Biggest scourge for landlords is bad tenants, not tax… but we don’t want either!
The Judicial Review of Section 24 reached Phase Two of its crowd-funding campaign last Friday, following its record-breaking Phase One campaign which saw £50,000 raised in just eight days to launch a legal case again the Government on buy-to-let tax relief changes.
However at Tenant Referencing UK we believe there is a much bigger scourge sweeping the private rented sector, in the form of bad tenants.
Forget the likes of selective licensing, new buy to let affordability tests and the 3% stamp duty surcharge – do you know the actual cost of removing a bad tenant?
- From this April fees paid by landlords have drastically increased, e.g.
– issuing proceedings for a possession claim has increased from £280 to £355 (27% increase),
– fees for possession claims lodged online have increased by 30%; £250 to £325.
As we all know this is only part of the story and these huge increases in court costs to regain Possession have to be added to the hidden costs of Possession.
Section 21 Accelerated Possession.
- 2-3 months between serving Notice and submitting Court forms
- 5 days for Court to serve on tenant
- 2 weeks for tenant to reply
- 2 weeks until judge considers application
- Judge May grant ‘suspended possession’ – usually 2 to 6 weeks
- If tenant does not leave – at least 1 month for a bailiff to enforce the Court Order.
An average of between 4 and 6 month with no rent.
Section 8 on Ground 8 (at least 8 weeks rent arrears) This will vary for other grounds
- 8 weeks rent arrears
- 2 weeks before you can apply to the court
- Legal process an average of 5 months depending on the pressures on court time
- Providing procedure and paperwork to the court
- Judge will give the tenant 2 – 6 weeks to leave
- If tenant does not leave – at least 1 month for bailiff to enforce the Court Order.
An average of between 8 and 10 months with no rent.
Furthermore, last week alone at LandlordReferencing.co.uk we sent out over £40,000 worth of live Tenant Alerts uploaded directly from our community of vigilant landlords and letting agents; see: Daily Tenant Alert Digest From Landlord Referencing.
Holding a deposit with MyDeposits may reduce your costs slightly, but will provide little comfort for the experience, stress and cost of this process that we hear about from many landlords each day. And yet, after 7 years of gathering unique rental data and preventing landlords from taking bad tenants in the first place, we are still struggling to get the message out there on the importance of thorough and proactive tenant referencing protocol.
Therefore, 25% of people affected by Section 24 of the Finance (No. 2) Act 2015 is really the tip of the iceberg for the private rented sector when you step back and look at the bigger picture. So instead of covering the graze with a plaster, we need to eradicate the Cancer that has been attacking our industry for so many years; bad tenants.
How many times can you afford to carry these overheads?
More importantly, how can you avoid them?
With Tenant Referencing UK the answer is simple! Carrying out both a credit reference and a tenant history report (as uploaded by the previous landlord) and check on the history of rent payment and behaviour of applicant tenants, as well as their financial status; reducing the risk of ending up with the huge costs of eviction at a later date.
Paying legal fees is nigh-on impossible when rental income ceases, especially when there is still a mortgage to pay, so it’s also important to have a contingency plan in place. And this is where our Rent Guarantee Insurance products come into play, where you can avoid the hassle of non-paying tenants as well as the expense of court proceedings.
Have a look at our latest offer: