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Troublesome tenants

Rent arrears, damage, sub-letting, absconders… life as a landlord and letting agent has its downsides, but you can protect yourself. Lisa Isaacs asks legal experts for advice.

Lisa Isaacs

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You’ve met the prospective tenant and they seemed polite. They passed the credit check and are in gainful employment. Most importantly, their references came back with the green light, so it comes as a shock to find a trashed property during the mid-term inspection or receive complaints about heavy metal music being played beyond midnight, every night.

Tenants can be the master of disguise, they may lose their way during a let or invite cohabitants with less than desirable characteristics, jeopardising the property and exposing the agent to unsavoury situations. Here, we discuss the most common bad tenant behaviours and offer advice on the courses of action that can be taken.

Sub-letting behind closed doors

Sub-letting is a real scourge. From the trivial, such as a tenant allowing a friend to crash on their sofa and using spareroom.com to fill a bed, to ‘professional’ sub-letters and sophisticated holiday lets via Airbnb – all sub letting is illegal unless a landlord has granted permission and the tenancy agreement reflects this. An agent working on behalf of a landlord can start legal proceedings as soon as sub letting has been identified – often when an inspection is carried out or when a neighbour reports an issue.

Paul Shamplina image“It is imperative that the agent gathers evidence immediately,” says Paul Shamplina, founder of Landlord Action. “Where holiday sub letting is suspected, screenshots of websites where the property may be listed and copies of all booking reviews are useful. It is helpful to get witness statements from willing neighbours and CCTV footage, if available, which will help if the possession case goes to court.”

All the while the rogue tenant is profiting from the property, they will attempt to remain in control of it for as long as possible. We advise contacting a regulated solicitors’ firm for advice. Paul Shamplina, Landlord Action.

Paul says that sub letting cases can be complex, taking anything up to five months to evict a sub-letter. “All the while the rogue tenant is profiting from the property, they will attempt to remain in control of it for as long as possible. Therefore, unless you have experience in handling such cases, we advise contacting a regulated solicitors’ firm for advice especially as, at present, most landlords who are subject to sub letting opt to use the Section 21 route.”

Damage limitation and legal action

When Zoopla released its State of the Property Nation report in 2018, it was no surprise that finding suitable tenants was the biggest worry for 56 per cent of landlords, followed by 55 per cent who said tenants looking after their property was their main concern. Despite referencing and inspections, tenants can inflict damage. “Damage can be intentional – sometimes malicious – but also unintentional,” says Sim Sekhon, Managing Director, LegalforLandlords.

“For example, unintentional damage often results from tenants drying wet washing inside without appropriate ventilation, which causes mould growth. Unfortunately, damage is frequently intentional, such as trashing carpets with splashes of ink.”

There’s also a fine line between anti-social and illegal behaviour, with brothels, drug dealing and cannabis farms being among the most serious misuses of a rented property.

Both instances will end up costing the landlord money and when the damage is substantial, it can warrant legal action. Sim advises that a letter is sent to the tenant giving them a clear timeframe to rectify any issues. Agents should then return to the property to confirm that the changes have been made.

When tenants fail to repair damage, a further letter should be issued to the tenant advising that legal notices may be served. “The final decision on whether to take legal recourse rests with the landlord,” says Sim. “We always advise taking swift action and avoiding the worsening of damage to the property. We also recommend keeping photographic evidence and ensuring that all paperwork is in order to avoid delays as the case progresses.

Anti-social behaviour

The latest member survey by The National Landlords Association found that 17 per cent of respondents had experienced anti-social behaviour by tenants in the last 12 months – actions that cause, or is likely to cause, harm, harassment, alarm or distress to persons in a different household. From damaging an adjacent property and threatening neighbours to animal abuse and dumping cars, anti-social behaviour presents letting agents with an altogether more complex management task.

Witnesses, often neighbours or co-tenants, are uncomfortable giving evidence in court against someone who may not leave the property, and they can fear reprisals if the tenant returns. Meera Chindooroy, NLA.

Link to Business featureAlthough neighbours are often quick to report anti-social behaviour, Meera Chindooroy at The National Landlords Association says bringing cases to court can be troublesome: “Witnesses, who are usually neighbours or co-tenants, rarely feel comfortable giving evidence in court against someone who may not leave the property, and they can fear reprisals if the tenant returns.” As a result, landlords and their letting agents often struggle to gather sufficient evidence to enforce this clause in the courts using the fault-based Section 8 process, and they revert to a Section 21 to evict and regain possession.

Recognising the issues

There’s also a fine line between anti-social and illegal behaviour, with brothels, drug dealing and cannabis farms among the most serious misuses of a rented property. Meera does highlight that less sinister activities, excessive noise and fly tipping, for example, can also break the law and require the involvement of several agencies.

“The police, local authorities and registered social landlords all have a duty to deal with anti-social behaviour,” adds Meera. If a privately rented property is licensed, one of the conditions of the licence will be that the landlord must take action against anti-social behaviour in or within the boundary of the property. Failure to do so may result in a financial penalty, prosecution and/or the licence being revoked.

Visits to the property every few months, taking complaints from neighbours seriously, keeping a log of evidence, and consulting with the police and the local authority are all highly recommended by The National Landlords Association, especially if a Section 8 notice is to be served.

Red flag rental arrears

Cashflow has never been more important to landlords, so ensuring prompt payment of rent is a real ‘added value’ service letting agents can offer. What’s more, stepping in when arrears do occur and handling the legal retrieval of rent can mark excellent agents out from the average.

The most common reason that tenants use to withhold the payment of their rent is because they are claiming disrepair in the property. “Tenants are not allowed to do this. Lee Daniels, Helpland.

Link to Business featureTenants can find themselves in financial difficulty for a number of reasons – loss of a job or a split with a partner – and the rent is usually the first commitment they miss. Rent arrears technically become a legal matter if a payment falls behind after it is due and Lee Daniels at Helpland draws attention to the recommended procedure agents should follow: “Agents can remind tenants that their rent is late after one month and I recommend sending an informal letter. Helpland does not, however, recommend serving a Section 8 notice until a tenant falls into at least two months of arrears. This is because, should it lead to court proceedings, the agent will then have mandatory grounds to rely upon at county court.”

It’s also well worth remembering that agents and landlords have six years to chase a debt. Old arrears can always be pursued as issuing legal proceedings can take place even if the tenant has vacated the property.

Non-payment of rent

Quite aside from arrears is a tenant withholding the rent – an act that is very much in the vein of the ‘power to the renting people’ movement. The most common reason tenants withhold rent is because of claiming disrepair in the property. “Tenants are not allowed to do this,” highlights Lee, “they should notify their landlords of any dilapidations at the property instead of withholding the rent.”

In fact, a letting agent working on behalf of a landlord can start possession proceedings against a tenant for withholding the rent. This scenario, however, can be avoided if property managers liaise with landlords and tenants about essential maintenance on regular, pro-active basis.

Universal problems with Universal Credit

The issue of non-payment of rent muddies when you stray into the world of Universal Credit. While there are many tenants in receipt of welfare benefits that can – and do – pay their rent, sometimes money is not forthcoming, either because of administrative errors or tenant behaviour.

The good news is companies are working hard to develop solutions to non-payment of Universal Credit-based rent, which is giving letting agents and landlords more confidence when considering those is receipt of the benefit. Caridon Landlord Solutions is one such organisation and it’s making light work of the jargon-laden and procedure-heavy sector, debunking benefit assessment periods, housing cost elements and alternative payment arrangements.

Link to Business featureAcknowledging that it’s easier for Universal Credit recipients to fall into rent arrears, Caridon Landlord Solutions is working alongside The Department for Work and Pensions. Together they are piloting a new online system that allows rent payments from tenants in receipt of Universal Credit to be paid directly to private rental sector landlords. “The new system, which will replace the two existing UC47 forms, has been so successful it has cut the processing time down from in excess of three weeks to just two hours, in some cases,” comments the company’s Managing Director, Sherrelle Collman.

The new Universal Credit system, replacing the two UC47 forms, has cut the processing time down from being over three weeks to just two hours… in some cases. Sherrelle Collman, Caridan Legal Solutions.

Until the pilot is widely adopted, there are ways of recovering Universal Credit rent. A landlord can apply for an APA (Alternative Payment Arrangement), which means the ‘house element’ of Universal Credit will be paid directly to the landlord. If the tenant is in eight weeks arrears or more, a landlord can request a managed payment or rent arrears deduction. If approved, rent arrears deductions will be paid under the third-party deduction scheme.

Start with a watertight AST

While no one wants to utter the words ‘see you in court’, some tenancies become irrevocably broken and can only be legally resolved. In these cases, letting agents need to have followed a cast-iron protocol from the start.

It’s vital that agents set up tenancies correctly, protect deposits and serve the prescribed information, so a valid Section 21 or Section 8 notice can be served, advises Meera – a point echoed by every profession and legal body, including PHR Solicitors.

Without this, tenants can find loopholes and court proceedings can collapse. “

Link to Business featureA watertight tenancy agreement is crucial for landlords,” says Gareth Edwards, Partner at PHR Solicitors. It is a legally binding contract that outlines the rights and obligations of both landlord and tenant.”

Gareth says the best tenancy agreements are clear and unambiguous, so it can stand up to the scrutiny of a court, if necessary. “It is essential that a copy of the agreement is signed, dated and kept by the landlord and the letting agent in the event that the landlord takes possession proceedings, as it will need to be produced in court,” adds Gareth.

It should be made clear – in writing – to the tenant if a breach has occurred. It may be because a tenant was unaware of their obligation and it may be simply resolved by pointing it out. Gareth Edwards, PHR Solicitors.

Although legal proceedings can be pursued, they should be the last straw and not the next step. Gareth recommends that rather than adopting a heavy-handed approach, the landlord should first try and resolve tenancy breaches with the tenant by discussing the issue with them.

“It should also be made clear in writing to the tenant if any breach has occurred. It may be that the breach happened because a tenant was unaware of their obligation and the matter may be resolved by simply pointing it out to them.”

Eviction – the last resort

Despite a watertight tenancy agreement, some tenants are still likely to be stubborn or belligerent and refuse to leave a property. In these situations, the letting agent will have to pursue the court route. Andrew Whitehead, an Associate Solicitor at Stephensons, endorses Assured Shorthold Tenancies that explicitly prohibit all anti-social behaviour and detail a provision allowing the landlord, letting agent or property manager to carry out inspections.

Andrew also shares his advice for dealing with uncooperative tenants, “If possession proceedings are required and the tenant does not leave, the landlord or agent will be able to apply for a warrant of eviction to remove the tenant from the property.”

These cases are normally dealt with in the County Court but in certain circumstances – such as illegal activity, anti-social behaviour and extensive rent arrears – requests can be made to transfer cases up to the High Court for enforcement, which will be carried out by specialist officers. “This should result in the property being recovered more efficiently, dependening on the severity of the circumstances,” says Andrew.

 

 

 

December 30, 2019

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