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.

How long is the lease for?

Assuming the tenant is on a 6 month AST you can serve a notice to quit at the start of the 5th month (ie two months notice). If I were you, I would be instructing the agent to do this. You need to serve the correct notice on the correct day for it to be valid.

Paying partial amounts is a common trick by a tenant who knows the law but who has no intention of paying in full, as most contracts stipulate two full months of rent arrears before you can initiate eviction proceedings on the grounds of non payment.

But you do not have to renew the tenancy. And you would be ill advised to do so with this tenant. It will not get better.

Do you have landlord insurance? A good policy will pay legal fees and compensate for loss of rent in this scenario.

Does your tenant have a guarantor? If so get the agency to chase them for the balance.

Otherwise tell the agent that he must pay within 7 days and then in full on due date. Give him notice as soon as you can. But the agent should be advising this. It is what you are paying for.

Why would he care about your financial position? He already has an incentive to pay on time (I.e. a good reference). I doubt he’ll care that you were foolish enough to do but to let on a mortgage.

I’ll add foolish as well into my next post . As I explained previously, I stretched for the deposit and we can afford to cover the mortgage and fees.

jennymalone thank you. I will arrange a meeting with the agent. Could be the end of a brief and not very happy relationship.

MullofKintire 12 months lease. We do have landlord insurance. Suspect it’s going to be needed.

Daisymay2 agree that the agent should be advising me.

I will fully hold my hands up to being naive in thinking a large agency would relieve me of the workload of managing these things. I really don’t want the hassle (have more than enough on my plate as is but I’m not looking for the sympathy vote).

Thanks for the constructive advice.

Hi OP
You are not naive or foolish. Anyone would expect a large agency with lots of branches would be up to the job of managing your property for you. We did exactly that- 20 years ago. Initally it as fine and there was a good manager in the local branch. Then they centralised their admin. Ha Ha . They were terrible all sorts of stuff went wrong - and tenant requests for maintenance not done. Final staw was a message to say that the tenant had moved out yesterday, what should they do- she had given 8 weeks notice. Then went to a local agent who was excellent initially but expanded too quickly and when his deputy left suddenIy I got a "feeling" as he became elusive and delayed payments. Tenant moved and I changed agent but my friend got caught when he went bust. Moved to a new business which was set up by the deputy and have been there for 8-9 years now. His team are on the ball and know their LL and monitor the tenants.

sorry but boohoo for you

The letting agent is not doing the job they are supposed to for their 10% (by the way, I think 10% us a high fee, but maybe you are in a big city). They are supposed to chase the rent payments actively.

Also, if a tenant has delayed rent by 2 months you can serve them a notice and kick them out, at least this is the case with the agency I use. I don't know if it's a law or local policy and don't care; sounds reasonable to me.

I was in a situation which could have gone the way yours did, but I decided not to tolerate the delays and we asked a tenant to find another place if they can't afford mine. I didn't like doing it but then I am not a charitable organization or a free hostel. I hope your situation improves. Kick the tenant out and change the agency (read the reviews of other landlords beforehand). Good luck!

I also don't think "face to face" with tenant is the best option here. OP already pays the agency to do all communications effectively, so it's the agent's job to talk to tenant. Face to face is the only resort for those landlords who don't bother with an agency, and this is fraught with conflict and all sorts of unpleasantness.

The whole point of paying a fee to an agent is to avoid "face to face" bullshit, protect yourself from being embroiled in nonsense and ensuring all legal safety requirements are met (i.e. your place is safe to live in)

@Nearlythere1

Hi OP. Off topic but just wanted to check you had considered the capital gains tax aspect when you sell to your son. If you sell to him for less than market value, you will be liable to capital gains tax on the increase between the property's full market value at sale vs what you paid for it. Just make sure you get the proper advice from your accountant.

Agree with poppet.
The price you agree sell the property at will be only be deemed to be market value if it is considered to be an rms length transaction , you can check but I think the connection to the seller must be no closer than cousin.
If you sell to your son you will need a written red book valuation ( more like a report) by a chartered surveyor, you may initially get away with several written estate agents valuations. However, If you don't pay for a proper valuation you will have no comeback if the inland revenue challenge the selling price.
Of course you will have two capital gains tax allowances to offset against the profit if the property is in joint names.

Do you actually have the tenants details yourself to contact him?

I'm a small, single property landlord too, and I think I would send him an email directly, to ask him if there's an issue with paying his rent monthly. Is there anything you can do, i.e. split the rent to weekly amounts instead? Is there a problem that you need to be aware of, such as problems with his work that he hasn't shared with you?

If all of this comes back as a no problem/ still pay monthly, then I would be letting him know that unfortunately, it's costing you time and money every month in admin fees, phone calls, etc, when he pays rent late, and if you can't come up with an agreeable solution together then you will have to start charging late payment fees/ interest on any rent not received by the due date, without your prior agreement. Most ASTs have this clause written into them as standard, if you've used an off-the-shelf one.

I also work in lettings, and the late payment fee is very rarely used for us, as we only charge it to the repeat offenders who take the mick, but a £25 late payment charge if they don't call with a good reason to let us know it will be late is very effective at helping to curb that problem.