Avoid the non-paying tenant

Having a tenant who does not pay on time, or even worse does not pay at all is a nightmare for many landlords and letting agents across the country.  There are ways to avoid the non-paying tenant and this comes down to thorough tenant checks before you accept the tenant into your property. 

What are the consequences of not checking my tenant properly? 

It would be great if we lived in a world where everyone told the truth, was honest and their ‘word’ was good enough.  Unfortunately this not the case so accurate and thorough checks are the best way to verify all information that is provided to you.  A tenant that does not pay their rent on time means that keeping up with mortgage payments on your property can become difficult.  If the tenant continually does not pay up your property investment will be threatened.  Evicting a tenant is an expensive and time consuming process and you must factor in lost rent when the property is vacant.  All in all the non-paying tenant will cause stress, cost a lot of money to you and are best to avoid.

How can I check my tenant?

Tenant checking doesn’t take long and can save you a lot of stress and hassle.  You can check your tenant’s credit score online and run tenant referencing as well.  The credit score will allow you to see if a tenant is financially responsible, as it will show you if the tenant has ever had any bankruptcies or insolvencies, or any active CCJ’s (County court judgements) which would indicate that the tenant has debt and outstanding payments still to settle.  Tenant referencing is about obtaining references from previous landlords and employers.  Previous landlord references will let you know if the tenant paid their last landlord on time and if they are recommended.  An employee reference will act to verify employment information the tenant has provided to you.  You can find out the salary they are on and check that they are in full-time employment. 

You generally do not know the people you are renting to and with you tenant credit checks and tenant referencing you know even less.  Get to know your tenant better with the right information so you can make an informed decision to who you are renting to.  Avoid the non-paying tenant and make the appropriate checks before you hand over the keys.

Landlords to pick up the bill for damages caused by cannabis farms in Scotland.

Plans have been suggested to help fight Scotland’s growing problem with illegal cannabis farms in private rental properties.  Landlords could have to register their properties and have them inspected by local authorities. This doesn’t sound like a bad idea, but it seems that the Landlord might be the one who ultimately pays. Landlords could face large repairs bills for damage caused to their properties by cannabis farms.

The suggested plans would see Landlords responsible for any damages caused to the property by illegal cannabis farmers.  Insurers have actually agreed to discuss Strathclyde polices suggestion to make the homeowner responsible for any damages and they will meet next month to discuss the proposal.  It is aimed to stomp out the supply of flats being converted into cannabis hothouses.  This could leave landlords unwittingly facing thousands of pounds of bills by simply renting to the wrong tenant.  It is estimated that 1000 properties are being converted into cannabis farms each year with an estimated industry worth of £120 million per year.

“We want landlords to be responsible for who they let their properties to,” said Detective Inspector Joe McLaughlan, second-in-command of Operation League, the country’s national cannabis farm crackdown that began in late 2006.

Six cannabis farms have been discovered so far this year, with a total of 264 cannabis farms discovered since 2006, the estimated value of all that was found was £37 million.  It is suggested that one in every 230 properties in Scotland are used as cannabis farms.

The damage that these cannabis farms cause can be anything from knocking holes in ceilings for ventilation to re-routing electricity supplies to avoid paying the bills.

Tenant referencing has never been so important.  Make sure you know who you are renting to and fully reference check your tenant everytime.

What are your tenants up to? Find out with a property inspection.

The simple process of inspecting a property regularly can go a long way to protect your property.  No-one wants to be in the situation of looking at a property 12 months after a tenant has moved in to find that it is in a state of disrepair, housed pets or was a hub for criminal activity.  By inspecting your tenant’s property regularly you are not only protecting your investment but your neighbours and the community area your property is located in.

You must organise and give notice if you want to inspect a property and the ideal scenario would be to arrange routine inspections after a period of time, maybe every three months.  When you inspect a property make sure to check all smoke alarms and fire extinguishers, gas safety equipment and that doors are not blocked with furniture which would used as a fire exit.  As you go through each room look out for signs of unusual behaviour, maybe of evidence of a pet which you don’t know about, signs of criminal activity or sub lettings.  If the property has a cellar or attic space then look at these as most criminal activity will be happening out of sight.  Often, if a tenant has a pet which they have not told you about you will be able to smell it, the same goes for if a tenant who has been smoking in a non-smoking property.  If you have a suspicion that illegal activity is taking place within your property it is advisable not to confront the tenant but to leave the property and contact the police as soon as possible.

It is important to make relationships with neighbours and people in the community so they can look out and contact you should they feel an inspection should take place.  They will see the comings and goings of your property and will notice if something unusual is happening.

Most tenants with nothing to hide will agree with no problem to an inspection and are happy to arrange and assist you in this process.  Those with something they may not want you to find are more likely to avoid the process, these tenants are the ones which you will need to inspect for peace of mind and to protect your property investment.

We recommended that you conduct a full credit check for tenant as part of your renting proceedure.  For online tenant credit checks and information then go to LettingRef.co.uk.

Rental Arrears remain a problem in an ARLA survey.

The results from a recent ARLA survey have shown that 55% of its members have seen an increase in tenants which are struggling to keep up with their rental payments.

This statistic is however lower than the previous quarter but still a concern, as it is so high. 

This is cause for concern because as rental arrears build up tenants face the prospect of being evicted from their property.  As a knock on effect this can lead to a landlord defaulting on their mortgage and the property can be repossessed.

Ian Potter, Operations Manager of ARLA, said: “The housing market looks increasingly buoyant with demand for rental properties having risen strongly since October. The problem of rental arrears will therefore persist and potentially grow in seriousness as tenants get caught in a web of debt.”

This highlights what this blog often talks about – Tenant Searches.  In an environment where tenants may have unstable jobs and find it harder to get credit, running a tenant search is vital to protect your property investment from repossession when a tenant defaults on rent.

Eviction is a costly affair and throughout the period of an eviction no rent will be being paid.  If you search tenants you are more likely to discover tenants with a history of debt who may be unreliable in paying their rent.  A Tenant search will also help you discover if a tenant has been evicted before or been unreliable through previous landlord references. 

As the ARLA survey clearly shows more landlords have seen tenants default on their rent, but it is a problem which can be handled effectively with a little pre-rental screening.  Tenant searches are not about rejecting tenants but putting the appropriate guidelines in place to accept a tenant, by either finding a tenant with a good renting history or stipulating that a guarantor will be needed to cover the tenancy agreement should the tenant default.

 Tenant searches have never been so relevant and important; every landlord should search tenants credit histories and references as their normal procedure every time.

Criminal gangs target rented accommodation.

If you ever needed extra incentive to run a tenant check before renting your property then the following should convince you that tenant checks could really protect your property.

According to the NLA criminal gangs are targeting rental accommodation to conduct illegal activities, mostly in the quiet, residential neighbourhoods which offer less chance of being disturbed. These homes are being sought after to run ‘home-made’ cannabis factories and to make crystal meth. It’s not just drugs that the criminal gangs are involved in but prostitution, as some properties are being transformed into brothels.

It is unfortunate that in a few of these cases the landlord is the one footing the bill. When illegal activities are discovered in a property, insurance companies often do not cover the landlord. It was reported that an NLA member lost £20,000 when he discovered his property was being used as an illegal cannabis farm. Landlords must always be aware to report anything directly to the police. If a landlord is aware that their property is being used as a brothel but does not report it to the authorities you can be prosecuted.

There are a few steps you can take to avoid these sorts of renters. Firstly – always conducted tenant checking. Tenant credit checks will look into a renter’s financial history and tenant checks will look into their renting history so you may find evidence of past criminal activities. Don’t take large upfront rental payments as it suggests that the tenant wants to the left alone. Carry out regular property inspections, it is down to you to organise and follow through with these. Get to know your neighbours so they can report to you if anything odd is happening. Finally go straight to the authorities if you have any suspicions, do not approach the tenants yourself.

Five features a Letting Agent must have on thier Website

Simple design and layout

As a letting agent your website will have to communicate a few key factors.  In order for your website to be successful it will have to be simple and easy to navigate for users.  Don’t over complicate it with too many pages or too much text – try and get your message across in as little words as possible.   Have dedicated pages for each subject or service you are offering. People will judge your website and the information on it very quickly so make sure it makes an impact.

 Great Property Display

The main job of your website is to generate tenants and landlords to your business.  It is vital that your properties are displayed in the highest quality to get people to make enquiries through your site.  Display clean and bright photos, and lots of them, include all the room you can.  Make sure you have an easy system to upload the properties onto the website with – you don’t want to make more time for yourself having to add things to the website when you have a million other things to do.

 Social Media

Social media can work wonders for getting your name out there and is a great business tool to attract people in your local area.  Set up a Facebook page for tenants and potential customers to join as a fan – ask current tenants to write a testimonial on your Facebook page about there experience with you.  The viral nature of Facebook will spread that message out to all their friends.

 Get your message out

A good website will have a convincing ‘about us’ page.  This page is your chance to tell the world who you are and what you’re about.  Whether you’re a small family business that focuses on the customer or a large multi-branch company which offers the full package from removals to insurance the ‘about us’ page should cover it all.  This is your chance to stand out – make sure you get noticed.

 Easy to manage

 Your website will need to be updated from time to time with new content, offers and images to keep it fresh.  Web developers can be expensive to employ to make these types of changed.  Try a Content Management System which will allow you to do all of the above yourself.  Joomla content management systems allow you to easily edit, amend and add in images whenever you please.  It is easy and convenient and won’t eat up too much of your time.  Controlling your website yourself will allow you to have a flexible website at a click of a button.

We recommended that you fully reference all your tenants as part of your rental procedure.  For online tenant credit checks and information then go to LettingRef.co.uk

Run a tenant credit check for extended leases

SO, your tenant wants to stay in the rental property and extend their lease – Great News! But have you thought about that tenant’s situation, has it changed since you last checked them out? Is it possible they have rented from you for more than a year? A lot can change in that time period so consider re-checking your tenant before you re-lease them the property.

The point of running another tenant credit check on the tenant is to make sure their financial situation is the same as it was when you first met them.  Take another employer reference as well, to find out if they are in the same job?  Is their new job stable? Are they on the same salary or lower salary?  It is, of course, very convenient to allow the existing tenants to stay on, as there will be no vacancy period and no advertising costs.  You will find that most tenant situations have not changed and you will be happy to rent them the property again.  If, however, you find a tenant who has perhaps lost their jobs, or has taken a pay cut, someone who has built up a lot of bad debt and owes money, then you may think again about renting them the property again. 

A tenant credit check is easy and quick to run online and you can get results back in an instant.  For the sake of a few minutes run a tenant credit check to make sure you are comfortable extending the lease of the property for another 6 months or a year?  It is always a great thing to have long term renters who are reliable and keep the property occupied, but it is always to advisable to re-check your tenant before re-renting to make sure everything is satisfactory. 

It doesn’t mean all is lost if the tenant fails a second tenant credit check or gets a bad reference, you can simply ask them to provide a guarantor for the next section of the tenancy.  A guarantor is an insurance policy if the tenant does default on rent or breaks the tenancy at all.  It protects your investment and means you can rent to your tenant with more confidence.

‘Reluctant tenants’ join the rental market as property supplies suffer!

According to the Association of Residential Letting Agents (ARLA) the UK housing market is seeing a rise in reluctant tenants.  The demand for rental property is on the rise as the supply of rental accommodation is reducing.  ARLA suggests that this has created the trend of the ‘reluctant tenant’.  It has been reported that in Quarter four of 2009, 41% of ARLA members had more tenants than properties, this compared with only 24% in the Quarter before.  It was also revealed by ARLA that 54% of landlords had felt that tenants had been forced into the rental market rather than being able to buy a property themselves.

 Ian Potter- operations manager at ARLA felt that this was a positive sign for the industry but also saw that rental accommodation will dominate the needs of the next generations, and that without government support the sector would struggle.

 ARLA research has also concluded that in 2009, Quarter 4 saw vacant periods for properties reduced with tenants snapping up accommodation fast, the average vacant period was down to 3.9 weeks rather than 4 weeks.

With more tenants on the market it becomes a competitive place for tenants.  Make sure complete tenant screening and fully reference your tenants before you accept anyone.  This means you can pick the best tenants for your property from a pool of a few. Check and reference everyone, making a decision based on which tenants  have the best references, steady job and are financially responsible.