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  • Buy-to-Let

    How to be fair to tenants?

    Afternoon all,

    Just about to complete on another btl, good purchase price, good returns, needs a refurb which is exactly what I wanted.

    It has existing tenants which I have agreed to inherit as they have passed my referencing, have been there 5 years and always paid on time, and more importantly I feel they are genuine people after speaking/interviewing them etc, it also saves me finding tenants. However they are messy, bordering hoarders I would say, they just don't tidy or clean to an acceptable level, I'm not expecting spotless either, their current landlord does nothing for them so maybe lack of pride in the property is the issue.

    My plan is an 18 month AST which coincides nicely with the end of the fixed term on the mortgage for a refurb and remortgage, this is where I need advice.

    My thoughts are to let these tenants go after the 18 months, give them plenty of notice maybe 6 months prior to the official notice, which will be a shame all round but I wouldn't want to risk refurbishing then the property deteriorating to its current condition again.

    Would you also let them go?

    And if so would you tell them the exact truth that its because of how they live, which could cause damp, fire risk etc, risk offending them and the last 6 months being a nightmare with them, or would you maybe tell them you plan to refurb and sell, a white lie but same outcome for them and no offended tenants?

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    Hi Ben, 

    I would be inclined to do neither.

    The reason that you are wanting them to move out is that you would like to refurbish the property to improve it.

    I am assuming that you will also be raising the rent after the refurbishment, you could advise of the new rent and invite them to apply for the property however stipulate that that the property will also be placed on the open market and their may also be other tenants which you may opt to rent too depending on all the applicants references. This keeps them on board and potentially improvement in behaviour until the end of the tenancy and you can review again. 

    Mark

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    To be honest I would leave them in especially if they are genuine and on time with their rent! I have 10+ properties some of which are in flats and as long as they don't smoke or sneaks big smelly dogs in I'm not interested how untidy they are, that's their choice.

    You could refurbish it and get a tennant from hell who could trash it and default on the rent.

    At the end off the day it's your choice, if you have a good feeling with these tennants keep them and do a minimum refurbish on the inside it might make them want to keep it cleaner.

    Good luck!

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    Both great replies, thanks, both of which throw other options into the mix.

    Mark - Yes rent would be raised but probably only by £50 which they could afford, the main benefit to me is the increase in value, so they may see through this, but can't see them having any objection to moving out for a refurb with all the work going on, it's just the issue of not offering it directly back to them!

    Daz - They don't smoke or have pets, it is literally just the hoarding and cleanliness which is a shame, but it needs a full refurb (8k) as that is part of my strategy going forwards for the remortgage.

    It really is a hard choice to make, I want them as tenants, just not in a newly refurbished house with their current ways! I come across people like this regularly and they wont change, they will resist and resent. So asking them to change isn't an option.

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    Hi Ben,

    Great to hear that you've bought a tenanted property. Like you say, you saved on lettings agents fees, started receiving income from day 1, have good tenants who aren't damaging the property, plus you've de-risked the process of estimating the market rent by substituting it with real rent being paid.

    So no arrears, no voids and tenants who are keen to keep paying the rent... sounds like you should be careful not to jeapordise this, as a significant portion of your long-term profits will be generated by your rental income.

    Why don't you tell them that you plan on investing £8,000 into the property for their benefit? Of course, they'll incur some disruption but they'll get a better bathroom/kitchen/carpets etc, and inform them that it's your expectation that they'll look after the property carefully. Like Daz says, untidiness isn't a crime nor does it damage a property's intrinsic value (unlike smoking or pets can). Plus you aren't guaranteed to get a good tenant if the existing ones were to leave. Seems like a win-win for both landlord and tenant and would be worth making the "sales pitch" to them (they are, after all, your customers and have been loyal so far).

    Also, just a word of caution (and apologies in advance if you're already aware of this), you would have inherited the existing AST that the tenants are on when you purchased the property. So they're not obliged to accept any rent increases until the appropriate review points stipulated in the AST.

    Out of interest, how much do you think you've saved by purchasing the property with tenants in place (i.e. the saving from the initial void period plus lettings agent fees had the property been vacant)? Reason for asking is that at https://www.vestaproperty.com we specialise in selling properties with tenants in place and are always keen to hear from others who have purchased tenanted buy-to-lets.

    Thanks and good luck!

    Team Vesta

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    If tenants are hoarding masses of junk any refurb would mean they have to vacate with all their stuff which sounds impractical.

    OP seems to have cash flow issue given need to remortgage for a higher value.

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    The need (want) to remortgage is my strategy going forward, I have bought the property knowing it needs a refurb so I can release funds for a further deposit.

    Cash flow is nearly £500pm.

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    I would not offer any new tenancy until you've had at least 12 months experience of a paying-in-full-and-on-time tenant who only complains about valid issues.

    Just serve s48 & s3 notices...

    s48 or no rent due...

    s3 to avoid criminal offence & possible fines.

    'sfunny how many property "experts" don't appear to know about those things....

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    Would agree with comments made and I also have tenants who are very very clean and tidy and also ones where you sit on the edge of the sofa and say no to a cuppa.  I would have a chat with them on the amount of stuff they have which could be a fire risk.  Wouldn't mention cleaning but the hoarding of stuff could be a bigger prob and maybe they don't see it

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    Would you still buy it if you can't do the refurb to refinance? If no, then think twice, but if yes, go for it.

    I'd be tempted to leave them be, why go upsetting the apple cart? How often has the rent gone up in their time there?

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    No I wouldn't buy if it didn't need the refurb as it wouldn't fit my criteria of being able to add value.

    They've been there 5 years and the new tenancy with me is their first rent raise which they understood and accepted.

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