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  • Landlords in Distress

    DSS/No Guarantor & has an unsatisfied CCJ

    Hi can anyone help:

    A 'gentleman agreement' has been made between family for someone that someone knows daughter (no one has met her) to move into the FIRST house we have bought to rent out, initially we were told she has a job and 1 child and would like to move into our beautiful 3 bedroom home that we have just purchased for rent and they immediately offered the correct rental price we had in mind. All is well at this point.

    Real Facts: Tenant to be works only 1 hour a day and received DSS and carers allowance (she brings in more money that we do as 2 working adults, crazy I know, but tenant can certainly afford the rent - also turns out has kids 5, 9 and 16 and a cat, but honestly not bothered about that - at least doesn’t have to pay bedroom tax as the house is a 3 bed), we can't get a guarantor as tenant to be doesn't know anyone who earns over £19,000 per year who will be guarantor. So as the family will be beyond upset if tenant does not move in, we still have to go ahead with this person. Again initially I did manage to find Rent Guarantee cover so long as tenant has no CCJs (which at this point we were told by this person they didn't). All again well, not ideal but we not have cover and a tenant.

    New problem: applicant has CCJ outstanding of £500 (unsatisfied/unpaid). So now the insurance company WON'T give Rent Guarantee and I can't find anyone, even when we are willing to pay a premium Sad I am not sure if there is more to this/or if the person is not aware they owe £500 (you never know - although you would expect with a CCJ a person should be aware as this has been to court, but I honestly don't know the circumstances).

    Any ideas? I have a friend that suggested not signing a tenancy agreement - but I have been strongly advised against this and believe it is against the law.

    We are using an agency, who have told me not to put the person in - but the family will be beyond devastated and never speak again if person doesn't move in (families eh!?). It is not worth the hassle not moving person in and I have been advised that the landlord reference should come back ok (apparently if she is a bad tenant they will want rid anyway and will just say she is good!!). She even conned us into paying her referencing (long story, again to appease family).

    Has anyone advice on this please - one way or another we have to take the risk as it is not worth the family falling out over, but would just ideally like some form of cover if she does decide to not pay (again, advice from people/agents is that evicting someone is costly and time consuming - and we have never done this before, so not an ideal first start).

    Thank you Smile

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    In a nutshell I would take advice of agency .

    As far as families go it really doesnt often work out to be honest .

    Sounds like you know yourself that it would be very risky ..


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    Thanks, I know what you are saying, it's a long story, but we are in a no win situation and the person will have to move in. Do you know if there is an insurance company that will offer Rental Guarantee with the above issues (DSS/No Guarantor/CCJ)? I did suggest that the father in law guarantors the person - which went down like a lead balloon. The FIL is of an older generation, he is already a heartbeat away from a heart-attack and cannot understand why the tenant needs to even go via an agency (in his day people paid a months rent upfront and straight in), if we dig our feet in and say no I it won't end well. Better to just put the tenant in and keep some money in the bank for 'worst case scenario' (whatever 'worst case scenario is', that is - this is why I need advice on if there is Rent Guarantee/Legal Protection available or how much do we need to keep back if she becomes troublesome). It is unfair on the FIL putting this situation on us, but can't do a lot about it Sad

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    so just to be clear, you have bought a house and you HAVE to let it out to family. and even though the person moving in is someone you would not normally want as a tenant, you still have to take them.

    it sounds like you are being forced into this situation by the FIL, but clearly he doesn't have any faith in the tenant as he wont act as a guarantor. that should tell you all you need to know about the how this will end

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    Yes, that is correct - except the tenant is the FIL's friend's offspring. The FIL has done majority of the work and is currently getting property no 2 ready (he is being paid, so not a free renovation - but I guess this will be at a preferential rate Smile ), so he is throwing his toys out of the cot because he can - we are in a no win situation and this person has to move in or this will upset the family, because he has made a gentleman agreement. So I am over that one - argued for a couple of days about it and got nowhere except for a FIL nearly having heart attack. So any advice on if there is Insurance available (I did find Adrian Flux, but they would not take on once we declared the CCJ) and also worse case scenario so we can hold some money back? Big Grin Big Grin Big Grin Thank you!!

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    So you are stuck with the tenant!!

    How about this

    You pay off the CCJ ensuring it is detailed as satisfied;  this can take some time though

    Then obtain RGI

    Then make a note in the AST that the rent will be X plus a fifth of what you have paid to clear the  CCJ for the following  5 months

    Then the rent to revert to a lower amount

    Simples!!

    You must by fair means or foul obtain RGI  on this tenant

    You also seem to believe that HB tenants are also subject to the Spare Room Subsidy

    They AREN'T.

    Only social housing tenants are.

    HB in the PRS  is based on domestic  circumstances

    It is perfectly  possible for a HB tenant to rent a larger property than HB will pay for. If the tenant can or chooses to afford the rent they may do so; but will only receive the HB element  of UC.

    There may be additional  Council Tax payments required if the property is larger than HB would pay for or council  tax assistance  would pay.

    In that case the tenant would have to make up the difference

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    hi amanda. what a horrible situation to be in. i cannot offer any advice simply because i would never put myself (or my investments) in this situation in the 1st place. if the FIL and the FIL's friend will not be a guarantor, then that should speak volumes - they dont want to risk their money but are happy to risk yours.

    if you cannot find any insurance, and by the sounds of it you cannot otherwise you wouldn't be on here looking for help, then maybe try another tact and see if you can come up with a reason why this person cannot move in.

    if this is your 1st property, then say that the mortgage lender requires that the tenant has a guarantor to protect their position? or say that your insurance is not valid unless your tenant has a guarantor?

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    Yes - but FIL is retired, so I don't think he would pass in any case. But rightly, he did turn down my suggestion Smile

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    Yes, and it does. But FIL still wants person to move in regardless and can't see what all the paperwork faff is about. He never had this in his day (I have honestly spelled it out) but he said the person has to move in because he is so stressed about the situation as he is a 'gentleman of his word' and he has given his word (he is a lovely gullible man, if it does go pear shaped we will not be telling him as it will no doubt land him in an early grave).

    So do you know any Rent Guarantee Insurers that will take one someone on Housing Benefit with a CCJ and no guarantor? Or if not, is it easy to evict someone? Smile Thank you Smile

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    Avoid

    ###k the family!

    This is your livelihood

    The proposed tenant has already lied to you.

    If your house is as beautiful as you believe take it away from the LA and advertise with LRS or Openrent.

    Will cost you about £40; I bet a lot cheaper than your LA  for exactly the same Web advert!

    Put in the advert that  only tenants or their guarantors who can pass RGI checks will be acceptable

    That will remove about 90% of possible  applicants .

    Avoid anything to do with UC tenants.

    Or if this prospective tenant paid the CCJ and the RGI was possible that would be different

    The family though would cause a lot of wear and tear on the property.

    HB types always do!

    What you could do and I do this frequently. Take 2 months rent as deposit

    Do NOT take the first months rent

    Have the tenant pay off the CCJ before signing the AST.

    Then obtain RGI

    Then add an appendix to the AST allowing the payment of the first month's  rent to be spread  over the following 5 months in addition to the normal  monthly rent.

    Subject to complying with these tenancy terns you deem that the tenant will not be any rent arrears

    So with the rent that would have been used for the first month it is used to satisfy the CCJ which then allows RGI qualification which then allows you to take on the tenant which then allows the tenant 5 months after the first month had elapsed to pay that first months rent

    Simples!!

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    You’ve received excellent advice here Amanda, ignore this at your peril, it will only end in tears.Ask your self this, would you loan this person a 100k to buy a house, that is effectively what you are doing if you allow this person to move in.?

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