Advice for landlords faced with the problem of tenants who won’t pay up
As the first wintry blasts begin to rattle the roof-slates, some landlords are having to cope with the cold wind of reality.
September’s student rush delivered tenants to many vacant apartments and, a month or so down the line, landlords should now be enjoying the sweet reward of a rental income from their buy-to-let properties.
But not all of them. Right now, many landlords will be ruefully discovering that they have taken on a tenant who can’t, or won’t, pay the rent. They now face the hassle of taking action to recover the cash and, if necessary, to process an eviction.
Failure by tenants to pay their rent is one of the key risks faced by landlords, but that risk can be reduced. A few simple steps by landlords could protect their investment and give them peace of mind, according to Mairi Scott, managing director of risk consultants Leaseguard who offer specialist insurance and services for tenants and landlords in the rental sector.
‘The trick is to carry out ‘tenant referencing’ before you sign the lease. It’s an inexpensive way of checking the financial status of applicants, highlighting any adverse credit history such as CCJs, bankruptcies or Voluntary Arrangements. And it can cost as little as £17.55,’ she says. ‘For a small additional cost, landlords can request a reference from the prospective tenant's employer and their previous landlord.’
Leaseguard, who process large volumes of these references say, ‘Of the checks we do, just over 17 per cent of people fail the credit check alone. That’s one in every six people wanting to take out a lease’.
Most landlords require that the parents of students stand guarantor for the rent, but it is recommended that a guarantor reference is obtained to check they have the resources to honour the tenancy agreement if the tenant defaults.
And it’s not just students who should be checked out, professional people who are already well into their career should also be referenced. She says ‘The average age of the people we reference is 35, while the average salary is £20,400 per annum. We see an average rental amount of £516 and this type of person may take accommodation at even higher rents and therefore be more of a risk. If they have a poor credit history or even trashed their previous rented accommodation, this can be identified and reported back before the tenancy agreement is signed.’
Leaseguard carries out reference checks on behalf of landlords and letting agents. Results are available within 48 hours and, if tenants pass the reference, landlords qualify for Leaseguard’s Rent Guarantee & Legal Expenses insurance – which covers landlords for interruptions to rental income where the tenant defaults or has broken the tenancy agreement, as well as help with legal advice and eviction costs.
leaseguard.co.uk
As part of the modernisation of court services, claims for possession of residential property can be made online from today.
Possession Claim Online has been launched by Her Majesty’s Courts Service to enable property owners, such as landlords, local authorities and mortgage lenders, to apply electronically for repossession for non-payment of rent or mortgages.
More than 260,000 possession claims were issued in the county courts in England and Wales last year. The 24 hour service allows small and infrequent users, such as private landlords, to fill out their claim online, while frequent users, such as local authorities or mortgage lenders, can link their data system directly into the Possession Claim Online interface to automatically start new claims. Court fees are paid electronically either by credit/debit card or direct debit. Claims are issued straightaway and court hearing dates, to hear the claim, are scheduled automatically. Claimants and defendants can also track their claim online and once a possession order has been granted by a court, claimants can arrange for warrants to be issued via the online service. Currently the whole claim process must be done on paper direct with the court.
Launching the new service for England and Wales, HMCS Chief Executive Sir Ron De Witt said:
‘Possession Claim Online is putting the needs of courts users first - it's about accessing justice in a more efficient and convenient manner. The service is more convenient for users as it means that they can make their claim online and it is issued immediately, with a court date automatically scheduled. Those using PCOL no longer have to fill out a lengthy paper claim. And they can keep track of their claim at all stages, instead of having to contact the court.’
The new service follows on the back of the success of a similar service for small claims – Money Claim Online – which allows people to make small claims online. That service has been running since 2002 and has processed over 200,000 claims since then.
Possession Claim Online has been successfully piloted in courts in South Wales before its roll-out. Possession Claim Online is available at www.possessionclaim.gov.uk/pcol/