Wwyd - evicting tenant?

[DexyMidnight]

Canvassing opinions. Took on self employed tenants in March. They were ideal and seemed mature, responsible, sensible etc. They did however fail their credit check due to their irregular earnings and fact that they didn't have the requisite 3 years' statements. They were keen to proceed and we agreed, with a 3 month deposit.

I am thinking ahead here to March. Obviously we must refund their excess deposit under the new legislation - we have until next summer to do this. My intention was to deal with it in March when the tenancy ends or renews.

At the 6 month check up recently the tenants asked what our intentions are for next year, they're keen to stay etc. The property is in fair condition and they have paid their rent on time with one minor exception which they (i think honestly) blamed on the bank holiday.

Obviously by March next year one or both of them could be employed ft in a job earning £50k p.a. and easily pass a new credit check, their business could have taken them overseas - who knows. As I said I'm just thinking ahead and canvassing opinion.

Assuming no change and they fail the credit check again next year (ie no rent guarantee insurance)... Wwyd? Give them notice and look for a new tenant who would pass the credit check?

I self manage so no agents fees for finding a new tenant etc and I'm confident the house would relet quickly as it's in catchment for the grammar schools and the primaries are decent.

Oh p.s. Guarantor a no go - their families are in the US and I'm not interested in trying to enforce a guarantee in a foreign jurisdiction

Ultimately your goal is tenants who pay, rather than tenants who allow you to take out insurance. If you can't have both, having tenants who reliably pay would be the priority, surely?

@DexyMidnight It might be ripe for a rerun but it is certainly common practice by a lot of the big name letting agents in London at the moment. The RLA can advise you but if you aren't comfortable with their advice and decide not to renew the contract, I wouldn't worry about the tenants finding somewhere else other than a dodgy HMO if reputable letting agents are taking rent in advance. They will find somewhere.

I have just thought of another solution though. You can insist on a UK guarantor. If they don't have one, there are companies that can provide the service for them. It isn't cheap but they can pay in instalments, it gives them the choice of whether they want to renew or find somewhere else. Although I have no idea what happens if they don't pay an instalment to the guarantor service. You would need to do your own due diligence on that.

We paid no deposit on our house, granted the landlord was a cousin of my boss who was happy to have some one here. My dh was made redundant two year ago and the first person he phoned was the landlord.

Why would you boot them out when they've done nothing wrong?

I hate to say 'we told you so' but well, we told you so. The changes to the law with the tenants fee ban were quite damaging and this is just one example from several I have seen where tenants may find themselves evicted as a result.

You can't ever be sure tenants will keep paying OP, but you can only hope that if they've paid well in the past they will continue. As another PP said, you've got to weigh up the risk of defaults and... The threat of losing s21 meaning it takes months to regain the property versus the hassle of turning over and finding new tenants, which as a landlord we know is a complete ball breaking, soul destroying nightmare.

Sorry not much help. Personally, if they've paid without issue for ages then chances are they will continue, but it's your call.

I have also asked for tenants to pay rent upfront, as an alternative to insurance- in this case 4 weeks for a weekly payer, but that was just circumstances. As long as it's written into any new contract, stating it can ONLY be used as rent in advance, and any deposit is secured seperately, I don't know why it wouldn't be allowed.

However, as above, I'm unsure about why you are signing a new fixed term and doing anything about the changes in the deposit. I haven't read anywhere that at the end of the AST that you have to refund any higher amounts that you hold if you are moving into a rolling contract, so if you have any links about that, I'd be very interested to see.

Thanks all will reply properly tomorrow - knob jockey fairly sure I still can't keep enhanced deposit even if it goes rolling but I will re-read the new Act again and let you know my interpretation of it.

Alternatively - please don't let this new legislation, designed to protect tenants, be a tool to disrupt your tenants' lives. They've done nothing wrong and it sounds like we're it not for this change, you'd have happily been keeping them on.

Renting is so tough and so expensive - the lack of security is awful, especially for self-employed.

@DexyMidnight I have just checked on the TDS website, and if you are happy with them moving onto a rolling contract, nothing needs to be returned or reinsured. It's only if you are issuing a new AST, so basically if you are making changes to their contract, that you need to return the excess and start again. In this situation, even if you were thinking of a minor rent increase, the extra held in deposit would be worth more to me.

I've attached screenshots of their advice.

@Catalicious I hate to sound like a cow, but the government were told repeatedly that by getting rid of fees and reducing deposits held, they were causing problems for tenants. It may not be the tenants faults that things have changed, and I agree with trying to find ways around it, but if there was no way, then why would the landlords choose to be the ones to bear the financial lossX SC

Dropped my phone! Because of the lack of deposit someone can hold, and if they have no guarantor, they are basically up shit street in the future. If the legislation to get rid of section 21s also comes in, you can say goodbye to a private tenancy unless you have the perfect credit history, a secure job with years of history, and a full guarantor. Let's hope the council builds lots more houses quickly.

Of course there are some push backs against the new legislation that will affect tenants in the short term. However in the long run we will see things settle down and landlords will need to organise and campaign for changes to insurance, better eviction procedures etc if they are that keen to keep landlording.
Things are changing all round. Landlording is not as lucrative or easy as it used to be and many are selling their portfolios to invest elsewhere. This reduces the numbers of people in private rent who would otherwise be buying as prices go down, because of this and other factors.
Landlords can moan about this and issue dire warnings about tenants losing out all they want but this is a good thing for most private tenants.
Ultimately your self employed tenants could change their circumstances if they wanted to pass credit checks (though I'm not sure why they haven't, unless that's because their income is really small)

Why would you evict them when they have done nothing wrong? Obviously they take their responsibilities as tenants seriously, and they are decent people as you say yourself.

Why anticipate a problem? You admit you have experienced no problems and they have done nothing wrong. You sound pretty mean, if you go ahead you could be making them homeless. If you do go ahead and evict them, I hope karma gets you.

Why is the OP being called out on the government changing policy? Would you expect a factory to keep on producing something for a customer who is more statistically likely not to pay? Same problem, different product.

As it is, the OP is actively trying to find a solution, so no problem anyway. But its the government who has chosen to change policy but has put nothing in place for the people who it's going to affect. Do you think that if the next lot of tenants are in the same situation, that the landlord will take a risk and accept them as tenants? Or are they going to be stuck with very limited housing options? I know which side I think it's going to fall on.

The landscape is changing for landlords. But ultimately, those who make a living from it will still continue to do so, and those that will suffer will be those in vulnerable positions- not those in the worst circumstances, as the council will help them, but those just a step above, who struggle for money but don't qualify for help.

Thanks again knob jockey and runoutofnamechange (amongst others) - I'm travelling atm but will read this all carefully and discuss with my husband.