03/01/2021
Some questions and answers you may find relevant to you.
Question 1
I have had a tenant in a property in England since 2016 and have decided to take over the management myself. I have just opened an account with my chosen tenancy deposit scheme so the deposit can be transferred from the management agency that looked after the property, however the management company say I have to pay part of the deposit back to the tenant under the new legislation. Is this correct as the tenant took on the property in 2016 before the changes in legislation, so nothing has really changed?
If you are going to keep the existing tenancy agreement in place, which commenced prior to 1st June 2019 and it will not become a statutory periodic tenancy on or after 1st June 2020, you can keep the amount of deposit that is currently held without having to refund any difference over the equivalent of 5 weeks rent.
However, you should provide the tenants with a Section 48 notice to confirm an address in England or Wales where they can serve notice to if they want to end the tenancy, as this address may have changed now that the agency is now longer managing the property.
The agent may have assumed you are issuing a new tenancy agreement therefore the advice would be correct in that situation, but you do not have to issue a new agreement unless of course you prefer to.
Question 2
I have a young couple that we want to rent our 2 bedroom house to. They have bad credit as they spent a bit on a credit card when they were young. The girl's mum has offered to be a guarantor. Should I credit check both the mum and girl?
We would advise a landlord to always fully reference check any guarantor to ensure they can make the payments in place of the tenant.
Having a guarantor is pointless if they are unable to make the payments on behalf of the tenant. It is also preferable that the guarantor is a UK homeowner to make it easier to recover any money owed.
Fewer tenants in arears but things could worsen
The proportion of tenants in arrears dropped to 11.8% in October November, down from 12.2% in August, Payprop data shows.
The number of tenants in arrears spiked during September, to 15.1%, although this remains below the 2020 peak of 15.5% recorded in May.
Neil Cobbold, chief sales officer at PayProp, said: “The general downward trend of tenants in arrears over the autumn and winter months of 2020 is positive news for letting agencies and landlords.
“Falling arrears suggest that even though restrictions were tightened once more towards the end of the year, society has adapted to the ‘new normal’.”
Despite the reduction in arrears recorded between September and November, the situation could worsen again in the early part of 2021.
PayProp says this is partly due to a seasonal bump in arrears as people spend more over the festive period. Meanwhile, with millions of people under the strictest tier 4 restrictions, more jobs could be at risk.
Cobbold added: “Although the situation improved towards the end of 2020, current market conditions mean that letting agents and landlords should be cautious at the start of 2021 as things could get slightly worse before they get better.
“Agents must ensure they have the systems in place to deal with arrears, while facilitating effective communication between landlords and tenants.”
