Renting to bancrupt couple

[loosenknot]

Hi. I own a property that is my sole source of income. A couple have asked to rent it. It took three weeks for the credit checks to come through and when they did it turned out that the couple have been declared bancrupt. (Although this will apparently run out in March, whatever that means). They are self employed and apparently preciousky good Tenants. The estate agent says they pay themselves a high salary. What is the risk if I rent to them? The letting agents said I could ask for six months rent in advance (although the cash would push me into a higher tax bracket). I feel mean saying no but st the same time I feel they were not upfront with me. If they had disclosed this when we met I would have considered but the fact they did not (and the house has been off the market for two weeks as they were meant to move in next week) really annoys me. What would you do.

UatuTheWatcher actually you are wrong, a bankruptcy can last for an indeterminate period of time and discharge is not automatic after a year, it very much depends upon the conduct of the bankrupt, complexity of the finances, and it is frequently 3 years or longer and in a minority of cases is for an indeterminate period. I'm not being pedantic, but it is important to get this stuff right as it is misleading and disingenous for people to believe bankruptcy lasts only a one year period for every case. The powers of the OR are vast and backed by statutory legislation.

I’m sorry but as a Landlord I have to disagree that bankrupts make very good tenants because they are used to managing their budget etc. To many people play the game re insolvency etc. It may not be dishonest but as the BHS scandal proves it is not exactly honourable.

How does one “play the game” when it comes to bankruptcy?

@Jack65 I think you are thinking about Scotland, in England it has been 1 year for a long time and discharge is automatic. Yes if the person does not co-operate with the OR then their discharge can be suspended indefinitely until he/she does which is quite rare.

Oh! if you own a house then the OR has 3 years to deal with it but that does not mean a bankruptcy lasts for 3 years it is still 1 year.

www.gov.uk/bankruptcy/when-bankruptcy-ends

I wouldn't rent to a bankrupt either, or people with kids, dogs, or smokers or those with any issue on their credit file. There are enough people looking (at the moment) who would make good tenants.

One 'plays the game' at bankruptcy, by acting discreditably, take out loans and credit cards when clearly already insolvent, not taking responsibility for their actions and generally behaving in a manner which makes one doubt their integrity. Bankruptcy is usually down to poor life choices. Particularly nasty are those who set up ltd companies, rack up debt, dissolve the company and then do it all over again.

Being a LL is running a business. Anyone running a successful business will balanced getting income in as quickly as possible versus the risk of that income suddenly stopping whilst still having to deliver the goods. It is no brained therefore that the key decision is try to gain as much information as possible to get a clearer evaluation of the risk vs waiting for another prospective tenant with less risk.

As a bankrupt person, you constantly live on edge that this is going to hold you back supporting yourself and your family even if the bankrupt might have been through no fault of yours. As such you will do whatever is necessary to increase your chance of getting a roof over your head, including not declaring things that you might get away having to declare.

Personally, it's not the bankruptcy that would concern me more but the self employment. Such high income relies on reputation and getting top clients. It could take little to affect such reputation - including history of bankruptcy- to lose these top clients and go from £90k to nothing. It's the nothing that is scary as ultimately you can't get rent from someone who earns nothing especially if the rental is significantly higher than what hb would pay.

I wouldn't rent to a bankrupt either, or people with kids, dogs, or smokers or those with any issue on their credit file

Where are those people supposed to live?

Missmalice Not in my properties. I'm not responsible for successive governments since Thatcher, including Thatcher, failing to address social housing issues. I'm in business to profit, I'm not a charity.

I wonder if that 90 k income is declared to HMRC?

Why wouldn’t it be?
In my experience, tenants are asked for proof of earnings by showing tax returns.

MissMalice to answer your question re where bankrupts should live may I suggest social housing or housing associations. Why should private landlords take on tenants with dubious history. Maybe charities could help too.

Bankrupts should make every effort to pay off their debts then they won't struggle to find somewhere to live

They are a middle aged couple in their sixties with adult kids who live in the same area near me. Their not having a house doesn’t make sense: their last house the rent was 5000 a month!

Irrespective of when the bankruptcy happened, this ^

If there is the two of you, why wouldn't you save or sort out some of your mess and live in a smaller, cheaper house?

Are they related to Kerry Katona?

I must say I thought of her too.

I rented a property while I had an active CCJ (had already paid off the debt and it was due to run out a month after the tenancy started). I declared it to the lettings agent first before the credit check. Because of this, the age of the CCJ and the circumstances (I had a letter from the company confirming it was paid off), I also offered three months rent and my landlord weighed it up and agreed to the let.

Had I not been honest the lettings agent said that anything that comes out after a credit check is likely to mean trouble. Because of my self declaration they could appreciate my honesty and work with me.

I had that tenancy for three years and never missed a payment - so it was the right choice however, I agree with the lettings agent - they should have declared their financial difficulties before the credit check. That does imply deceit and in your situation I wouldn't rent to them.