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How Landlords Can Avoid Bad Tenants
In this crazy world someone decided to make a profession out of being a “bad tenant”, and like all crazy ideas, it caught on. These “professional bad tenants” are ruthless as they are ugly. They go from property to property without paying any rent, and they successfully do it for a living, leaving behind a trial of innocent (granted, and some times not-so innocent) landlords in debt.
Unfortunately, this is becoming common practice, and these professionals seem to be getting away with it. How do they do it? These professionals have become all too familiar with the legal system and know every trick in the book. Every time a landlord attempts to evict them, they appeal with various excuses E.g. I didn’t pay rent because the property was in bad condition.
The problem is, every time a tenant appeals eviction, the process of eviction is lengthened because the court needs to look into the issue before being able to dismiss it. The claims usually get dismissed because they’re fictional, but by the time each appeal goes to court, months and months pass, leaving the landlord severely out of pocket while the tenant still remains. The system definitely isn’t perfect, but it is what it is, unfortunately.
Here are a few ways to avoid professional bad tenants:
1) Tenant referencing
First and foremost, make sure you thoroughly reference ALL prospective tenants, which should include the following:
- Credit checks
- Employment status/history
- Current and previous rental details
- Employment references
- Landlord references
All of the above and more is covered in the Tenant Referencing & Credit Check Guide for landlords, which I highly recommend reading if you haven’t done so already!
2) Be wary of cash payers
Tenants may offer to pay rent upfront for a large period e.g. 6 months. While it may seem appealing and an ideal situation for a landlord, it may often be an evil ploy to disguise sinister activities.
It’s not unheard of for tenants to pay cash upfront for a few reasons, but the 2 most common I’ve heard about are:
- The tenant doesn’t want to be disturbed and wants the landlord to stay away from the property because they’re harbouring illegal activity in the property e.g. growing drugs
- The tenants have AWFUL rental history, so the offering of large some of cash is a diversion
Of course, this may not always be the case, but it’s something to be wary about.
3) Be Wary of DSS tenants
Rightly or wrongly so, DSS Tenants are becoming more and more associated with the term “bad tenants”
DSS tenants receive Housing Benefit from the government to help with living expenses i.e. rent. A lot of DSS tenants are becoming notoriously known for pocketing their allowance, consequently failing to pass it onto their landlord.
I’m not saying every DSS tenant is guilty of this crime, because they’re not. I’m just saying, make sure you know the complications of DSS tenants before accepting one.
4) Don’t accept the first tenant that comes along
It’s true, the longer a property remains vacant the more expensive it becomes for the landlord. Consequently, landlords are often inclined to accept the first tenant that comes along. While that may seem like the financially safe solution, it can often have the opposite affect. The fact is, finding a bad tenant quickly will cost you more than finding a good tenant slowly.
It’s important to take time over vetting your prospective tenants and making sure they’re right for both you and the property.
5) Don’t be afraid to say no
This can often be daunting, especially if confrontation isn’t your thing, which I can totally relate to. Over the years I’ve had to learn to be firmer in order to be sufficient at being a landlord. Some tenants just take the absolute piss, and you need to be authoritative in order to keep things in order, otherwise you’ll just get trampled over. Be firm, but fair.
If a prospective tenant shows complete interest but you’re having doubts for whatever reason, have the courage to say no. Do NOT feel obliged to accept if you do not feel comfortable.
Simply inform the interested applicant that you have several viewings booked and you intend on taking them all before you make your decision. It’s a perfectly plausible and normal situation.
On that note, do NOT under any circumstances stop looking for tenants until you have completely secured tenants, which means someone has 1) paid their deposit in full 2) paid their first month’s rent in full 3) signed contracts 4) moved into the property (point 4 should not even occur unless 1-3 have been completed).
Until all the above is fulfilled, keep on taking viewings and processing applications. Tenants frequently delay move in dates or pull out from the arrangement all together, and there’s usually little landlords can do to recoup that lost time/money.
Don’t take your tenants word or allow them to earn your trust at this stage, despite how much they assure you they are interested and intending on moving in, it means nothing until they actually move in. Absolutely NOTHING!
6) Take a full deposit
ALWAYS take a full deposit, stay clear of tenants that want to pay in instalments; not only does it highlight their financial difficulties, but it also adds legal complications when it comes to the tenancy deposit legislation. More details over at the tenancy deposit guide.
7) Mannerisms and early signs of bad tenants
I’ve written a whole blog post that focuses on early signs of potentially bad tenants, which you can read over here in full. But in short, you may want to be wary of your prospective tenants if:
- They try to overly haggle with the price
- They keep rescheduling and/or arrive late to the viewings, without apologising or giving you prior notification
- If they have a scruffy appearance and/or bad odours
8) Don’t overly value a tenant’s job status/role
This is an easy honey-strap to get lured into, and perhaps that’s why it’s a sticky situation many landlords find themselves in.
I’ve been mesmerised by prospective tenant’s that came with high salaries and prestigious positions in society, and it eventually cost me, because I put too much stock in those factors.
Of course, we all want to unearth “working professional” that have good salaries. Not a bad goal, and I encore. However, don’t isolate and OVERLY value those factors.
Some of the filthiest asshole tenants I’ve had the displeasure of encountering were so-called working professionals. Two notable examples, a head-chef from a prestigious restaurant and a highly qualified Oral Surgeon. I mention those two specific examples because you’d expect people in their position to have impeccably high-standards in terms of hygiene. I’ll spare you from the gory details, but in both cases, the end of tenancy clean-up process involved scraping off various types of congealed and unidentifiable goo off surfaces throughout the property. Absolutely fifthly pigs!
Just remember, just because someone is earning good money or has a respectable job, it doesn’t mean they will make a good tenant!
Minimising damage in case you get a bad tenant
Unfortunately, even if you follow each tip above, there’s still opportunity for bad tenants to slip through the net because we’re dealing with humans here, in a world where “shit happens”- even to the best of us. That’s what they’re trained to do. In a worst case scenario, there are certain steps a landlord can take in order to minimise the damage when they’ve mistakenly harboured a bad tenant.
1) Always have a written Tenancy Agreement!
Forget a “gentlemen’s agreement”. We’re not living in the Wild West anymore. A spit-handshake doesn’t mean shit in today’s society. It’s all about lack of trust, and consequently the use of secure written contracts.
Get the terms and conditions of any tenancy in a written tenancy agreement, with the signature of both landlord and tenant.
I’m always astounded each time I receive an email from someone regarding a dilemma they’ve encountered due to the absence of a written tenancy agreement, because they trusted the tenant enough to form an oral tenancy agreement. That, by definition, is a recipe for disaster.
There are tonnes of free Tenancy Agreement Contracts available online to download. Granted, the majority of them are junk and out of date, but that’s when you need to be diligent in your research in order to separate the wheat from the chaff. Perhaps you may require some Tips On How To Check If Your Tenancy Agreement Is Any Good
2) Start with a 6 month agreement
It’s always good to start with a short term agreement so you can serve notice sooner rather than later if shit hits the fan.
If the tenant proves to be well behaved after the initial 6 months, then you can easily create a new tenancy agreement and extend the terms. Alternatively, just allow the agreement roll into a Periodic Tenancy.
3) Insist on a Guarantor
Don’t agree to take on a tenant unless they can organise a guarantor. A guarantor is someone that is willing to accept responsibility for any rental payments the tenant may miss. If the tenant can’t get a guarantor, then obviously they’re not trusted…or they have no friends and family. In either case, both scenarios are repelling.
Tenant Guarantor Form
4) Landlord Rental Loss & Damage Insurance
If you’re a landlord that’s allowing complete strangers rent your property, I highly recommend getting rent guarantee and legal expenses insurance. The policies are relatively inexpensive, and could potentially save you a heap of money.
Landlord rental Insurance can cover loss in rent and legal charges. If after the initial terms of the agreement expire and your tenant proves to be well behaved, then you can terminate the policy.
5) Regular Property Inspections
Landlords are legally entitled to make regular inspections during a tenancy, yet most landlords that manage their own property can’t be bothered.
Come on, all you need to do is arrange a time and day with your tenant and spend 5mins looking around the property. Trust me, you don’t want to be added to the growing list of landlords that have been fucked over by tenants that have turned their properties into Cannabis Farms. Or perhaps you do; I don’t know, I’m just speculating.
In all good tenancy agreement contracts there will be a clause stating that the landlord is entitled to make inspections of the property with the consent of the tenant. It might be worth ensuring a clause like that is present in your tenancy agreement.
Be wary though, the landlord must give their tenant 24 hours notice which the tenant must agree to before entering the property.
6) Allow funds to clear
Don’t hand over any keys or allow the tenant to enter the property until you have the deposit and first months rent cleared into your account, this especially applies for cheques.
Many professional bad tenants will hand over a cheque (which will inevitably bounce), hoping that the landlord will immediately hand over the keys in good faith (before the cheque has cleared). Rookie mistake.
As soon as a tenant has the keys and permission to enter the property, they legally become a tenant, despite whether or not the funds clear. At this point, it can take up to several months before they get removed.
Seeking professional advice
One of the biggest mistakes a landlord can make when dealing with a problematic tenant is trying to take the situation into their own hands.
The thought of getting professional help to evict your troublesome tenants may sound expensive, and may even feel uneasy on your pride, but that’s nonsense. Stop being a stubborn mule. It’s often cheaper to get professional help than trying to handle it by yourself.
Professionals will know exactly what to do, and they’ll do it efficiently and legally.
Leave your baby cousin’s Superman cape in his draw, and leave it the Tenant Eviction Professionals.
Anyone got anymore tips?
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.