society, tenants always have the right to defending their position.  The court will send your tenant a copy of your claim to the tenant advising them strongly to seek legal advice.  Free help is available to tenants from Shelter, solicitors, the Citizens Advice Bureau and also their local housing authority and there are also a number of specialist Government websites offering advice to tenants facing eviction.  There is a severe shortage of council and social housing available in the UK right now and these organisations will do all they can to ensure tenants can remain in their rented accommodation.

However, the law is the law and you as a landlord have a right to evict a tenant who has breached their agreement or is refusing to or simply cannot pay their rent.  As long as you ensure you communicate with your tenant and attempt to resolve any difficulties you may be able to avoid the long and arduous process of tenant eviction.

Advice for First Time Landlords

Buying a first buy to let property is exciting and can be a great investment.  It also means that you have to get some of the important legal and financial issues sorted out before you have tenants move into the property.

If you’ve never owned a buy to let property and never had tenants there are probably quite a few unknowns you might be unsure of or that could be causing you concern.

This article will give you a run-through of some of the most important requirements you need to have covered in order to rent your property to tenants legally and safely.

Provide an Energy Performance Certificate

It’s a legal requirement to give tenants the chance to view an Energy Performance Certificate of your property.  These certificates give ratings from A to G regarding the energy efficiency of the property.  A is the most energy efficient and G is the least.  In order to get a certificate you will need to contact an accredited domestic energy assessor.

Protect your Tenant’s Deposit

By law you need to put tenant’s deposits into a deposit protection scheme within 14 days of receiving the money.  A Tenancy deposit protection scheme is there to guarantee that tenants get their deposits back at the end of their rental agreement providing that the property they have rented isn’t damaged.

Landlord Insurance

Having the right Landlord Insurance for your property is crucial.  This is a different kind of insurance than you would normally take out if you were living in your own home.  If something in your property is damaged or if someone is injured in your property you may well need Landlord Insurance to cover a claim.

Make Sure your Property Complies with Safety Regulations

It’s important to make sure that your property meets all the appropriate safety regulations.  The electrical appliances need to be checked every few years.  Gas appliances need to follow a similar procedure.  A “Gas Safe” engineer needs to inspect your gas appliances to make sure they meet all the correct requirements.

Hire an Agent

If you don’t want to deal with a lot of the administration and safety checks yourself you can always appoint an agent to look after the property.  They will charge you a certain amount of the rental income but it could save you time.

One of the best things you can do when becoming a Landlord is do a bit of research yourself and try to become as knowledgeable as possible about the whole process.  There could be legal issues and implications you might need to familiarise yourself with as well as the procedures for resolving disputes between Landlords and Tenants.

The legal and safety issues might seem overwhelming if you’re just starting out as a Landlord but once you have them all sorted out, being a Landlord doesn’t need to be so daunting.

When is the right time to sell your buy to let?

No so long ago, buy-to-let was viewed as a pretty sure bet by those with money to invest; with the potential to make big long term profits, and a good interim income, they presented an attractive way to invest your money.  But with current economic volatility, and the fluctuation in housing prices, it’s no surprise that some landlords are now rethinking their portfolios.

Digging into our own data (here at Simply Business) we can see that when we compare the average market value of those properties insured with us in 2008 vs 2010 there is a drop of 6%. This is particularly significant when you consider that prior to 2008 we’d seen prices appreciate year on year.

I guess the question on many landlord’s lips is – are we going to turn the corner and see property prices begin to recover? Or,  is now the time to sell that buy to let? If you too are in this position it’s important not to act hastily – there are many things to consider when making the decision about whether or not to sell your buy-to-let property.

First and foremost you need to remind yourself of what your original investment aims were when you bought your buy-to-let.  For the majority of landlords this kind of property is a long term, high-yield investment, as opposed to an investment for short-term capital appreciation.   And if you fall into this category then it’s important to keep the long term in sight.

During the spring of 2010 thousands of owners off-loaded their buy-to-lets because of fears that the new government was going to raise Capital Gains Tax to 40 or 50%.  In the end the increase (and only for those who fell into the high-tax bracket) was to 28%.  This just goes to show that having a knee-jerk reaction in the world of property investment can be costly.

Similarly, to panic sell a property because there is a dip in market prices can end up being a mistake.  Many landlords feel that if they fall into negative equity they should get rid of their buy-to-let.  But this is really the worst time to sell.  Prices rise and fall but over the longer term they tend to follow a significant upward trend.  And the truth is that negative equity is only a problem if you sell, or find yourself in a position where you are forced to sell.

A long period of vacancy may also tempt landlords to sell their property. If this is the case for you, but you’re currently in negative equity it is important to note that there are other options open to you.  It’s always worth doing a bit of research into other rental properties in your area.  It can take only a small amount of money, and a little effort, to bring your property up to a standard where it will be easier to let.

But if you’ve reached a point where you’re ready to sell simply follow the usual property rules.  It’s well known that between March and July is the best time of year to put your property on the market.  And keep your eye on house prices and changes in tax and interest rates.  The last thing you want is to be selling in a buyers’ market.  But just as house prices fall, they also spike.  If you see a number of houses under offer in your area it could be a prime time to catch the buyers who’ve missed out.  However, if your neighbours have saturated the market with for sale signs that don’t seem to be going anywhere then it’s probably a good idea to hold off.

Overall, the most important thing to remember when you want to make a profit out of selling your buy-to-let is to not panic because of short term problems. Take the time to think through all of the issues at hand.  And always remind yourself – making a high profit on the property market is a long term investment.

Julian Watson is a guest contributor to The Big Property List blog. He’s spent more than ten years in the property industry and is the Landlord Insurance product manager for SimplyBusiness.co.uk.

Ten Tips for New Landlords

Letting property in the UK?

1. Take safety very seriously.

Landlords have obligations under law to keep tenants safe in relation to gas (carbon monoxide), electricity and fire. By law you MUST have an annual, valid gas safety certificate at ALL TIMES. There is no legal requirement to have an electrical certificate, but the only real way to prove the electrics are safe is a certificate, so sensible landlords get one every 3-5 years. All furniture and furnishing must show a fire safety label, if it doesn’t, it’s illegal, and you need to remove it. It is also good practice to install smoke/heat detectors and a carbon monoxide alarm. We all deserve to be safe in our homes.

2. Reference your tenants & get a deposit & guarantor

Having non-paying tenants in your property means no income, and it may continue for several months. It is a landlord’s worst nightmare, but unlikely if you take the right steps. To significantly reduce the chances of problems, reference your tenants (e.g. RLA Tenant Referencing), get several applicants and choose the best – don’t just take the first one that comes along. Take a deposit (it needs registering by law in a deposit scheme (see the Government rules).

You should also get a guarantor (e.g. a parent or relative) to agree to pay the rent if the tenant doesn’t (most tenants are agreeable to this). If you take tenants on benefits, get the benefits paid into a credit union account if you can.

3. Look after the property

Before the tenants move in, take copious photographs, with dates on them – floor, walls, appliances, ceilings, doors, and windows. Print them off and get the tenant to sign each one, so they agree that is the current condition of the property. If they do damage the property, this is clear evidence which will help you retain some or all of their deposit. During the tenancy, visit to inspect the property every three months and inform the tenant of any improvements they need to make (you need to give the tenant advance written notice of visits).

4. Tell your lender & freeholder

If you don’t tell your mortgage lender you are renting the property out, you are likely to be in breach of your mortgage conditions, which may invalidate your insurance. The best policy is to inform your lender. Most are agreeable to homes being converted to buy to let properties. If the property is a leasehold property (i.e. a flat), you should also write to the freeholder and give them the tenant’s name and contact details in case of emergency (some, councils especially, may charge for updating their records).

5. Use a written tenancy agreement

Don’t even think about letting a property without a written tenancy agreement. You can buy one online (Assured Shorthold Tenancy Agreement Template) or in some stationers like WH Smith.  A written agreement makes the details of the tenancy very clear in case of problems, and will be required in case of any court action. Letting property on verbal agreements is asking for trouble. Ideally the tenancy agreement will be signed AND witnessed. Remember to keep it safe, and scan a copy.

6. Get an Energy Performance Certificate

As of October 2008, an EPC has to be shown to a tenant BEFORE they move into a property, by law. An EPC is a grading of the property’s energy efficiency. They cost about £75, and last for ten years. Getting one is easy, and contains advice to improve the efficiency of a property. It’s advisable to replace all light bulbs with energy saving bulbs before the EPC assessor visits. Not showing the EPC to the tenant prior to them moving in may result in a fine from Trading Standards.

Get an online Energy Performance Certificate quote.

7. If tenants stop paying, act fast

When a tenant stops paying, many landlords freeze, and simply hope the tenant will pay up. Before you know it, several months have passed, and the arrears put your own financial situation at risk. To avoid this, watch rent payments like a hawk, as soon as one is late, call and write to the tenant to request payment. As soon as they miss a second monthly payment, you should issue formal eviction notices (which usually encourages tenants to pay, but if not lays the groundwork for the eviction). The eviction process is not straightforward and it’s advisable to get help from someone like Landlord Action  as soon as a tenant misses that second monthly payment. Typically an eviction (including legal and court fees) costs £700 and takes 3-6months – the quicker you get on it, the smaller the problem. Always be understanding, but also be firm.

8. Check you are insured

Many home insurance policies are invalid if a property is rented out, so check with your insurer. You also need to inform your buildings insurance provider (or freeholder if they arrange it on your behalf). If your property burns down and you are not insured, it could destroy your financial foundations, so check it. You should also get public liability insurance, so if someone is hurt in or near the building, you are likely to be covered. Insurance is boring…. unless you need to make a claim.

Get an online Landlord Insurance Quote from Melville Burbage and get online prices with a High Street Service.

9. Pick a good agent (or get trained)

Letting agents are unregulated, and sadly some are unscrupulous and will impose what some consider unreasonable charges on tenant or landlord or both, often when it’s too late to refuse. It is invariably best to use an agent who is a member of the Association of Residential Letting Agents (ARLA) as they have high standards, and agents need to be formally trained. Ask them what their fees are, including tenancy set-up fees, management fees, renewal fees, and what they charge tenants – get it in writing. If you do not use an agent, don’t DIY without some training – landlord associations and ARLA do training, as do many local councils (as part of their accreditation schemes). Property law is extensive – don’t get burnt, get trained. 10. Join a landlord association The largest UK landlord association is the National Landlord Association, which provides a regular magazine, many member benefits, a telephone helpline, and an annual conference. Membership is low cost and well worth it. The second largest UK landlord organisation is the Residential Landlords Association which offers similar benefits. Joining one gives you an insight into what a professional landlord needs to know to protect his or her finances and reduce risk of problems.

About the Author

Ollie Cornes is an experienced, professional landlord and entrepreneur. In 2002 he founded (and later sold) the Singing Pig property forum. He owns a multi-million pound portfolio of properties in and around London, and is qualified with the Association of Residential Letting Agents. His business, Juicy Property, provides online property management software and related services to landlords.