To think about kicking out (good) tenants?

[pctmmn]

I've had them for over three years and never missed a payment. But in April they said they were struggling so offered a 1/5th rent discount for three months. When this ended they asked for another three months. It doesn't affect my bottom line has I've taken out a 6 month mortgage holiday and the payments won't increase when they start again as it's added to the term.

I've been able to build up a bit of cash, but one works at a hotel and the other manages a resterant.

Would I be unreasonable to ask them to confirm the full rent needs to be paid for September else I'll give them notice? I really want someone in there paying the full rent and it feels like I'm subbing them right now.

Eh no, I said the exact opposite. That I'm not looking to make a profit right now and am concentrating on paying off the mortgage.

I think I understand very well what a long term investment is

Apologies if I misconstrued, but from what you said, it did very much sound lke you were claiming that you weren't making a profit, when of course, overall, you clearly are doing so over the investment period as a whole.

@lollyfog - Ah! Now I understand. I am actually Jealous of BJ. Well I never knew that...

I wish I was a natural blonde!

LL's who claim payment holiday will not be able to buy another btl as it adversely affects their credit rating. Also it has affected you as now your mortgage will take 6 months longer to repay. You could ask for a meeting with them to set up repayment plan over 12 month period and make clear not sticking to plan would result in you giving them notice at the end of contract.

Sit down and talk with them.
Ask them what they think is happening with their jobs in the hospitality industry and if they feel they can continue to live in the property paying full rent.
They may become eligible for financial assistance by way of housing benefit etc.
As pp have said,you might get rid indecent people and end up seriously regretting your decision.
But first,give them a chance to talk it through I expect they are extremely worried.

Rid of decent people!!sorry for the typo

Hi OP, we're in a similar situation, our tenants are both airline stewards and when lockdown hit they were furloughed on 80% of 'basic wage' (apparently significantly below their actual salaries).

We offered 50% rent for three months, with a view to them renewing the tenancy (which came to a natural end of tenancy at that point). If they renewed, we wiped the debt, if they left, they'd pay us from their deposits.

Everyone was happy with that, but of course the airlines haven't all gone back and their particular airline are making mass redundancies - so they weren't able to commit to a new tenancy without knowing what's coming.

Since then they've been on a rolling monthly contract (waiting for news), paying about 65% of the rent. I can't lie, it's hitting us hard and with no real end in sight, we're tempted to end the tenancy regardless (the estate agent thinks we're crazy to keep helping them out as their deposit is now a drop in the ocean) to get full rent again. The market is now weirdly buoyant!

We don't want to go this to perfectly good tenants, but we can't afford to carry on indefinitely. No solution for you OP, but watching with interest for inspiration!

That airline if it’s BA they’ve started sending out the new contracts now. My friend is due to start flying next month so they should hear soon.

I'm not a LL, but honestly this doesn't appear to be a sensible longterm (or short term) business decision to me OP. Not a LL, but I own and operate 7 businesses. Will focus on that side of things, rather than the moral aspects of it.

Long term - generally it's always better the devil you know. They're good tenants, they're making 80% in the midst of a pandemic, without you really having to invest anything or make much effort...

What's your acquisition cost on installing a new tenant? How many months will it take for you to reach breakeven on that? IME, acquiring any new customers is ultimately a lot more expensive than retaining your existing ones. You've already covered these costs with your existing tenants, so your 80% is almost pure profit (I'm not including capital gains/movement). Unless you can quietly line up new tenants in the background, ready to move in and save you from any void months, then kicking out tenants currently paying 80% seems a bit short sighted.

Short term - the costs of relisting and acquiring a new tenant might conflict with your cash position, which sounds precarious from what you've said. You're feeling the 20% reduction and you've felt the need for a mortgage holiday, so for me the costs attached to relisting would be jumping from the frying pan into the fire. Can you realistically afford any void months?

There is of course the risk that they'll choose to leave anyway, as they probably can try and downsize/cut their costs, so if you're preempting that, then it makes sense to end the lease on your terms. This - or having new (better) tenants ready and waiting - would be the only scenarios that make sense to me. Other than that, it's just a case of principle and you believing they should be paying 100%, which is completely fine, just maybe not entirely realistic with everything that's happening in the economy at the moment.

I would ask them to confirm they will he paying the full rent from September and make a decision based on their response.

In years to come, when your mortgage is paid off (by tenants - not you) and you're enjoying the rise in equity too, you can look back at this time and say with pride "I kicked out tenants during Covid because they worked in sectors which were badly hit. Yes, they had been good tenants and no, I don't know if they were able to rent elsewhere. I could have discounted their rent from the market rate for 9 months while they got back into work, but I wanted as much money as possible. Look at all my lovely money now!"

It seems almost illegal to agree to a rent reduction and then evict someone for having the rent reduction without specifying that that would be the terms at the time you agreed said reduction.

if you were to send the eviction notice this month i mean.
Id be seeking legal advice if i were them probably.
it would be like tesco giving you a sandwich cheap then punishing for theft, since you love the analogy so much.
im pretty sure this is a troll though.

in fact thinking about it further, they havent actually been 1p in arrears at all, they negotiated a reduction which you agreed to and because they 'might not' pay in future you want to evict.

So basically evicting someone because they lost their job? so they might not pay rent in two month so you evict them now? same as you cant prosecute someone for a crime they 'might' commit?
Seems really discriminatory. really really bad actually.

unless of course it says in your tenancy agreement that if they lose their job through no fault of their own and are not in arrears you have the right to evict them.

@Carrotgirl87 Have you RTFT? OP didn't have to give them a rent reduction nor is OP evicting them because they had one. But OP now wants them to pay the rent as per the contract they've agreed and is planning to see if they are able to do so, and if not, then make moves to end the agreement.

To use your beloved Tesco sandwich analogy, it's as if you've bought the same sandwich every day. Then couldn't afford it anymore so asked Tesco to charge you less. Which they agreed to for three months. And then another three months. And then Tesco come to you and say 'we can't do that any more, you need to pay the normal price or I'm sorry you can't have the sandwich anymore'. Which would all be perfectly normal if we were even on a planet where business would do such a thing.

What would actually have happened six months ago is that you would have had to find the money to continue buying the same sandwich or at that time moved to buy a sandwich from somewhere else which you could afford.

Most of the arguing on this thread and, frankly, the OP Itself seems moot atm..
The tenants haven't actually asked for a further period of reduction as yet. OP is just assuming they will.
All this angst might be for nothing

I have found this thread really interesting. I would like to point out though that slum lords 'kick people out'. Landlords evict. If you are quite reasonably renting out a property as a business, not a charity then use professional language.

@QuizzlyBear - if the airline is BA they have taken Voluntary redundancies and those that stay sign their new contracts.

Yes I said that up thread but the op didn’t answer BA are going back to work in September

Businesses have to adjust to changing circumstances.
While everythings been ticking along beautifully the last 20 years or so, landlords have been able to do whatever they liked in the knowledge that there would always be more tenants clamoring for nice places if you evict your current ones.
We're now in a recession, and with Covid and Brexit we're not looking to bounce back any time soon.

Theres a real risk now that saying "out, next!" will result in you finding there actually isn't anyone queueing up to replace them this month, or next month, or the month after that. You're giving up your 80% of current rent in favour of potentially no rent.

Only you know your local rental market as it is now, and how prospects look for your local area. If one of your "2 big local firms" does annouce a number of redundancies of permanent staff in the next month, how will your prospects look?

If these tenants really are as good as you say, it might be worth considering if you should stop overpaying your mortgage as much as you'd like to and only paying the actual mortgage with the 80% rent you are getting. The tenants might not be the only ones who need to cut their cloth according to their current circumstances.

Hmm. I think you've been quite good with them, what i wonder is what their actual situation is like now.
Are they actually not much worse off at this point or on the bones of their arses?
Have they approached the council for discretionary housing payments to cover the 1/5 discount they have received?
Have they claimed any and all benefits they may be entitled to? Have they been spoken to about putting the rent back up? Even if 50% of the shortfall for 2 months then all of it thereafter? That may be somewhat fairer to both parties.

Either way, its going to be a tough storm this next few years what with us just having dipped into a recession. Honestly, they don't sound like the best paid people in the world, and they may be a pretty stable option if they are likely to get top ups for their rent and actually pay it.
No one knows which businesses will still be afloat in the next year but housing benefit will still be paid i assume.

@PatriciaPerch

I don't understand why someone who is getting £1350 a month for rent on a 3 bed bungalow in a desirable and is 2 years off their mortgage being paid off is either THAT bothered about eviction with a couple of years left OR why they are posting on here. It's an absolute wind up, she couldn't resist my eviction before Christmas stuff :o journo

I didn't say I was two years off paying the mortgage. You've invented that. And even if I was that doesn't make the repayments and all the other costs null.

I don't think they would get UC or housing benefit as it's a couple renting a 3 bed, another reason why different people would be better.

Yes I regret the language in the title, blame the heat and getting frustrated!

Anyway note sent yesterday and no reply yet

To the person who said the onus for communication lies with the tenants, I don’t agree. Op as LL wants her rental business to work. Being proactive in communication is always vital for this - YOU drive it by communicating

The tenants are the ones who are breaking the terms of the contract so of course the onus is on them to communicate to ensure they won't face the worse outcome.

They had a break, and then an extension of the break. Why should they assume that this will automatically continue? Or do they think it will if they keep quiet?

OP seems to be very close to have made her mind up. That's because they are not bothered to communicate with her and provide some level of assurance that they will be able to pay their full rent at some early time in the future.

Why should OP be the one doing the chasing when ultimately she believes she'll be able to get tenants who will?

A lot has been said here about LL issues with their mortgage not being the concern of the tenants and I totally agree, yet plenty of posts imply that LL should take into consideration their tenants' circumstances.

It works both ways, and so far, it would seem OP has taken much more responsibilities for the situation than her tenants.

[quote Lochroy]@Carrotgirl87 Have you RTFT? OP didn't have to give them a rent reduction nor is OP evicting them because they had one. But OP now wants them to pay the rent as per the contract they've agreed and is planning to see if they are able to do so, and if not, then make moves to end the agreement.

To use your beloved Tesco sandwich analogy, it's as if you've bought the same sandwich every day. Then couldn't afford it anymore so asked Tesco to charge you less. Which they agreed to for three months. And then another three months. And then Tesco come to you and say 'we can't do that any more, you need to pay the normal price or I'm sorry you can't have the sandwich anymore'. Which would all be perfectly normal if we were even on a planet where business would do such a thing.

What would actually have happened six months ago is that you would have had to find the money to continue buying the same sandwich or at that time moved to buy a sandwich from somewhere else which you could afford. [/quote]
Thanks for some common sense!