Multiple choice exam for Landlords .... please answer three questions ...

[Vanessa]

This post has been inspired by the comments on a recent blog about tenant referencing services.  Some of them were extremely viscious, including one that said that tenants who do not pay their rent are "criminals".

Having been on the receiving end of delinquent tenants myself on several occassions, I am only too aware of the pain, hurt, and stress they cause by their actions.  Early on in my career, I was angry and outraged.  But experience has tempered that view.  Maybe I am a bit daft or something, but, rather than blame the tenants, I have looked to myself to take responsibilty.

You see, every time a tenant turned bad, it was someone who I had a bad "gut reaction" about or someone whose references did not satisfy me.  I knew in my heart that something was "not quite right", but went ahead with the tenancy anyway.  The only person I can blame in those cases is the person I see in the mirror.

As many people who have been in this game for a long time realise ... the best way to never have a bad tenant is never to let one set foot over the threshold of your property in the first place.

Landlordism is a "people" profession.  Humans do not act how we want them to, we cannot control them, and they will do bad things that we struggle to understand.  They are not robots who pay their rent on time and look after "your properties".   If you are not prepared for that, then perhaps property investing is not for you?  (For peace of mind, you could consider a service like Rent On Time, that pays the rent on time, every time, even if the tenant defaults).

When becoming a Landlord, be prepared to experience other sides of life, not your comfy existence where the world is all rosy and you can afford to purchase a property for your pension.  Feel priveleged that you are in this position, but it is not a "right", and understand that you may encounter people who will not care about you or your property!   Yes, really!

When it comes to dealing with people, it is never black/white in my experience.  There always needs to be some degree of flexibility, putting yourself in someone else's shoes, and, dare I say it for fear of retribution .... compassion.



There is not one person reading this who has not experienced unfortunate curve balls thrown at us by life.  My general rule is to treat people how I would like to be treated in the hope that this goodwill is passed on and comes back to me somewhere down the line.  "There but for the grace of God" ... and all that.

So I have put together three actual situations from my Landlording career with three courses of action, and I would like to hear from the tribe how you would react.  I will also give my answers at the bottom of the post as to what I did.  You may not agree with me, and if not, that's fine.  I'd love to hear your reasons why.

I would also like tribesters to add some of their own mulitple choice questions for others to consider.

Without listening and being open to new ideas, we are not learning, so I hope this could develop into a really valuable and balanced thread.

Here are my scenarios:

 

1.  A professional family tenant has been in your property for three years, being a model family and paying the rent on time every time.  Unfortunately, the husband is killed in a motorcycle accident.  The wife and two children are left without a bread winner.  They go into two month's arrears.  Would you:

a)  Serve notice on them.  Report them to a tenant blacklist.  Evict them in due course.

b)  Go and meet with the wife.  Help her understand how to apply for housing benefit.  Help her understand the process of probate.  Get her to agree to pay arrears when her husband's estate is settled and she is back on her feet.

c)  Something else?  Please state.

2.  An excellent tenant has been in your property for two years, always paying rent on time.  He splits up with his girlfriend, is suddenly made redundant from his high paying city job, and goes into a serious depression.  He is American, and has no family, his parents having died 20 years previously.
He stops paying the rent and stops communicating with you.  He goes into two months arrears.  Would you:

 

a)  Serve notice on him.  Report him to a tenant blacklist.  Evict him asap.

 

b)  Meet him at the property.  Discuss his situation and advise him on claiming housing benefit.  Agree a payment plan with him for the arrears to be paid when he gets another job.  Advise him to seek medical help for his depression.

c)  Something else?  Please state.

 

3.  A tenant takes your property on, pays the first month's rent, then stops paying.  They refuse to communicate with you.  Owing two month's rent, they then hand in their notice, and leave the property without paying the back rent.  Would you:

a)  Chase them via a debt collector & report them to a tenant black list.

 

b)  Be grateful that you got your property back.  Put it down to experience, learn from it, and focus on getting a new tenant.

 

c)   Something else?  Please state.

My answers are:

 

1.  (b)

2.  (b)

3.  (b/c)  I moved the property to Glenn Ackroyd's National Lettings Group due to their strict due diligence processes including rental guarantors for all tenants, and their superb systems for maintaining properties with an in-house team.  I got a new tenant moving in within one week, who was happy with the condition of the property, even though, in my eyes it needed some minor refurbishment.

In 1 & 2, I got my money back through the payment plan.  In 3, I lost about £500 and put it down to experience.

What does the tribe say?

 

[Richard Hedges]

1&2 I would agree to c

for 3 I would go with a

[Vanessa]

Thanks for commenting Richard.

Could you explain what your actions for (C) would be in the cases of 1 & 2?

[Rhys Carpin]

I pretty much agree with the course of action you took on all 3 occasions, V. I think I would probably have done the same in all 3 cases.

 

Before becoming a landlord, I really never realised what a diverse role it is. Rent collector and handyman came as no real shock, but Social Worker and Benefits Advisor came as a bit of a suprise.

 

We spoke briefly about rent arrears at the Property Investor Show. I still get very wound up by tenants who lie and take advantage. I sometimes wake up at 3am seething about what some of my tenants have put me through. On the other hand, as you rightly say, these are tenants I should have known better than to put in my property in the first place.

 

All of my tenants who have fallen behind, and kept me informed of how they intend to resolve the matter on the other hand, always get my understanding, help and leniency.

[Vanessa]

Thanks for the input Rhys.

I too have been furious and indignant about the behaviour of tenants but I have come to learn that non-payment of rent is par for the course in property.  It goes with the territory, as they say.  People are people.  That will never change and we have to learn to be pragmatic and learn from the negative experiences. 

[Vanessa]

Thanks for noticing pink one!  Yes, my point was that some people suffer temporary problems through no fault of their own and will make up arrears.  Of course, it is up to the individual Landlord to decide what course of action to take and if they want to "bear with them" until their problems are resolved.   Would it be fair to add them to a tenant's blacklist on that basis?

There are undoubtedly some "professional rent dodgers" who we should all avoid like the plague, but we are going to get one somewhere down the property trail.  It's inevitable and all part of the joys of being a Landlord. :)

[Tumi Hawkins]

I don't think its always those that shouldn't have been allowed into the property in the first place, who then misbehave. Good people do turn bad, for whatever reason, and then take it out on the landlord. People will be people, and we need not only to learn from the bad experiences, but to ensure justice is done for the ones that work the system - like scenario 3.

 

1. c-other: Meet with wife as soon as is decently possible. Give her CAB address to go for impartial advice. Go with her to HB office or get forms and assist her in filling and getting supporting paperwork, submit on her behalf if necessary. That way, I know its done. I would explain that if need be, S8 would be served, which they should present to the Local Authority, which should help speed application along, and that the S8 would only be executed as a last resort. Any shortfall in HB can be managed. The final decision to evict may not be an easy one to make, but will have to be done if local authority don't cooperate. Probate can take forever, and mortgage lenders won't wait forever for payment!

 

2. c-other: If he stops communicating, no guarantee he will consent to meeting me! I've been there!! Assuming he does, then, I would advice on how to claim. As he is depressed, I would be tempted to help him fill in the claim form and submit with supporting documents. But I would also serve the S8 explaining the reason, and agree a payment plan with him. I'd have no hesitation in evicting if he stops communicating.

If he doesn't consent to a meeting or payment arrangement, I would evict asap.

 

3. a.

 

Bottom line is this is a business. Its got to be run profitably, but fairly. I subscribe to the "do unto others as you would have them do unto you". When people let me know about their issues, I'm happy to work with them and come to arrangements. Its when they bury their heads in the sand, get evasive or try and work the system that I go down the eviction route.

 

Infact right now I've got someone in a similar situation to b (suspended from work, and appealing, but not depressed) who's just reached the two months unpaid stage yesterday, and I've advised about HB. Some payment is promised this week, but if nothing happens, then S8 will be issued with appropriate explanation so she can take it to LA/CAB.

 

 

 

 

 

[Vanessa]

Yes, Tumi, good communication is everything.  If the tenants responds to communication, it is generally a good sign. If they avoid you at every turn, then that is usually a bad sign in my experience.  Yes, it is a business, but there are two sides to every story.  Just trying to foster a balanced debate ....

[Mike Leflay]

For me 1&2 would be option b, but we would also most likely serve a S8 and S21 in these circumstances and explain to the tenant that we are simply doing this to protect ourselves and that we will not enforce the notices as long as the tenants keep communicating with us and keep to any repayment plans. We feel that whist it is important to be sympathetic and understanding when tenants face difficulties that may be no fault of there own, they should be in no doubt that we will be firm if they do not try to resolve their problems.

For 3 partly b, as yes I would be pleased to get the property back and yes my main focus would also be to relet asap. However I would also advocate a dash of c with these in that I would pursue them for the money, but I would not bother with a debt collection agency I would do it myself, as to be frank I seem to be pretty successful at it.

I do completely agree with Vanessa in that I try to treat everybody as I myself would like to be treated. One of our tenants is getting near to the end of a 3 year repayment plan having got seriously behind with their rent but having initially gone into ostrich mode, they then faced up to their problems and came to us with a repayment plan that they could afford, we get to keep an otherwise good tenant and we recover to money with no stress or costs.

We have just had what I consider to be the worst type of tenant that we have just evicted, when this tenant came to us they had a spotless credit record, came across as a genuine person whom I had no reservations about and I spoke at length to their previous landlord who had nothing negative to say. After moving into the property upon paying the first months rent and deposit then refused to pay anymore and ignored all attempts to communicate. Even had the cheek to defend the s8 claim by alleging we refused to do repairs and also alleging harassment. This is the kind of person I have no sympathy for as they knew exactly how to work the system and had obviously done it before, when I went back to the previous landlord he rather ashamedly admitted he had lied to me in order to get rid of a nightmare tenant. Needless to say this person now has a CCJ which should give any other potential landlords a pretty clear warning and allow them to avoid the grief we have had to endure.

[Tumi Hawkins]

:-) debate is good. It was not my intention to imply otherwise.

Vanessa said:

..... Yes, it is a business, but there are two sides to every story.  Just trying to foster a balanced debate ....

  I generally don't do "personal" anymore, as I was taken advantage of once too often. But those who genuinely are in difficulty get my personal attention. As Mike says, together with the Notices that says we will be firm.

 

Mike,

We've also got a couple of tenants who this year have managed to catch up with arrears they've been paying back for 2 or more years.

 

Like you, we've also recently evicted someone on the face of it was genuine, who paid the first month rent and then nothing, and worked the system. Again, turns out there was a hidden eviction by previous landlord.

 

The thing with the S8 Judgements is that it doesn't show on the record until the payment judgement is enforced. This is why a database of bad tenants is useful as it doesn't rely soley on the vagaries of the judicial system.

[Glenn Ackroyd]

Hi V - 

 

Many thanks for the testimonial - we aim to please!

 

Re helping tenants with their benefits, there is a useful online website that people can use and point tenants towards;

 

http://www.direct.gov.uk/en/Video/DG_WP195806

 

www.NationalPropertyGroup.co.uk

Follow me! @NPGLettings

[Jayne Owen]

Not certain I'm qualified to respond here as David deals directly with tenants - but often discusses issues before taking action. Reason for me not getting directly involved? I'm too much of a soft touch, particularly as I deal with these sorts of issues on a day to day basis.

 

I'd probably have taken a similar approach to you Vanessa in each case, though with business hat on, think that Tumi's approach is a sensible one. It's about a mix of balance, your relationship with the tenant, trust and instincts at the end of the day.

 

There is so much truth in trusting your instincts at the outset when meeting the tenant and doing the research. More difficult when you are a hands-off landlord, but there are still some straightforward procedures and checks you can put in place, such as arranging to meet a prospective tenant. Ultimately, it's a business relationship - business-to-consumer (or B2B if you're in commercial lettings). When you take a step backwards and consider property as a business - even as a hands-off landlord - then procedures for checking out potential long-term customers become rather sensible.

 

Jayne

Trading as Mozaique Property

Buying, selling, renovating and letting property throughout South Wales

www.twitter.com/jayneowen

[Don Robbie]

I totally agree with your approach Vanessa and have used this twice so far with my own tenants.

Having started to manage let properties myself rather than use agents I have learnt to be meticulous re references

(I use NLA service plus one or two other checks) and if I have any doubt I will insist on a guarantor and/or take 6 months rent in advance. If agents source tenants I insist on fully examining searches and references before agreeing to an AST.

Have been amazed at tenant's lack of understanding of right to benefits/LHA if made redundant and they have been very appreciative of my help towards a solution. With one tenant, I am helping my own situation by working with him on job search, CV and interview skills so that LHA (which will not shortly pay full rent) can be replaced by a salary income.

Don