New tenant asks for maintenance work that is financially not viable

[Amadeaa]

My tenants moved in this week. They’ve asked me to undertake maintenance work which they believe are in my responsibility as a landlord, but these works are financially not viable. The costs would exceed the yield of a whole year’s rent with no guarantee that the problem might not reoccur within 6 months. I also don’t have this kind of money available right now. What are my options? They are at the start of a 1-year contract. I don’t think I can terminate the contract without any fault at the tenants side.
Should I offer them money if they agree to terminate the contract early?

Unfortunately you’ve just discovered that landlords need deep pockets. As others have said, damp issues need sorting.

I still don’t understand why this would recur if fixed correctly.

You say you can't afford to deal with the damp issue, but how do you know what the issue is and how much it will cost?
Your tenants only moved in last week. Have they discovered a damp issue, had a tradesman round to establish what the problem is, got a quote and told you that you have to get it done, all in a week.
I can't imagine what it might be that would cost more than the £5k and 2 months rent that you are prepared to forfeit, unless it's a mansion and it needs a whole new roof (ours is a semi and we had a whole new roof done for £6k a few months ago).

Damp's important to fix because of the health consequences.

Have you had quotes for the work yet?
Is there a short-term cheaper fix while you find the money?
What are you going to do with the property even if you do get them to move out? Where will the £3k-£5k to pay them off come from?

I’m a landlord and don’t expect my tenants to live with issues or in any property I would not be prepared to reside in myself. The paucity of detail in your post does not help so forgive us if it’s more complex or down to tenants’ lifestyle choices causing the damp.

However, you really need to get a grip of the responsibilities of being a responsible landlord. It’s not all it’s cracked up to be. Sometimes you just have to fork out even if it does cost all the rental income. It’s a hard fact of life.

In this case you must seek out a financing opportunity to have the work done. You can, after a decent period of time, increase the rent to help retrospectively cover the cost but in reality you must put this issue right asap whatever your feelings about it possibly reoccurring. (Why would it if you get a proper professional job done first?)

If you are not prepared to be a good landlord you need to get out of the game. You run the risk of all sorts of legal issues if you don’t take action.

Best case scenario, maybe you can have a catch up with your tenants and they will collaborate with you to timetable the work when you are on a better financial footing? Communication is key.

I should have added, fixing damp issues now will be far cheaper than leaving them for the year.

How much would the works take? That you're considering paying them about £5 grand, it must be pretty significant work. Not doing it- how will you ever manage to rent or sell the place? Did you buy it with this issue and it was covered up?

I’m really not clear how getting rid of the tenants helps you, it won’t magic away the damp?

Ok, lesson learned, do not be a landlord unless you have a lot of reserves. I will try to get a loan tomorrow. I have two quotes so far and they are around £15k. Thanks everyone.

And what’s the back up when in the winter, the inevitable happens, and the boiler stops working? Mine always breaks down over the colder months.

The roof leaks? A fault in the plumbing?

So in the first week tenants have noticed damp that you as the owner hadn’t?

It doesn’t add up that you are willing to pay them thousands to move, but can’t afford potential work?
Whatever you do don’t give them notice or that would be deemed a’retaliatory eviction’.

How can you be facing such expensive repairs that you hadn’t noticed? Baffling.

OP, the issue needs fixing if you are ever going to rent out or live in the property.

Is your plan to get the tenants to move on and then sell, leaving the works undone?

You may well lose the money in stamp duty and fees if you do that.

Take a breath. Get more trades in to give alternative quotes. Damp can have many causes and be fixed in many ways - clear guttering, repair roof, inject a damp proof course, get a dehumidifier...

There are many ways to address the problem and none that I can think of would cost a year's rental income.

Hope you find a way forward.

If your tenants have only been in a week and your property was okay for listing for letting via an agent and it’s got a valid EPC then you’ve been subjected to a tornado clearly.

you can be a novice decent landlord. MN hates landlords; especially accidental landlords. This is despite most being on six figure salaries with 6’4 husbands matching it.

find out what the issue is. Your contract should stipulate clauses. Then contact your agent. Instruct contractors. Sounds like they want out.

...Also would your insurance cover it? Ours would, I believe.

How much is the rent and the repairs?

This sounds like a very generous solution for the tenats but your house will still need to be fixed before you can rent it out again.

What work actually needs doing? It's very common to be told the only option is a chemical damp proof course from the likes of Kenwood at great expense. Whereas an independent surveyor specialising in damp may tell you rightly that your issue can be resolved with some minor building works like extra air bricks or resolving drainage issues.

Am I stupid? I don't understand how paying them to leave and then having no rental income at all is more affordable than getting the work done. Or are you hoping someone else will move in and not mention it?

How much are the quotes you've had to rectify the damp problem?

You do need to sort it. You don't need to do exactly what the tenants specify, if they've come up with a ridiculously expensive solution. You pay to do a damp survey and go from there.

What's the exact problem that it wasn't obvious to them or you when looking around the place but is suddenly a vastly expensive problem after a week of living there?

I don't understand how you have no money for works but can slip them £5k to move out. You can't just break their contract anyway. Even if you offer them money you'd need something legal drafted up otherwise they could take your money, carry on staying there and STILL need the damp fixing.

I’d sack of the damp surveyors for a start and ask a building surveyors. Damp ‘surveyors’ are just salesmen with no qualifications 99% of the time.

This is what I'm imagining...

Damp does not happen in a week!!!! You’ve either got a massive roof issue or this is an ongoing issue you’ve hidden well!

The work will need done whether you have tenants or not? We had massive storm damage a few years ago that caused internal damp issues as well as problems with the roof - I would have been astonished if our landlord gave us notice because of it. They rectified the external and structural problems as a matter of urgency then arranged complete redecoration in the front room when Covid restrictions lifted and we were allowed non-essential tradespeople. Our landlords are very nice - and we are very good, long-term tenants - but it just didn’t cross my mind they would do anything different! (Presumably buildings insurance did cover a lot of it though.)

Obviously I would not get new tenants in, why would I get myself into new trouble? I would put it on the market (and mention the damp issue) for someone who wants to invest in a property that needs significant maintenance.

£15k to do what?

And yes of course you need financial reserves or good insurance to be a landlord. What would you do if your tenants paid no rent for 12 months?

It's not a get rich quick scheme. It's a business and it comes with legal responsibilities. It should be regulated, quite frankly.

And if it’s plumbing you will be covered under landlord insurance if it’s not a visible leak. There is no way In hell you’ll get damp and mould that bad In 7 days.
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That’s what I was thinking.
And would do the same to the next tenant/owner.

15k repair work didn’t happen with a week afterall.