Re rent payment?

[newbelandlord]

I really stretched myself to purchase a buy to let flat. Our son is at university and the idea is that when he’s ready to leave home he can buy the flat from me at the mortgage cost (we had to put 25% deposit down).

We engaged a letting agent to manage everything for a cost of 10% of the rent (the rent is £850 pcm).

The tenant has lived there since October last year. Since he moved in he has never paid the rent on time and usually in part payments over the month. Every time he makes a payment the agent automatically deducts the full charge of £85 and I have to chase them to claim it back.

When he doesn’t pay on the 1st of the month I get what looks like a standard email from the agent saying they have called and emailed him and are waiting for an answer.

I’m getting fed up with the tenant, I appreciate the rent is a lot of money but why take it on if he can’t afford it? We did agree to delay the payment payment date by a couple of weeks so it tied in with his salary payment. I’m also getting fed up with agent for apparently not giving a toss.

I’m tempted to go round the flat and explain to the tenant that we’re not landlords with a huge portfolio and we need the rent to pay the mortgage.

I would add though that the agent has carried out an inspection of the flat which came back as good.

Should we just suck up the late payments given that, so far, he has always paid in full? I’ve watched enough debt collector type programmes to appreciate it could be much, much worse.

Agree with the comments about not conflating the issues here. You let out a property and aren’t receiving payments on time. Get onto the agents first to find out what they’re doing and how the intend to improve the situation.

If that’s not looking very fruitful, consider discussing with the tenant. It’s up to you, perhaps you give them a warning to pay in full each month on the agreed date, see if that helps things along, or alternatively if you’re not confident serve them notice.

Be prepared, some tenants unfortunately get wound up by being given notice and stop paying rent altogether. Even if you move quickly legally, could have several months of no payment and recovering the debt can sometimes be tricky or time consuming (especially if you have to get recovery agents in, perhaps they have very little in the way of assets and ultimately end up on a payment plan, etc, that being if they track the person down).

I know a few people already have mentioned the harsh realities of letting. This is it. I know several landlords that only let one or two properties, for whom this is not their main business, so I understand your perspective in terms of saying this isn’t something you can afford to be messed around with. But, this is the nature of the business, and it is a business. If you had decided to open a shop instead but were losing valuable stock to shoplifting, you wouldn’t put a sign up saying, “I only own one shop and need the cost of all of the goods to pay to keep it, it’s an investment for my son”.

The reality is you started a business which like any other comes with potential benefits but also a number of potential issues and threats to its success. In the current climate a lot more people are renting, in some areas this demand is causing rents to go up and up, others costs continue to rise (travel, food, fuel, council tax etc) and a lot of people are not seeing the same rises in their salaries - and, for those receiving benefits these have become tighter too. People are squeezed. It’s not your fault and you don’t have to let people live in your property for free, of course not, but it does mean your pool of ‘customers’ may be increasingly struggling to meet with all of these costs, and that presents as a risk to your business. If you’re not confident you can mitigate for or weather those risks, you might want to consider exiting this particular industry.

I mean that all kindly. I know it must be worrying, but it really is a huge gamble to stretch yourself for a business that you don’t particularly want to run (as in, this is essentially a short term deal for you and not your main occupation) and don’t have the means to fully manage in the event of an issue.

Forgot to add up top, if the agents aren’t pulling their weight then have a look around other agencies and see what’s on offer. I have a relative who lets out a property, the agent deals with the letting side (legalities, payments etc) and my relative manages the property (deals with physical issues like repairs, furniture etc). They have really good communication, there are plenty of agents out there (hopefully plenty where you are) who will be communicative and helpful in situations like these. Perhaps see if there is a local group or online forum for landlords in your area and get some recommendations, if you haven’t already.

Just adding to the echo of what are you paying the letting agents for!

Silly silly woman!

Thank you for all the constructive comments and advice.

Should have been clearer about the financials. I stretched myself to find the deposit but the rent covers the mortgage and fees by approximately £300 per month. I was more thinking of appealing to the tenant’s better nature.

General consensus seems to be get rid of tenant and agent. The contract with the agent started in October 2018 and is for twelve months. I will check to see if I have any get out clause. The whole point of using a letting agent was to mitigate risk.

I can serve notice on the tenant for late payment. I will get the agent to give him a warning first.

I do have landlord insurance, also to mitigate risk.

Mumwon, thanks for the tip about joining a landlord association.

HeyPresto55, agree, definitely need a backbone!

Cubesofjelly, wise words, thanks.

HollaHolla, would it still boil your piss if we waited a couple of years, hoped that our (hopefully) newly graduated son could get a mortgage and the funds we had were sufficient to make up the deficit? Would we still be removing affordable properties from the market then?

Hersheys, I haven’t been on mumsnet that long but if I have learnt anything its DFOD.

So wait, you’ve overstretched yourself on a BTL to the extent that you struggle with the mortgage if the rent isn’t paid? How do you propose to make any repairs needed? And how do you know your son will ever be in a position to buy it off you? Don’t think you thought this through

Meant to thank HarrysOwl for the support, much appreciated.

OP I still think, despite your update, that you don't understand your power here.

The agency contract might have a break clause, but you should not need to rely on it - look for where they're not fulfilling their contract obligations and get rid. You may need to serve them notice but get rid and don't look for a natural break/review point - make it clear that their services were meant to reduce risk & stress and it simply hasn't been delivered.

But first, get rid of the tenant. Why are you talking about giving him warnings? He's already had them and ignored them (I mean, that's repeated behaviour,bwho doesn't pay their rent FFS). And you've been more than reasonable to change rent dates to match his salary. Stop arsing around and give him notice within the law, now. No more warnings.

This is a business investment not a family friend you're doing a favour for - the sooner you act like it, the sooner your tenancy problems will resolve.

I agree with ditch the agent, we had cnuts in ours who just stopped paying altogether and thank god for the guarantor who we reluctantly had to recover the money from but the agents kinda just shrugged there shoulders. I would never again rent to anyone without a guarantor or rent in advance. I’d rather the place sat empty

If you decide to change agent, you need to research them well- see if you can get a recommendation or look at feedback. I am not a great fan of google but sometimes you get a feel. My friend was getting rental payments late and as having to chase payment every month. Agent went bankrupt owing thousands to LL including not transferring deposits to the Deposit Scheme . ( and had conveniently tranferred the house to his wife shortly before hand)

I meant the backbone comment in the nicest possible way but you do need to put yourself first in this scenario. So more Mrs Nice Person
Some great advice here.

No more... (obvs)

jennymalone, somewhat harsh but very true!

Definitely need to be proactive and tackle the problem. Thanks.

@newbelandlord - yes, it does annoy me. If your son was living in it, and paying for it, then that’s standard, and fine.
The issue for me is where people think they’ll make money, and buy up all the affordable housing stock, to rent out, and think it’s easy money. Then people like your son can’t afford to get into the market, because everything goes for 10/20/30% over the valuation price, so FTBs can’t get a mortgage for that.
Can’t you see that you’re misguided in how you think you’re supporting your son? Unless you’re wealthy enough to actually put a large amount into a purchase for him, then you’re playing at being a landlord - and ergo, you end up with these situations, which are stressing you out.
I fully understand that you thought you’ve been doing something good for your son, but it seems to be disproportionately stressful, sadly.

Can you afford a void for months? Where you don't have a tenant paying rent, and you also have to pay the council tax? And can you afford costly eviction proceedings?
Because if the answer is no, then you can't afford to be a landlord. It's not a very good investment, unless you have more than one property, and are in it for the long haul, not just a couple of years.

The tenant should be given notice, when you're legally able to, but that may not be for months yet (you haven't said how long his fixed term is, or when it ends).
You can't just go round there and have a chat, you need to give him 24 hours written notice, and he can refuse to see you.

Although you have an agent, as the landlord, it is YOU who is liable, so you should know all the relevant laws that you need to adhere to, it wouldn't go down well in court if you try to blame your agents.
Do you know if his deposit is in one of the secured deposit schemes?
Do you know when the gas safety check is due?

This is a business, just like any other. You need to act in a business like manner.

HollaHolla We are not looking to make easy money and I could borrow only 75% of the valuation. I really do not agree that I’m misguided. I’m not so much stressed as getting fed up.

Motoko Yes, we can afford a void, we have landlord insurance, I can give the tenant notice, there’s no gas in the property but I have the appropriate electrical certificate, yes the deposit is secured. Obviously I should find time to become a tenancy law expert on top of all my other commitments. This is why we used an agent (who has been established over forty years and has multiple offices over the south east).

Once again, thanks to the posters offering constructive advice, much appreciated and I have taken it on board.

You may need to wait until October and his AST term has finished to give notice but you can definitely get new agents for now, that may solve the problem.

Being a landlord is very stressful, especially if it's a new experience! Feel free to PM if you need any specific advice; meant to mention before about the National Landlord Association, they are FAB.

NL A is a good idea and making an appointment to see your letting agent for a review of your relationship might help. They need to sort their admin errors and deal with the tenant . You need them to explain how they are dealing with the tenancy arrears, whether he has a guarantor and if so is he/she is aware that they might be asked to start paying . They need to be aware that you may have to put up with this until October but you will not renew with him unless things improve with immediate effect. Also ask to see the documentation about him, but bear in mind a previous LL may have given a good reference to get rid of him. Ask to see photos/checklist of the inspection if they have them
IME the well established chains are not always the best , both as a 'LL and student parent. "Forgetting" to say a tenant is leaving and not advertising, slow repairs , using expensive contractors and taking a commission from them. Some smaller local offices so better but make sure they belong to one of the associations. I am afraid you have to be an active client of the agency.

You don't need to be an "expert" in tenancy law, but you do need to know your obligations, because courts will expect that of you. As I said, YOU, not the letting agents, are liable.

If you'd just turned up at his door, wanting to have a talk, he could put in a complaint, that you're not observing his rights as a tenant to "quiet enjoyment".

It's things like this that you need to know, whether you have an agent or not, because you need to know whether the agents are doing their job properly.

You can’t just go round and see him without providing 24 hours notice.

In addition to the above, I’d look into rent guarantee insurance (though it may be a case of stable door/horse in the present circumstances). Did the agent do reference checks on this tenant before tenancy?

When we rented our house out we used a company called RentOnTime, they basically guarantee that you’ll get your rent when it’s due, and if the tenant pays late then ROT sort it out and you don’t have any hassle.

We never knew if our tenant had missed or paid late as it was all taken care of. Think they charged us about 5%. I’d get rid of your managing agent too, they sound useless!

We had the exact same problem with our tenants and they were constantly in arrears (my agent requests payments as a month in advance) so we negotiated with the tenants that they could change their payment date to coincide with pay day (which was why they were always paying late) provided they back paid to cover the portion of the month they were then not covering. So they paid something like £80 one month to cover that cost and going forward the date their rent was due was changed so they could make it on time for payments to then be received to cover the following month and everything has run smoothly since. I really hope that makes sense because I don’t think I’ve explained it very well but it solved the problem for me.

@Junkmail OP has already done that. He is still paying in drips and drabs.

When we rented our house out we used a company called RentOnTime, they basically guarantee that you’ll get your rent when it’s due, and if the tenant pays late then ROT sort it out and you don’t have any hassle.

The way these schemes generally work, is that the company becomes the LL's tenants, and then they sublet to the person who lives there. They have their own problems, so need to be researched carefully.