A TENANT GOES AWOL
In many ways it’s the landlord’s nightmare.
You as the landlord turn up one morning unexpectedly and there it is; your buy-to-let property, empty and abandoned like the ‘Mary Celeste’. With any luck the tenant has just removed themselves and their possessions and not any of your residential investment property. Unfortunately, I was not so lucky as one New Year when I arrived at my residential investment property to discover that half of my new kitchen had also been removed, along with new washing machine and fridge freezer. To make it worse just as I was digesting this information I heard a knock on the door. It was a prospective tenant coming to have a look around my buy-to-let property. I was it would be fair to say, pretty speechless.
What to do?
The first thing a landlord shouldn’t do is over-react and panic. Take a sharp in-take of breath and then a landlord should try and remain calm.
Unfortunately, if there are no forced signs of entry then buy-to-let contents insurance will not cover a landlord for their losses. It is worth reporting any theft to the police so that if should you catch up with your tenant at some stage the extent of your losses are documented and can be verified.
Where can I get insurance used by professional landlords?
The other thing is a landlord should not assume abandonment and go about changing locks on the assumption that the tenant has given up their tenancy. A tenant’s disappearance does not bring a tenancy to an end, even where the tenant is no longer paying the rent and has removed half a landlord’s kitchen as in my particular case. What a landlord needs to do is follow the legally required steps to bring a tenancy to an end by either issuing a section 8 or section 21 notice.
Tracing a tenant
A landlord firstly should ensure that they obtain possession of their buy-to-let property legally to enable them to re-let their residential investment property. Landlords however will also want to ensure that they get any monies that were due to them before the tenants disappeared. This will probably involve taking the tenant to court.
The problem with taking court proceedings against a tenant is that a landlord needs an address for the tenant to serve the legal documents on.
The process of tracing a tenant can be easy or it may prove to be impossible, particularly where a tenant is a ‘professional tenant’ & is well versed at doing a bunk and leaving their debts behind whilst disappearing into the ‘ether’. The first step a landlord should use to try and trace a tenant is to compile a comprehensive list of information that a landlord has on the tenant. A landlord should have some basic details resulting from the original credit check they carried out on the tenant. Information such as previous address and date of birth will be useful in being able to potentially trace the absconded tenant.
For instance a landlord could then use these details and the facility provided by a company such as Tracemart to try and locate the tenant.
Alternatively a landlord could employ a dedicated tracing agent such as 1st locate who will do all the leg work for a landlord. 1st locate offer a service where they assign one of their dedicated researchers to a landlord’s case on a no results no fee basis. This service will cost a landlord £35. They also offer a landlord a trace and collect service which means that they will do the work of collecting the debt as well as tracing the tenant.
Once a landlord has a tenants address they are able potentially to take legal action through the courts against the tenant to recover the debt.
Employing a private investigator
Where a landlord has a very large debt amounting to several thousands of pounds and is confident that the tenant has a sizeable income or assets, then a landlord could consider employing a private investigator. PI’s aren’t cheap and you will be looking at paying £30+ per hour for them meaning that bills can easily run into the hundreds if not thousands of pounds. However, a good one may be able to access information that you and I couldn’t and if it means finding a solvent professional tenant it could easily be worth it. I used these www.enquiryagent.co.uk and they got the results I wanted which was to find where a former tenant worked.
Word of warning for landlords
However, a word of warning also gained from personal experience. Even if the landlord is successful in getting a County Court Judgement then if the tenant has little or no income and no assets, the amount that a landlord will receive could mean that a tenant will take many years to pay off the debt. The likelihood is that payment will not be continuous. In this case a landlord is right to ask themselves whether it was worth the cost and effort involved & this question should always be asked early on in any proceedings.
Even where the tenant is working and the landlord obtains an attachment to earning Order the landlord will need details of where the tenant is working. This is because the landlord or solicitor acting for them will need the employer’s details in order to be able to write to them and instruct them to make payment. The good thing once this has been done an attachment of earnings order means that the landlords payment is automatically taken out of the tenants wages by the tenant’s employee before they receive their net wages in the same way as tax is paid through PAYE (pay as you earn).
Selling a landlords debt
I have heard about some landlords who have attempted to sell on their tenant’s debt to a debt collection agency. The reality is that a landlord who does this will forgo most of their debt. Even for a primary debt source i.e. a debtor who might also be a home owner the most a landlord is likely to receive from the debt collecting company is around 30p in the pound or 30%. Where more likely it is a case of a tenant that has absconded and cannot be traced; the amount a landlord is likely to receive is in the low single figures – in other words effectively nothing!
The importance of landlords vetting their tenants
All this highlights the importance of a landlord doing a good job of vetting the tenant in the first place.
This includes carrying out a credit check on their prospective tenant. Getting a good tenant at the outset will minimise the chances that the tenant is likely to abscond. Where they do; a landlord should then have the background information necessary to stand a reasonable chance of at least getting part of their money back should the tenant decide to disappear into the night!