Dealing with Problem Tenants

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Dealing with Problem Tenants
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Renting out your property isn’t always straightforward. From maintenance of appliances, to finding a suitable tenant, negotiating on price, and much more, being a landlord often does not give you the ‘passive’ income some people expect.

Almost every house owner hopes to have a friendly relationship with their tenant(s), because it makes your life so much easier – but if the person renting your house starts to become a problem, what can you do?

If you want to find out what exactly a ‘problem tenant’ is, how you can deal with one, then you are in the right place. Keep reading our blog below for all the answers you need.

What is a Problem Tenant?

Someone renting your property is described as a ‘problem tenant’ if they are causing you difficulty, stress, or are breaking the terms of your agreement. Examples of this might include:

  • Damaging your house’s interior
  • Breaking appliances
  • Refusing to pay rent
  • Paying rent late consistently
  • Irritating the neighbours

Your tolerance for misbehaviour may vary, depending on how many times your tenant has done this before, how long they have been living in your property, whether they are going through a difficult time personally, and more.

It is always advisable to speak to your renter (even if they are being problematic) before you take any drastic action. There may be a reasonable explanation for the difficulty, such as miscommunication, a genuine accident, or a rare episode which won’t happen again.

If the situation appears untenable, and you want to evict the person living in your house, then you should have a clear understanding of whether you are able to do this.

Can I evict a problem tenant?

There are different types of tenancy agreements, and the type that you have in place will impact the steps you can follow to evict a renter. One of the most common types is an ‘Assured Shorthold Tenancy’, which can include a ‘periodic’ tenancy or a fixed-term tenancy.

If your renters have an assured shorthold tenancy, but have not broken the terms of your agreement, you will need a Section 21 notice to evict them from your house. This enables you to take back control of the property once the fixed term comes to an end. However, even if your problem tenant is causing you issues, you may find it difficult to evict them from the house if they have not broken the terms of your rental agreement.

Alternatively, if your problem tenants have broken the terms of your contract, you can issue a Section 8 notice which requires you to provide a valid reason for reclaiming the property. It is generally advisable to get support from a legal expert when carrying out this process, especially if your problem tenant is causing considerable financial damage to your house.

Finally, keep in mind that the Government’s guidance for evicting tenants varies in Scotland, Wales and Northern Ireland, as some of the laws and ‘common practices’ can be slightly different. You should research these variations thoroughly if you are in one of these countries.

Can I sell my house with a problem tenant in-situ?

Yes, you can sell your house with a tenant in-situ – even if they are causing you difficulties, and/or destruction to the property. However, you may need to seriously compromise on the price you are willing to accept, because a property which already has a tenant living there is generally considered less desirable to potential buyers.

When you sell your property with a problem tenant, it could greatly increase the time it takes you to find a suitable buyer on the open market. This is why some homeowners in this position use a cash house buyer, or an auction house, to complete the sale quickly.

One of the advantages of selling to a cash house buyer is that you can decide whether or not to accept the offer you receive. This is a major reason that landlords with problem tenants often prefer a cash buyer, rather than an auction house.

How much does a problem tenant affect the value of my house?

Unfortunately, having a tenant in-situ seriously decreases the value of your house. Some studies suggest that it will take up to 25% off your property’s value. Therefore, if your tenant is causing serious difficulties (i.e. destruction to the house) then the dent in your house’s value could be even greater.

The type of tenancy agreement that you have in place will have an impact, too. For example, if your renter has an ‘assured’ tenancy agreement – meaning that they can live in the house for the rest of their life – then the decrease in value will usually be more than 25%.

Why is a tenanted property considered less valuable?

The vast majority of buyers on the open market are keen to live in a house that they purchase – meaning that if they are unable to do so, your house will be less attractive, and they will therefore offer less.

If your house has a ‘problem tenant’ living in-situ, then the potential buyer will also be inheriting all the stress and potential legal challenges associated with this. Most people do not want to voluntarily increase the amount of stress in their life, and may therefore compensate for this by reducing their offer.

Even property investors will be less enthusiastic about a tenanted house, because they are unable to influence the monthly rent that your tenant is currently paying.

On the other hand, plenty of cash buying companies and property investors specifically purchase tenanted houses to get a ‘good deal’, with the aim of selling it for a profit further down the line, once the renter has moved out or been evicted.

Common causes of someone being a problem tenant

It is not uncommon for a tenant to be well-behaved when they first move into a house, but start causing trouble if they have a dispute with the landlord. Some of the most common points of contention between homeowners and renters include:

  • Property maintenance
  • Cost of repairs/damage to the house
  • Late payments
  • Causing a nuisance (e.g. loud music)
  • Pets

It is almost always in the landlord’s interest to maintain a friendly relationship with the tenant. Even though you are in charge, your renter can increase your short-term costs by behaving badly and damaging the house – so you should try to keep them on-side.

Ways to avoid getting a problem tenant

There are steps you can take while searching for a renter, to ensure that they are unlikely to become problematic further down the line. A few examples include:

  • Run a background check on them
  • Ensure your property’s inventory list is updated
  • Get a non-restrictive tenancy agreement

Each of these steps can be crucial to ensuring that your tenant is well-behaved, as well as giving you a plausible way of dealing with the situation if it becomes challenging.

You should be mindful of the questions to ask potential tenants when you are searching for someone suitable. If you get your vetting process correct, it can make your life much easier.

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