Singing Pig

Hello,

I am new to this forum, hope no one minds me posting and I would be so grateful if you could help me.

 We are about to Let to Buy, hopefully completing early July. We advertised the house a couple of weeks ago and had a few potential tenants look round.

We found one man very likeable, he had 2 teenage sons and a dog, we said pets by negotiation so asked to see the dog before we decided, but the dog seemed fine, so no problem. We specifically advertised for full-time employed tenants. This tenant has been in stable employment (albeit low paid) for 15 years at the same company and we have received the employer's reference to confirm.

 So what's the problem? Well, we told him we would be happy to offer him the house subject to satisfactory credit check and previous landlord reference and deposit. I contacted the previous landlord who was happy to recommend him, said he always paid rent on time. But when I mentioned the credit check he said he needed to be open and say that he would fail it as he had gone bankrupt last year due to a business venture that went wrong. He assured me that despite the bankruptcy he had a stable income, plus tax credits for the children so he would have no trouble affording the rent. He has also had 78 days off sick this year, though he gets 16 weeks full pay then 26 weeks half pay.

 My partner and I discussed it last night and decided that he was too risky a tenant, despite the fact that he seems a decent bloke and his last landlady said he was a good tenant, and emailed to gently decline him. He emailed this morning begging us to reconsider as his priority is finding a home for his 2 kids, and this house is so well located for their schools. I feel very torn in that he does seem  a nice bloke and perhaps he deserves a chance, but also we will have a big mortgage on this house and will be up s*** creek if a tenant can't pay the rent for several months. Does anyone have any advice for me? I have been warned that there are such things as 'professional tenants' who prey on first time landlords, which we are, and prey that he is not one of these!

 Many thanks in advance, Sarah

He is a risk, as are all tenants. Put him through the credit check anyway. It might show other positive or negative information.

Firstly, do not give particular credence to his current landlady. It is not unknown for current landlords to be very careful not to say anything specifically bad if they have a poor tenant, after all they want rid and if they give a bad reference the tenant won't be leaving! If you can, try to contact the previous landlord (if there is one) as they will have no issue and will tell the truth. You really need five years of addresses anyway.

Secondly, you didn't say the ages of his sons. This can be significant. If he goes long-term sick and claims benefit, if his sons are working age this will affect the benefit awarded (to his detriment). Also,check the local authority Local Housing Allowance rates to check that if he does claim benefit, at least the published rates will cover the rent. 

He has been open with you about the bankruptcy. Ask to see the papers so that you can check is story. If he has been working for this company for some years, what was this business venture and how did he fit it in to his full-time job. The papers will reveal his creditors, and you can go through these with him. He may simply be bad at handling money, and if so you cannot let to him. If it was genuinely a bad business venture, then he is probably okay.

 

has he got someone who can act as guarantor?? if so, check the guarantor as thoroughly as the tenant, then take a month's bond & rent ... and get on with it!  (PS  don't do things by email ... old-fashioned rapport is built by face to face and phone contact ... backed up by written confirmations).  i have had an ex-bankrupt for a while ... best tenant i ever had ... backed up by a home-owner employed sister!  always pays on time, never any trouble, long-termer ...... a tinge of gratitude as she knows, through her own experience, that no letting agent (and most landlords) wouldn't give her the time of day .... PS i also upped the rent from 550 to 575 as a "risk premium" ... business is business ;-P

Thanks for your replies, a bit of clarification:

David, his kids are 12 and 16. The business venture that caused bankruptcy was a patio slab business, he claims that a friend encouraged him to invest £10k and be his business partner, but his friend went bankrupt soon after and the potential tenant tried to 'keep a dead duck alive' by paying business costs on credit cards until finally accepting that the business would not work. Re the landlady's reference, she is a previous landlady, he moved in with an older son who lives alone a few months ago and is temporanry lodging with him. He rented from the previous landlady for 3 years.

 Pod-The guarantor idea is a good one, I can ask him at least.

 

Thanks again, Sarah

Sounds as if you can re-assess this person - and if you can get a guarantor you are home and dry.

If no guarantor, then you will have to use gut feeling. Sounds like you will have a long-term tenant here though, and voids are nowadays the biggest loss landlords have to deal with.

I would suggest though that you only do an initial six-month AST, then let it go periodic. To make life easy, ensure you have a clause in the contract that the rent will increase on each anniversary of the start of the tenancy, and that the minimum increase will be the published BoE inflation rate, rounded to the nearest pound.

If you ever hit a problem, it is easier to do a s21 when periodic. You can't have one expiring during a fixed term.

i couldn't agree more with DavidA  -

 

also - you can try to get a guarantor  -  check that person out as fully as the prospective tenant - and that they can afford 2 rents/mortgages if necessary, and get them to sign a Deed of Guarantee.

you can ask to see 12 months of bank statements so that you can see how he lives  - can he afford the rent on his low pay

 

have you actually spoken to his employer ?  folks will say stuff on the phone that they wont write.  

 

why is he moving ? - and why did he leave hs 3 years tenancy ?

Personally, I dont like his sickness record. He is on low income and does not work work full time. I would classify him as high risk.Best to avoid him unless you get a gaurantor plus deposit plus rent up front.

Some landlords give tenants a good reference, to get rid of them.

You have a big mortgage, so put yourself first.

The sad truth is that you never get the sort of tenant you imagined/wanted and that is from information you know about them at the begining. You can consider the problems of low pay, pets, age, nationality. But there will always be other things you cant legislate for whihc then crop up - marriage splits, job loss, not getting on with the neighbours, illness, pregnancy . . .

You have done the right thing by meeting him (and his dog!) and gut feelings account for a lot. We have a rule, 3 negative things and its a "no".