One of the keys to being a successful landlord is proper tenant management and, particularly for an HMO, this is something that can make or break a successful property investment.
Disputes can range from simple (even seemingly petty) things such as a tenant in the property pinching another tenant’s food to a tenant having issues with neighbours; having caused material damage; refusing to pay rent or refusing to leave at the end of a tenancy.
Things like this take up a lot of landlords’ time and are a major factor in many HMO landlords choosing to appoint a managing agent to look after their property or even being put off investing in property in the first place.
When working with both new and experienced landlords, I always advise that, often, prevention is better than cure – the best way to handle a dispute is to simply to put measures in place to avoid it happening in the first place! Despite this, instances like the ones mentioned above can be a necessary evil when it comes to being a landlord, and most landlords will need to handle some form of dispute at least once in their property journey.
Vet Your Tenants Thoroughly
Like I said, prevention is the best way to handle a tenant dispute. This “prevention technique” kicks in right at the outset of the landlord / tenant relationship – even before your tenant has been given their tenancy agreement.
There are a lot of ‘red flags’ that present themselves when conducting a viewing which you will need to keep an eye out for. How does the applicant present themselves? Are they polite and courteous, or rude and demanding? Does their story match with what they communicated when they booked in for the viewing? These are some of the giveaways suggesting a bad tenant and there are many others, so trust your gut and don’t be afraid to refuse an applicant if you don’t feel they are right or will not fit in with the other housemates.
Once you decide to accept an applicant reservation and take a legally compliant holding deposit to begin the tenant move-in process, I cannot over-emphasise the importance of properly vetting your tenants! As well as processes such as reviewing their immigration status, it is advisable to:
- Obtain last three years address history (insist and verify a reference from their previous landlord)
- Run a credit check – companies such as Homelet will be able to do this on your behalf
- Confirm income by having sight of bank statements, payslips, employment contract or a letter from an employer. Generally, the requirement is to earn at least three times the annual rent in gross annual salary.
Whilst it may seem that these steps take extra time and add costs in terms of void periods, you will be astounded at the number of problems that you will avoid further down the line! I would be interested to hear if you do any checks on prospective tenants in addition to the ones mentioned above.
Maintain Excellent Communication
Still on the point of prevention – maintaining excellent communication is key to heading off tenant disputes. Tenants should know who to contact in the event of an issue and landlords should always respond promptly.
Many disputes are a result of poor communication or lack of responsiveness from the landlord, whereas resolving a small issue quickly prevents it from becoming a bigger issue later.
To give you an example, we recently had a problem with a leaky shower in one of the HMOs we manage. The tenant phoned our office and we arranged for a plumber to visit within 24 hours. A part needed to be ordered which took a few days to arrive; we kept our tenant updated and they were very happy at how quickly the problem was resolved but also with the fact that we kept in touch with them and kept them up to speed with what was going on.
Radio silence is a big “no-no” when dealing with tenants as it can indicate that you’re not prioritising their request. Regardless of the fact that the shower took a few days to get sorted, the situation was prevented from becoming a dispute by our strong levels of communication – the tenants knew at all times what was happening and, importantly, that we were on the case and doing everything we could to resolve the issue.
Provided that you have a good line of communication from the start, if a bigger issue does occur, you will be much better placed to deal with it.
Handling Disputes Between Tenants
The nature of the HMO set-up means it is generally more common for there to be a dispute between tenants. Something that you will want to consider when vetting tenants is whether they will fit, personality-wise, with the other tenants in the property.
Encourage your tenants to address any issues amicably between themselves and, if you do need to get involved, speak to all parties to get a picture of what’s actually going on.
You will want to also speak with the tenant who is perceived to be causing a problem and let them know that if they do not sort it out, they may be asked to leave. You should also keep the other tenants informed so that they know you are handling the situation.
Keep Excellent Records
I cannot stress enough the importance of keeping excellent records and having sound legal advice. If you want to evict a difficult tenant, you will need evidence of their behaviour: this could include things such as text messages, videos, photos, and statements from others.
You must keep records of the actions you have taken to address the situation to avoid a situation where you need to begin eviction proceedings.
Be Prepared To Compromise
Evicting a tenant is expensive and, particularly at the moment, can take a long time! You therefore will need to be prepared to find a compromise. However, you will not want to compromise to the point that you find yourself losing other tenants in the property.
Landlords may also wish to consider using the services of a professional mediator (check this link), who will be able to speak impartially to your tenants and avoid expensive litigation.
To those looking to invest in property: Don’t let the horror stories that you see on the TV put you off! Whilst it is inevitable that there will be disputes, it is important to remember that investing in property is an excellent way to build wealth.
If you are considering investing in property or have any questions regarding tenant disputes, I would be more than happy to help. The best way to contact me is via LinkedIn.