Troublesome Tenant , deposit scheme, etc.

TripleH

The problem with a locked room is that there could be equipment in there using electricity that you end up paying for.

Or like me, you could live in a HMO where you have the last room on the loop for central heating and freeze because everyone else (including the person in the locked room who is never there) has their radiator up to maximum.

Also what's to stop the door being forced open because the tenant smelt burning?

theartfullodger

Or the old landlord excuse "i thought i smelt gas..."

elsien

Completely baffled by the utility bill situation. All she has to do is inform the utility company that she’s not living there, show a copy of the tenancy if necessary and tell them to bill the occupiers. 

Has she completed all the other obligations of a landlord ref gas checks etc and given the tenants all the other information she is obliged to by law?

turnitround

If the tenant was paying the bills during the first 6 months what on earth made your sister take over the bills after that? 

turnitround

Is this the same house you were afraid your father would reappear and demand his share from your mother? You were going to rent that one out.

_Penny_Dreadful

Android07 said:

Afternoon.

My sister is in a sticky situation.

She bought a 3 bedroom property and the intention was to sit on the property and let the value increase and eventually sell it after 10 years. She wanted to rent just enough so that this could cover the mortgage.

She rented two rooms to a couple and their teen son initially without a contract.

3 months later, she signed a tenancy agreement with them for 6 months after obtaining a Selective licensing license from the council. The tenancy agreement looks like this :  https://www.ebay.co.uk/itm/13426229083

She accepted the deposit as '1 month's advance rent' and this was written in hand just above the deposit section on the agreement.

The tenant signed in presence of a witness/guarantor. She paid the deposit in cash.

Sis set the deposit aside but did not register it with a protection scheme.

After 6 months, they voluntarily said they would be leaving the next month but months have come and went and they have not left. After asking them sternly for a fixed leaving date in the presence of their guarantor, she agreed to a date but the very next day, she complained to the council that she was forcefully evicting them. The council has asked for documents and she is in the state of preparing them.

She has just now registered with a deposit protection scheme and paid the initial £20 or so fee. Prescribed information has not been provided to the tenant yet.

Meanwhile, over the course of last 6 months, the tenant has damaged the house by flooding the bathroom and that has affected the kitchen ceiling underneath. The bathroom ceiling was also full of mould. Sis has used buidlers to fix everything. It has also been two months since the tenant has stopped paying rent.The tenant also stopped paying bills after the tenancy agreeement ended. Instead, she duped my sis into putting all the bills in her name. My sis tried to impose the bills on the tenant but the tenant has been deducting bills from the rent and only paying the remainder in rent. So, now we have a situation where the tenant uses as much gas & electricity as they want and my sis has to pay their bills!

Furthermore, after the agreement ended, the tenant was unmable to pay the full rent and asked for an adjustment against the rent for month 7. This was agreed verbally and my sis adjusted accordingly. So, the deposit held should be lesser than before ( approx.half )

What can be done now?

1. Deposit -

Send tenant presribed infroamtion now?

OR

Send refund for remaining deposit by cheque and recorded delivery with an apology.

2. Bills -

Utility companies have advised to ask tenant to call them to take over bills but tenant has ingored this. A PAYG Smart meter installation has taken place but the utility company have messed up and are yet to send a key while the bill has been accumulating!

3. Rent arear - How to get this back? Contact a Debt collection agency?

4. What about changing license to HMO so that the 3rd room can be rented so that it offsets the loss by a bit from no rent being paid.

Thank you ever so much.

The tenants saw your sister coming a mile away.  

1. Your sister can do either but neither will prevent the tenants from being able to sue her for failing to protect what was, in my opinion, quite clearly a deposit in the first place.  If take to court the judge must award the tenants a sum of money equivalent to 1-3 times the value of the deposit as compensation for your sister's failure to protect the deposit in the first place.  

2. What was the arrangement with the utilities in the first place?  Ordinarily a landlord would let a whole property to a couple and their offspring not just a couple of rooms in a house.  Then the landlord would contact the utility company with meter readings from the tenancy start date to close their account and inform the utility company there are new occupiers.  Why has your sister never done that?

3. First your sister needs to prove the money is owed and for that she will need to file a MCOL or wrap the arrears up with a Section 8 notice.  Even if she manages to do that it wouldn't be a debt collection agency she uses to try and recover the money.

4.  First your sister needs to get possession of the property back and fix whatever needs fixing before she even things about turning the property into a HMO.  Personally, as she has made such a pig's ear of this let I'd suggest she sell the property and invest in something else however if she is determined to stick with BTL then why go down the HMO route instead of letting the whole property to a family?

saajan_12

Few issues: 
Deposit - From your snippet, that looks like a deposit given that's the heading and there's no clear way that the money would be used as rent during the tenancy. The comment about '1 month advance rent'  just adds confusion -> but then it would be interpreted in the tenant's favour anyway. 
So it does need protecting or returning. If already protected, then just carry on, and note sis may indeed be liable for a penalty due to late protection / documents serving, but little that can be done about that now

Bills- What exactly was agreed regarding who pays bills, and what changed at the end of the fixed term (usually the terms continue unchanged). However usually when the tenant only rents part of the property (2 rooms) they have no control over what the LL does with the other room eg left empty or rent to a 3rd person, or has a very energy intensive workshop there.. So usually the LL pays all bills and its up to them to set the rent high enough to cover. Indeed if the tenant can prove they only rent part, then they may be able to avoid the council / utility companies from changing bills to their name. 
Solution would be to agree a rent increase (by notice if needed) and keep bills in LL's name, or to get a tenant that will rent the whole property, and then set bills in their name. 

Rent arrears - send the tenant a rent statement showing all amounts due and all amounts paid, with the difference and a message reminding them to pay promptly to avoid escalation. After some time (say a week), if nothing received then send a Section 8 notice, citing Ground 8+10+11 if the amount is over 2 months worth, or just Ground 10+11 if under 2 months worth. This would start the process to evict them, if still nothing once the notice expires then apply to court for a possession order. The court process for actually claiming the money can be either part of the Section 8 or as a separate MCOL. Again, needs to go to court, get a judgement and if the tenant doesn't pay get bailiffs to recover the money. No point in debt collectors before court, as they'll charge you fees and have no more legal standing than you asking for the money. 

HMO - A HMO comes with additional responsibilities and criteria for the property due to the higher risk of multiple people living there. Why not sell or just get one family to rent the whole property, which is usually covered by a Selective licence. That also has the added benefit of bills and council tax being clearly under the tenant's responsibility and no issues of who maintains the common area. 

Rent reduction - how much was the rent reduced by and was this a one off for month 7 or ongoing? If ongoing, then the deposit can be a maximum of 5 weeks worth, so if its higher then the excess needs to be returned asap. Otherwise that would be considered an illegal tenant fee, which comes with a hefty penalty. 

Android07

saajan_12 said:

Few issues: 
Deposit - From your snippet, that looks like a deposit given that's the heading and there's no clear way that the money would be used as rent during the tenancy. The comment about '1 month advance rent'  just adds confusion -> but then it would be interpreted in the tenant's favour anyway. 
So it does need protecting or returning. If already protected, then just carry on, and note sis may indeed be liable for a penalty due to late protection / documents serving, but little that can be done about that now

Bills- What exactly was agreed regarding who pays bills, and what changed at the end of the fixed term (usually the terms continue unchanged). However usually when the tenant only rents part of the property (2 rooms) they have no control over what the LL does with the other room eg left empty or rent to a 3rd person, or has a very energy intensive workshop there.. So usually the LL pays all bills and its up to them to set the rent high enough to cover. Indeed if the tenant can prove they only rent part, then they may be able to avoid the council / utility companies from changing bills to their name. 
Solution would be to agree a rent increase (by notice if needed) and keep bills in LL's name, or to get a tenant that will rent the whole property, and then set bills in their name. 

Rent arrears - send the tenant a rent statement showing all amounts due and all amounts paid, with the difference and a message reminding them to pay promptly to avoid escalation. After some time (say a week), if nothing received then send a Section 8 notice, citing Ground 8+10+11 if the amount is over 2 months worth, or just Ground 10+11 if under 2 months worth. This would start the process to evict them, if still nothing once the notice expires then apply to court for a possession order. The court process for actually claiming the money can be either part of the Section 8 or as a separate MCOL. Again, needs to go to court, get a judgement and if the tenant doesn't pay get bailiffs to recover the money. No point in debt collectors before court, as they'll charge you fees and have no more legal standing than you asking for the money. 

HMO - A HMO comes with additional responsibilities and criteria for the property due to the higher risk of multiple people living there. Why not sell or just get one family to rent the whole property, which is usually covered by a Selective licence. That also has the added benefit of bills and council tax being clearly under the tenant's responsibility and no issues of who maintains the common area. 

Rent reduction - how much was the rent reduced by and was this a one off for month 7 or ongoing? If ongoing, then the deposit can be a maximum of 5 weeks worth, so if its higher then the excess needs to be returned asap. Otherwise that would be considered an illegal tenant fee, which comes with a hefty penalty. 

Hi.

Please accept my apologies for the late reply. I was busy with work and travelling.

Let's assume the monthly rent is £1,000.Tenancy started a year ago.

The tenants only needed two rooms as rent for the whole house is about £3,000pm and they could not afford it. This also worked for my sis as she only wanted to rent part of the house and leave the rest of the rooms under lock and key so that other rooms did not get used and damaged through wear & tear.

DEPOSIT - The one month advance of £1,000 means the tenant does not have to pay £1,000 in his last month when he decides to leave as he paid £2,000 in his first month when he moved in. As this was not a deposit, i.e. no money will be returned to the tenant when he leaves, surely this does not need to be protected? Please accept my apologies if I incorrectly used the terms 'advance' and 'desposit'  interchangably in my first post.

BILLS - The tenants arrived as students and would not have a credit rating. Hence, it was agreed verbally, that the bills would stay in sis' name and at the end of the month, the tenant would pay bills to sis ( gas+electricity+water+broadband+council tax). When the 6 month tenancy ended, the tenant refused to sign a new contract and it moved to a rolling contract. The tenant then declared that since he does not have a contract anymore, he is not going to pay bills anymore. Sis was forced to pay all the bills from her own pocket.

RENT ARREARS - After the 6 month tenancy ended, the tenant also decided that they are not going to pay the full rent that they agreed to in their tenancy agreement as there was no contract anymore(?) They missed out on one month's rent completely and then started paying less than £1,000pm. Some months, they have paid £700, some £800 etc. The tenant has been advised by post each time they failed to pay rent in full. The total amount in arrears IS 2 month's worth now.

I think the tenant has been deducting bills from rent and the paying it!

Doe S8 take into account about deposits?

HMO - Not applicable. Selective license. An application is still ongoing for an additional HMO license.

RENT REDUCTION - I think you misread this. No rent has been reduced.

NEW UPDATES -

Since the first post back in May, the following have now taken place:
-Solicitors have been approached and they have said to issue S21

-All bills have been changed to tenant's name

-Section 21 has been served by sis ( on own, not by a solicitor )

-A debt collection agency has been asked to recover money that sis paid as bills in the past.

Mstty

I suspect any S21 issued will be invalid if challenged.

https://markprichard.co.uk/content/documents/170522-Section-21-checker-tool.pdf

RAS

OK, so both the LL and the tenant are making the law up as they go along. 

At the very least, unless she really understands tenancy law for her specific country, your sister needs professional help to remove the tenants.

When you says the tenants "arrived as students", do you mean that they were/are foreign students? So might not be au fait with UK tenancy law and might also be picking up advice from others who don't know UK law?

It is possible to sign an AST just for a room in a house as well as for a house share (all the tenants are liable for the full rent not just their room); that's the definition of an HMO, basically. What exactly did your sister agree to rent to them as it's not clear from your OP.

What exactly is the role of the witness/ guarantor? If they ARE a guarantor (signed and witnessed as a deed), why has the LL not pursued the guarantor for the unpaid rent?

If the LL has not yet provided the prescribed information to the tenants, the S21 will fail. If the tenants weren't given the up to date "How to Rent" booklet, the S21 will fail. Does she have the gas and electricity checks, and has she given copies to the tenant? Read the link provided.

This is such a mess that the LL is best getting proper expensive legal support to remove the tenants. It's going to take time and money to even get the tenancy regularised so effective notice can be given. And possibly a year to remove the tenants once that happens.

And then sell the property ASAP and hope to cover the costs.