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Need a bit of advice about tenancy agreements, please.

ambc
Posts: 125 Forumite

We’re ‘accidental landlords’, and own a property that’s too small for us to live in, and that we can’t quite afford to sell as it’s in negative equity. But that’s besides the point.
Around 6 months ago, we had a tenant move in via a letting agency on a 12 month AST. We’ve had contact from the agency this morning telling us that the tenant has cancelled their direct debit and that they suspect the tenant has also done a runner. Six months early.
They’re going to visit the property this afternoon to try and find out more.
If the tenant had explained his/her situation, I’d have cancelled the contact early as I'm not in the business of making life hard(er) for people. But given that this has happened, I’m super PO’d to be honest. Especially since we were incredibly flexible about a few things at the beginning of the AST to help them out.
I’m also wondering whether they’ve left the place in a bit of state, too - hence the disappearing act.
A sad lesson learned, I guess.
I’m sure the agency will move things along for us, but I’ve just got a quick question while I’m waiting for them to get back to me. Given that the tenant has moved out, but NOT actually ended the contact, are we legally able to end it ourselves before the 12 months is up without agreement from the tenant? In other words, do we need to wait the remainder of the 12 months before we can get the property ready to let again?
I’ve read that it’s possible we might not be able to end it ourselves.
And another quick q - if it’s the case that we can’t end the tenancy ourselves even though the tenant has disappeared, who would be liable for the council tax, given that the current ’tenant’ would still be contracted under the AST?
Does all of that make sense?
Thanks.
Around 6 months ago, we had a tenant move in via a letting agency on a 12 month AST. We’ve had contact from the agency this morning telling us that the tenant has cancelled their direct debit and that they suspect the tenant has also done a runner. Six months early.
They’re going to visit the property this afternoon to try and find out more.
If the tenant had explained his/her situation, I’d have cancelled the contact early as I'm not in the business of making life hard(er) for people. But given that this has happened, I’m super PO’d to be honest. Especially since we were incredibly flexible about a few things at the beginning of the AST to help them out.
I’m also wondering whether they’ve left the place in a bit of state, too - hence the disappearing act.
A sad lesson learned, I guess.
I’m sure the agency will move things along for us, but I’ve just got a quick question while I’m waiting for them to get back to me. Given that the tenant has moved out, but NOT actually ended the contact, are we legally able to end it ourselves before the 12 months is up without agreement from the tenant? In other words, do we need to wait the remainder of the 12 months before we can get the property ready to let again?
I’ve read that it’s possible we might not be able to end it ourselves.
And another quick q - if it’s the case that we can’t end the tenancy ourselves even though the tenant has disappeared, who would be liable for the council tax, given that the current ’tenant’ would still be contracted under the AST?
Does all of that make sense?
Thanks.
0
Comments
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What advice has your letting agent given you in this situation...surely they have given you an indication of the way forward considering you employed them to manage the property and rent collection.....or have they simply handed the problem back to you?
At this stage I would wait and see what this afternoons inspection brings up...they could still be living there,there could still be possessions there or they could have cleared out.
Sadly cancelling the standing order does not end a tenancy either for you or them at this stage.
GM's very useful link
https://forums.moneysavingexpert.com/showpost.php?p=67759913&postcount=4in S 38 T 2 F 50
out S 36 T 9 F 24 FF 4
2017-32 2018 -33 2019 -21 2020 -5 2021 -4 20220 -
Just as a side issue until someone comes along and posts GM's link. How much negative equity have you got? The reason why I ask this is because if you are getting the kind of tenant who leaves in this way you are probably trying to let a property that doesn't make a good rental property.
People assume that any property will let and yes it will but not all of them let to the kind of hassle free tenant that people imagine they will. If you want hassle free letting you have to let the kind of property that tenants want to live in and often that is not the same as people will buy to live in. Buyers are prepared to make many more compromises than tenants will.
You may find with this property that paying off the negative equity and selling it will in the long run cost you less than trying to let it.0 -
Go in and change the locks. Tidy up. Re-advertise and get a new tenant in.
2 weeks later your original tenant returns, tries to get in and finds they can't. Goes to court.
You get convicted of illegal eviction. A fine, criminal conviction, and possible custodial sentence............0 -
What advice has your letting agent given you in this situation
Hey, thanks. Not had any advice from the agent yet - we've just had a brief notification that something's up and that they're going to investigate ASAP. This is purely a bit of a knee-jerk reaction from me. I'm hanging on to hear from them, hopefully by the end of today, but I'm just trying to figure out as much as possible first.How much negative equity have you got?
In terms of neg equity, there's probably around £10k... then once sols and estate agents are paid I guess we'd looking at losing £12k or thereabouts, which is roughly around 3x years worth of costs to us worst case (ie, if the place was empty/voided during that entire time).
Assuming we'd need to take a loan out to repay this amount over 3-5 years or so, my gut feeling is that it's probably a better idea to continue paying down the mortgage instead of taking out a loan to pay a shortfall, even if the place is empty. At the end of the three years, we may have found a better tenant... but even if not, we'd almost certainly be able to sell the place at that point in time without losing money on it.
So it's a bit of a calculated risk. That make sense?0 -
Go in and change the locks. Tidy up. Re-advertise and get a new tenant in.
2 weeks later your original tenant returns, tries to get in and finds they can't. Goes to court.
You get convicted of illegal eviction. A fine, criminal conviction, and possible custodial sentence............
This is why I'm asking the question. I'm the kind of person who tends to stick by the rules. I posted a comment the other day saying that I've had some terrible landlords and some good ones over the years.
I hope I'm one of the good ones.
Just to bump my second question... if the tenant has disappeared and there is a further 6 months to run on the original AST, I'm prepared to leave it empty if that's what I'm required to do. But who's liable for the council tax during this period? That's one of the bits I'm not clear about.0 -
We’re ‘accidental landlords’, and own a property that’s too small for us to live in, and that we can’t quite afford to sell as it’s in negative equity. But that’s besides the point.- Still not accidental.
Around 6 months ago, we had a tenant move in via a letting agency on a 12 month AST. We’ve had contact from the agency this morning telling us that the tenant has cancelled their direct debit and that they suspect the tenant has also done a runner. Six months early.- They didn't have a direct debit, but a standing order I suspect. In anycase yes this happens all the time.
They’re going to visit the property this afternoon to try and find out more. - that would be risky given there being no notice
If the tenant had explained his/her situation, I’d have cancelled the contact early as I'm not in the business of making life hard(er) for people. But given that this has happened, I’m super PO’d to be honest. Especially since we were incredibly flexible about a few things at the beginning of the AST to help them out. - irrelevant
I’m also wondering whether they’ve left the place in a bit of state, too - hence the disappearing act. - possibly
A sad lesson learned, I guess.
I’m sure the agency will move things along for us, but I’ve just got a quick question while I’m waiting for them to get back to me. Given that the tenant has moved out, but NOT actually ended the contact, are we legally able to end it ourselves before the 12 months is up without agreement from the tenant? - using a court, sure. In other words, do we need to wait the remainder of the 12 months before we can get the property ready to let again? - no, just a s.8 notice for rent arrears. then court
I’ve read that it’s possible we might not be able to end it ourselves. - A landlord can never end a tenant unilaterally
And another quick q - if it’s the case that we can’t end the tenancy ourselves even though the tenant has disappeared, who would be liable for the council tax, given that the current ’tenant’ would still be contracted under the AST? - Tenant.
Does all of that make sense?
Thanks.0 -
Hey, thanks. Not had any advice from the agent yet - we've just had a brief notification that something's up and that they're going to investigate ASAP. This is purely a bit of a knee-jerk reaction from me. I'm hanging on to hear from them, hopefully by the end of today, but I'm just trying to figure out as much as possible first.
In terms of neg equity, there's probably around £10k... then once sols and estate agents are paid I guess we'd looking at losing £12k or thereabouts, which is roughly around 3x years worth of costs to us worst case (ie, if the place was empty/voided during that entire time).
Assuming we'd need to take a loan out to repay this amount over 3-5 years or so, my gut feeling is that it's probably a better idea to continue paying down the mortgage instead of taking out a loan to pay a shortfall, even if the place is empty. At the end of the three years, we may have found a better tenant... but even if not, we'd almost certainly be able to sell the place at that point in time without losing money on it.
So it's a bit of a calculated risk. That make sense?
The problem is that if the property does turn out to be the kind that doesn't attract good tenants you are going to be spending money on doing repairs when the tenant has stopped paying the rent. If you don't get letting property right it can cost you serious money so instead of having a nice income coming in you will have a continual drain on your finances.
You don't say where the property is but there are now big companies building property to rent. So there really isn't a lot of future in letting undesirable rental properties unless you are an experienced landlord and your business model is difficult tenants. If you want a quiet life you need the same kind of tenant that the big build to rent companies are after and the only way that you can compete with them is if you undercut their rental prices but still offer a good quality rental. It seems to me that you can't really do either of these so you can't compete.
For peace of mind your best course of action would probably be to pay down the negative equity and then sell it for what you can get for it.0 -
Yes perfect sense
Appreciate that - thanks.0 -
We’re ‘accidental landlords’, and own a property that’s too small for us to live in, and that we can’t quite afford to sell as it’s in negative equity. But that’s besides the point.
Around 6 months ago, we had a tenant move in via a letting agency on a 12 month AST. We’ve had contact from the agency this morning telling us that the tenant has cancelled their direct debit and that they suspect the tenant has also done a runner. Six months early. - did you check references, plans to stay long term etc?
They’re going to visit the property this afternoon to try and find out more. - careful with this.. there's still a vaild tenancy so could claim illegal eviction against YOU. Ensure you still serve 24 hours written notice etc as usual before an insppection (or whatever your agreement allows)
If the tenant had explained his/her situation, I’d have cancelled the contact early as I'm not in the business of making life hard(er) for people. But given that this has happened, I’m super PO’d to be honest. Especially since we were incredibly flexible about a few things at the beginning of the AST to help them out.
I’m also wondering whether they’ve left the place in a bit of state, too - hence the disappearing act.- possibly, but again you can't start taking deposit deductions or renovating without ending the tenancy.
A sad lesson learned, I guess.
I’m sure the agency will move things along for us, but I’ve just got a quick question while I’m waiting for them to get back to me. Given that the tenant has moved out, but NOT actually ended the contact, are we legally able to end it ourselves before the 12 months is up without agreement from the tenant? In other words, do we need to wait the remainder of the 12 months before we can get the property ready to let again? - their agreement would help, else you need to evict by court. See below for your options.
I’ve read that it’s possible we might not be able to end it ourselves.
And another quick q - if it’s the case that we can’t end the tenancy ourselves even though the tenant has disappeared, who would be liable for the council tax, given that the current ’tenant’ would still be contracted under the AST? - No, the tenant is liable during the tenancy ie upto the end of the fixed term. It can get complicated if it goes onto a SPT and they move out mid month but you won't be liable to the council during the fixed term.
Does all of that make sense?
Thanks.
Firstly make sure you or your agent don't enter without serving the usual 24hour notices etc.
Secondly you need to properly end the tenancy by any of the below (I'd use multiple and see what sticks first):
a) Mutual agreement- try contacting the tenant, saying you'll waive xyz if they sign to say the tenancy ends by mutual agreement TODAY. That way you can relet and start recovering some rent rather than chasing money suing for arrears you may never get.
b) Section 8 notice- when tenants are 2 payments in arrears you can serve Section 8 on a mandatory ground giving 14 days notice. eg if rent is on 1st and they don't pay 1Feb or 1Mar, then on 2Mar they are 2 payments in arrears. There may be other discretionary grounds but these are likely to fail if the first 6 months rent has been okay. Then serve Section 8 notice, apply for possession order, wait for hearing, wait for expiry date of order.
c) Section 21 notice- giving at least 2 months notice and expiring on / after end of 12 month fixed term. If they haven't vacated by the end of the fixed term, this will allow you to get a possession order and evict.
d) Wait for fixed term- then if they have vacated the tenancy automatically ends.
Only after getting mutual agreement or possession order expire, can you enter at will / renovate / relet.0 -
Your in for the long haul. I have had two abonments, both took around 7 months to resolve.
The new laws in Scotland make it easier for us and dramatically reduces the time and effort to get abandoned houses back. But England hasn't caught up with us yet so you need to go down the old route that includes a court order.
I was also under the impression that waiting for the fixed term to end doesn't actually end the tenancy as a periodic tenancy takes place unless the tenant gives notice of their intent to leave, in writing or handing the keys back is intent. I might be wrong about that though.0
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