Rent to tenants with CCJ

hoyalove

Hello,

I have no idea what to do in the situation I am facing now, and would like to seek for advice.

The tenants have been living in our property for a year and the contract is due to end this month. Last year, tenants paid a year rent upfront after selling their own house so there was no issue with paying the rent at all, and the house has been kept very clean despite of having three kids. But this year they want to pay the rent on a monthly basis, so we have gone through referencing company to check if they can afford and to go ahead with insurance company. Then we found out that tenants have around 1100 of unresolved CCJ from March this year and their incomes are not enough to pay the rent. *We found them through a local agency and did referencing - they did not have any issue earlier. Only we did not add up rent guarantee insurance as they paid upfront.

He has been working as a black cab driver, and recently found a new job to work at night. It seems like his income as a black cab driver cannot be proved well enough, and other income is also not enough to cover the rent (referencing company said income should be 2.5 higher than the rent to pass - and he did not write any income as a black cab driver). The tenants want to live in the property and we were happy with them, only till the time we found their income and CCJ record. We directly spoke to them about it and tenants said they were not aware of CCJ as their credit score shows 'FAIR' rating? They said they would bring a guarantor instead. Now we do not know if it is OK to accept them for a new contract or if we are taking a high risk.

Rosemary7391

You already rent to them - horse, stable door, bolted? Given that, I'd at least see if they pay up, and if they don't then be very rapid in dealing with it to minimise the amount they owe you.

Guest101

hoyalove wrote: »

Hello,

I have no idea what to do in the situation I am facing now, and would like to seek for advices.

The tenants have been living in our property for a year and the contract is due to end this month. Last year, tenants paid a year rent upfront after selling their own house so there was no issue with paying the rent at all, and the house has been kept very clean despite of having three kids. But this year they want to pay the rent on a monthly basis, so we have gone through referencing company to check if they can afford and to go ahead with insurance company. - you didn't reference them beforehand?! Then we found out that tenants have around 1100 of unresolved CCJ from March this year and their incomes are not enough to pay the rent. - That's unfortunate for you both

He has been working as a black cab driver, and recently found a new job to work at night. It seems like his income as a black cab driver cannot be proved well enough, and other income is also not enough to cover the rent (referencing company said income should be 2.5 higher than the rent to pass - and he did not write any income as a black cab driver). - it doesn't matter what they say. They aren't the ones providing a house. The tenants want to live in the property and we were happy with them, only till the time we found their income and CCJ record. We directly spoke to them about it and tenants said they were not aware of CCJ as their credit score shows 'FAIR' rating? - well then they need to deal with it, but unknown CCJs are VERY common They said they would bring a guarantor instead. Now we do not know if it is OK to accept them or if we are taking a high risk.

What do you mean accept them. You have no choice. They just live there noiw

FBaby

There's no right or wrong answer it all depends on the risk you are prepared to take whether it is worth paying for looking for new tenants and whether you are likely to get more financially secured tenants.

You then have to consider that if you give them notice they could stop paying all together and wait to be evicted by the courts. If you don't want them as tenants neither will other landlords.

What I certainly wouldn't do is renew a fixed contract as although you could use a S8 if they don't pay rent it would be much easier to use an S21 with two months notice.

Pixie5740

The fixed term contract comes to an end 31st July? How does the current tenancy agreement say the rent should be paid? Weekly? Monthly? Annually?

DumbMuscle

If they are willing to provide a guarantor, and the checks on the guarantor come back OK, then you at least have some safety net. I would agree with the others here that either going for a rolling tenancy or a fixed term tenancy with a break clause will make it easier to deal with if they don't pay rent.

hoyalove

The term ends on the 24th of July. The contract says that the rent is payable in monthly instalments but tenants will pay the sum for 12 mths to cover a year.

Guest101

hoyalove wrote: »

The term ends on the 24th of July. The contract says that the rent is payable in monthly instalments but tenants will pay the sum for 12 mths to cover a year.

and then it becomes monthly tenancy.


You cannot prevent this

G_M

PROs

You know them.
They've been good tenants.
You trust them (I assume).
They have income sources above those the referencing company have taken into account
Evicting them will give you a void
Evicting them will involve tenant-find costs
Evicting them will involve other tenant-change costs

CONS
Your rent guarantee insurance may (will?) be invalid
If they struggle and fall into arrears, you'll have hassle. And costs.

I'd go periodic. Either CPT or SPT. That way you have 2 options for eviction if you later decide to - either S8 and/or S21.

How much deposit do you hold?
Is a guarantor a possibility?

hoyalove

Thanks for the comment. I hold 6 weeks of deposit. And the tenants said they would find a guarantor. If guarantor passes referencing it would be easier I guess.
The contract says: Should the contract have become a periodic, after the fixed term, one month's notice given... etc. So we do not need to make a new contract?

Guest101

hoyalove wrote: »

Thanks for the comment. I hold 6 weeks of deposit. And the tenants said they would find a guarantor. If guarantor passes referencing it would be easier I guess.
The contract says: Should the contract have become a periodic, after the fixed term, one month's notice given... etc. So we do not need to make a new contract?

Its two months notice. and that is notice of intention to go to court. to evict takes on average 4-6 months