Being a landlord frequently throws up a whole raft of legal but also moral dilemmas.
They are not always easy to resolve.
I recently had a situation with one of my tenants with respect to repaying his tenancy deposit. I confess I had more than one sleep interrupted night as I churned the moral and legal implications of the case.
I’m still not sure I got it 100% right but perhaps you could give me your thoughts by posting a comment below.
Outline of the situation.
The outline of the case is that the tenant, I’ll call him John, in his 20s and as most tenants of his age his priority was having fun & probably not much else.
There was a period earlier on in the tenancy when the tenant had stopped paying rent so I took the precautionary step of issuing a section 21 notice for possession.
A section 21 notice gives a landlord the right to obtain a court order for a possession at the expiry of the notice. There is no time limit on the expiry of a section 21 notice and it remains valid once served as long as the tenancy continues.
John was generally a pretty good tenant. However last year he suddenly stopped paying his rent again.
Obviously, this was a worry for me. I started off by trying to get in contact to find out the situation in respect of the unpaid rent. No response. I tried phoning and emailing over a period of weeks, but nothing.
I therefore decided to act. No news in my experience is normally bad news. I decided to continue the possession process by seeking possession through the courts in October last year. I did this by making a claim for possession under the accelerated procedure through the courts. This involved issuing a section N5B. The cost of this was £150 of my own cash. If I had proceeded to obtain possession it would have been possible to reclaim the cost of applying for a court order for possession and this would have included any associated legal fees incurred. A landlord can also reclaim the monetary value for their time in making an application for the court order.
The tenant responds on receipt of the Notice of Issue
Following the application to the County Court the tenant finally got in contact with me.
John indicated not unsurprisingly that he had some financial issues and that he was looking at a cheaper apartment to rent and wanted to give notice that he wanted to move. I discussed his situation and responded by offering him a reduced rent. We agreed a payment plan to bring his rental account up to date which he did.
Rental liability of the tenant
The tenant contacted me earlier this year on the 15th March giving me notice that he would be leaving the property by the 19th April. He actually very kindly had lined up a potential tenant for me.
Now the notice period and charging rent when the tenant was no longer in occupation was the thing that has given me my moral dilemma.
Firstly, many landlords may not be aware that when giving notice; both the landlord and tenant need to give a full rental period worth of notice. For example, because in the case of this particular tenancy; the tenancy began on the 14th. A full rental period meant that rent on the rental account was due all the way up to and including the 13th May.
My moral and legal dilemma
My attitude to tenants and their notice period has in the past been pretty lax. To be honest I’ve allowed many of my tenants to get away with giving me just 1 months notice irrespective of the fact that they have not given me one month’s clear notice.
However, with the increasingly onerous bureaucracy such as the Tenancy Deposit Scheme
being heaped on me as a landlord, and the greater time involved has forced me to stop and think. Why should I be running around complying with the various bureaucratic edicts and then let my tenants get away with a fairly 'laissez faire' approach to the law and the tenancy.
I only met John once. This was during the tenant ‘check out’.
He and his girlfriend seemed like a nice young couple. They were off to have a bit of an adventure over the Summer working on a French campsite. I felt quite a lot of empathy. They were clearly short of cash and the deposit monies were going to be useful for their French Summer adventure.
The issues & morals
My first reaction was to ask myself “was I been mean?” Should I make the tenant give me a full months notice? I clearly had more money than him and he was banking on getting most of his deposit back.
I never got into being a landlord to be a ‘tight arsed’ money grabbing landlord of the type that had pervaded my youth. Had I become the man I always hated?
What goes around comes around
Then I thought. Actually there was an element of justice in the whole situation. It had been me who was kept hanging on not knowing what was going to happen about the payment of rent several times during the tenancy. Now it was the tenants turn to wait upon my actions. Then there was the cost of issuing the notice for possession. This cost me £150 and I was unable to claim this back from the tenant’s deposit. In addition, the carpet was pretty trashed. Seen as the letting agent had carried out the Inventory, the chances of establishing that they had damaged the carpet if the matter went to arbitration would be close to zero.
I was therefore torn. I needed to justify my actions to myself and reconcile the fact that I could pay the tenant back the money they wanted. However, when I started to think how much I should pay them. Actually, I could have picked a random figure. None would make sense in law. So what am I doing? Am I running a business or a charity? A tenant wouldn’t have batted an eyelid when I ‘kissed goodbye’ to the £150 in court fees.
Sometimes being a landlord you can’t always please everybody and you have to make a tough judgement call. All I am certain of is that legally I’m in the right. Morally, I guess that I don’t feel so great about charging rent to the tenant after they had moved out. However, sometimes being a landlord you can’t always please your tenants and do the right thing as a landlord.
Do you have any comments about the issues raised?
I think maybe at the second sign of non-payment of rent with John you should have gone through with the possession order and then claimed the costs back from John. If you were a “real business”, non-payment of rent would not be taken lightly – why should letting be any different?
I myself have tried to exert the 1 month clear notice on a tenant moving out from a statutory periodic tenancy only to be met with a torrent of abuse. I now at the commencement of a statutory periodic tenancy write to the tenant explaining this rule so that there can be no misunderstanding in future.
I also think you should do your own letting and inventory in future as this is another case of a landlord being unable to justify deductions due to letting agents’ lackadaisical attitude towards management of landlords’property. - Jo
Being a landlord often puts us in difficult positions. Tenants' personal problems have a tendency to find their way into our lives. I cannot imagine my bank manager losing much sleep over someone's overdraft charges and yet I know I have worried over tentants divorces,unemployment or ilness.
The bottom line is that we are in a position to help them out but we need to ensure we get a fair deal too. In your example I think you acted right. These young couple you mention would have no problems taking the full deposit back and forgetting about you almost instantly. You have been far from mean. You helped out as much as you could but they have to meet their obligations too. I'm sure they will survive and possibly they will learn something for the future.
20 something and going to France for the summer with my girlfriend.. I wish I was your tenant!
Dear Contact (sorry I don't have a name)
I simply run my portfolio as a business. Even if other people don't see it as a business which I have always found rather curious. Everthing is chargeable. I quickly learned not to use letting agents and deposit protection schemes - quickly means after LA tenanted my second investment. This tenant made me so angry I decided that she would be the first and last tenant to piss me off in this way and then use the LA and Deposit Protection Scheme to achieve it. I manage my own portfolio which means I put everything in writing. I photograph everything and use my own inventories. I get the tenants to sign both. My AST is 14 pages long covering everything from being contactable as a condition of the tenancy to cleaning the carpets and professionally cleaning the property prior to leaving. The last tenant did such a bad job as did her predecessor (and I fully expected she would) that I sent her a checklist of everything I expected her to clean and repair prior to the end of the notice period. She failed to complete. I then got her to sign on the last day a copy of inspection report detailing the condition she had left the property in including breaches of tenancy agreement which to my amazement she did. I don't have time to run around after tenants who take up my time and money then look at you bug eyed in amazement as though you had just hurled some unrepeatable insult at them. As far as I'm concerned it is their job to take responsibility for the tenancy and my job to fulfil my obligations as landlord. When last tenant defaulted on rent (then paid late) I sent her a list of my charges to make her understand that time costs money and the letters have to be paid for aswell. I don't have any moral dilemma. When I was renting (for 20 years) no landlord had to put up with anything anywhere near the likes of which my tenants seem to expect me and other landlords to accept. And I noticed how quickly they (the landlords) let you no and in no uncertain terms when something seemed wrong or not to their liking. I am easygoing but when tenants start to cost me time and expense I get my business hat on and make them take responsibility. I am sending her a bill for the cleaning, garden maintenance, refit of carpet, admin and anything else that cost me time and or money. I shan't hold my breath getting the money out of her but I'll have a jolly good go.
As for deposit - I take 2 months rent in advance. If they haven't got it I let them pay in monthly instalments. I refuse to use the deposit system because the schemes like the tenants they fall over themselves to protect seem to be oblivious to the time, effort and expense involved in running a portfolio.
I think as he lined up the tenant, something he didn't have to do, and as long as they check out, I'd cut him a little slack. This will ulitmately have saved you some advertising expenses.
Plus whilst he is going away now to have fun he may be back in the future and wish to rent another one of your properties. Hopefully with a better job and able to pay his rent on time. Plus there is the plus side of positive word of mouth from him about you being a decent landlord. Which will help you attract better tenants in the future.
But when all's said and done presuambly you are doing this to make money. I'd ask for the rent for the notice period but deduct a tenant finders fee from it. Some sort of compromise so you can cover some of your costs but also aren't sending him off to France a complete Pauper.
I believe that rentals should be run on a completely business basis and unfortunately the more slack one allows tenants the more they expect from future landlords and consequently spoil things for future Landlords. The law views letting as a serious business and so should Landlords and tenants and any lattitude given should be on a reciprocal basis where if tenants put in their fair share eg of improvements/repairs, one can reciprocate but this must not become a one sided scenario where only the landlord gives. - Regards Michael