Greetings, I Come in Peace

[AVJ113]

Or to put it another way, twice as much chance of a bad tenant. A big difference in real terms.

Fortunately, this is business, not politics. In real terms it's not that significant that you have twice as much chance of getting a bad tenant when the worst case is a 90% chance of success.

[doobrey]

Well... yes it is. According to those figures, it's double the risk. And a rate of 5-10% is significant. That's not one-in-a-million 'not going to happen'.

[boletus]

In real terms it's not that significant that you have twice as much chance of getting a bad tenant when the worst case is a 90% chance of success.

Let us know how significant you think it is after your first eviction.

Fortunately, this is business

It certainly is and a big part of it is risk mitigation.

[jpkeates]

Well... yes it is. According to those figures, it's double the risk. And a rate of 5-10% is significant. That's not one-in-a-million 'not going to happen'.

You have to be careful with these press release statistics though.

That figure quotes a survey based on landlord's responses based on something that began to happen last October, when the £20 a week was removed from the UC payment.
So it's quite a specific period.

And there's no information about how many actually paid or didn't pay, or paid less than they should (the UC cut is about £87 per month, which is a lot, but it's not the cost of rent).
Or how many were in the same state of mind before October.

And it would be interesting to know how the landlords arrived at this conclusion - how do they know their tenant's state of mind in September 2021 and then afterwards?
And how often do tenants have issues and concerns about rent in the run up to Christmas, generally?

And I don't see where the idea that non Universal Credit tenants are half as likely to run into difficulty paying their rent comes from.
Is that some general rule of thumb?

1 in 10 tenants with a particular situation not paying their rent (or all of it) is a significant business risk.
9 % of people expressing concerns about paying their rent in some way that a landlord is able to recognise when their income has just been cut by £1k per annum is less of a risk.

If only because it can only have affected tenants selecting properties while the £20 increase was in place (an increase that no one predicted) or where landlords increased rents by £87 per month.

Anyone else is just feeling a normal pressure of increasing costs affecting limited incomes and putting pressure on fixed costs.
Which is entirely a matter of affordability not income source.

[boletus]

I don't see where the idea that non Universal Credit tenants are half as likely to run into difficulty paying their rent comes from.

You have to look for it as it is not readily or clearly available. The English Housing Survey and the MoJ possession statistics are a good place to start. The pattern is repeated in most surveys (I'll try and find one).

Is that some general rule of thumb?

From experience, it's not a bad rule of thumb but the figures are less than half as likely (or more than double the risk).

[Turbine Terry]

Would you consider disclosing the questions please?

edit: If you got 97 replies, doesn't that suggest you could be charging a higher rent? Also, how many were left on your shortlist after applying your '8 question' rule?

In my area rental properties are like looking for hens teeth in a haystack, and that is partly the reason for the 97 enquiries I had recently on a property. The other reason was that for that property I started the referencing/ credit check process with 2 lots of separate tenants that both failed to proceed – one lot changed their mind (how dare they!) the other lot failed the checks - before the third applicants got the tenancy. This meant my advert was ‘live’ longer than normal – about 4 weeks. Normally/these days I find suitable tenants within the first 7 to 10 days and have about 30 enquiries in that period. That level of demand allows me to be extremely picky (I admit I am excessively cautious after having had my life made hell for 18 months by a psychotic tenant once). Out of the full 97 (or however many apply to my adverts) I would estimate that I would be happy to offer the tenancy to only around 15%. Many of the 97 didn’t reply to my auto-reply list of 8 questions, or didn’t reply to all of the questions (see my post above about that). Out of the ones that answer all the 8 questions properly (without using text speak!) I would probably be happy to offer it to around 70% of them based solely on their answers (after meeting them and then after reference/credit etc checks that percentage would drop a little).

Yes, like you say with such high demand I could have put the asking price up, but it is already at the top end of what I am comfortable charging and, a) I prefer to have a larger pool of potential tenants to choose from, otherwise I could miss out on some ideal tenants, and b) I don’t want the tenants to think I am taking the urine with excessive rent as I think that would cause resentment and they would be expecting hotel levels of accommodation and service. I have ways to limit the shock/impact on the tenant, but it is no coincidence that if you put the rent up mid-tenancy you get a reply agreeing to the rise, but sometimes you also quickly start getting notified of minor ‘issues’ with the property. Tenants can easily ‘forget’ or decide they are no longer comfortable with them doing things like learning how to use the heating system/topping the boiler up with pressure occasionally (assuming no leak), flipping the breaker back on after a power surge/cut, or them continuing to install full external/internal wall insulation to get me an EPC grade C (OK, maybe I made that last one up, but if they did they would make a great tenant!).

With regards to the list of 8 questions that my Openrent auto-reply sends the questions are below (technically it’s more than 8 questions as each question has sub- questions, but hey-ho in for a pound…). When they are sent they are wrapped within a nice friendly message, and I don’t word them exactly like this, but in brief I ask:

1. What income each tenant has and if they are employed what they do (if landlords are uncomfortable asking for exact income you can ask them to confirm that they earn over £x per month/year)
2. I ask for confirmation that they don’t have any CCJ’s or other adverse credit issues or criminal record.
3. I ask if they mind my family and I visiting each Saturday so that the tenants can make us our favourite pie and chips and watch Saturday night telly with them.
4. How long with current landlord and why moving (if no current landlord state situation e.g. living with parents)
5. Any issues paying rent to existing landlord
6. When they wish to move in and how long do they imagine staying
7. How many others moving in with them
8. Approx ages of any children
9. Do they have any pets – if so what size/breed/number, or are they considering getting a pet.

I tell them that credit checks and proof of income and landlord references will still be required, I thank them for taking the time to answer and that I will be back in touch ASAP (I am responsive and reply to them normally within a few hours). I often ask follow up questions depending on their answers. I know many landlords will feel my list to be excessive and that they either don’t feel comfortable asking that many questions or they don’t have the demand to be able to justify doing so, but it has worked very well for me for many years now and decent tenants with nothing to hide have no issues replying in full, often adding even more info than I have asked.

Self awareness note: I am aware that my posts always seem lengthy, but I have extra time on my hands at the moment, plus never having contributed to forums before and having been a landlord for 20+ years and having many properties I feel I have quite a lot to say…….hope I am not boring anyone yet! If I am I hear YouTube has many videos of some cats doing mildly amusing things.

[boletus]

In my area rental properties etc...

That is very similar to my experience and method of letting.

[boletus]

I have advertised there etc...

Me too. I've now stopped using them and use another (less tenant friendly) online agent instead.

[AVJ113]

hope I am not boring anyone yet! ...

Not at all, it's all very informative, thank you. I think I might opt out of criterion 3 though, I'm not a pie and chips man myself.

[SouthernDave]

I thought the main issue of taking a tenant on UC is not so much the fact they are receiving benefits, but the fact that its a pain in the proverbial to evict as the council tell them to sot tight until forced out by bailiffs.

[jpkeates]

I thought the main issue of taking a tenant on UC is not so much the fact they are receiving benefits, but the fact that its a pain in the proverbial to evict as the council tell them to sot tight until forced out by bailiffs.

The council will tell anyone who asks for their advice to do that.

[SouthernDave]

The council will tell anyone who asks for their advice to do that.

thats why we were always advised not to take any tenants who receive UC

[boletus]

I don't see where the idea that non Universal Credit tenants are half as likely to run into difficulty paying their rent comes from.

It's rarely openly stated but it's reflected in most reports/surveys about the subject. Here's one from last month*;

https://www.mortgagestrategy.co.uk/n...ended_Articles

"of those tenants in arrears, 57% are not receiving Universal Credit"

So very roughly, half of tenants in arrears are in receipt of Universal credit, half aren't. But there are more than twice as many tenants not in receipt of universal credit.

https://www.mortgagestrategy.co.uk/n...andlords-nrla/

"Around 1.4 million households in the private rented sector in England and Wales receive Universal Credit with housing cost support, known as local housing allowance, included in the payment, according to the Department for Work and Pensions."

https://www.ons.gov.uk/economy/infla...tedsector/2018

"The number of households in the private rented sector in the UK increased to 4.5 million in 2017"



*Note, this is just one recent example and I'm sure holes can be picked in it with enough effort but the pattern is consistently repeated -for those who care to look.

[boletus]

Incidentally, I have DSS tenants, but I don't kid myself I'm not taking a higher risk.

[jpkeates]

thats why we were always advised not to take any tenants who receive UC

Anyone who has received a section 21 notice and goes to their local authority for advice (and, usually, housing) will almost invariably be told to wait until a court has made a possession order before doing anything to help the tenant.

There are three reasons for this:
Local authorities are short of resources to help tenants.
Many s21 notices aren't valid (they are difficult to get right, particularly for an inexperienced landlord).
Many local authorities have no court hearings related to possession orders for months - often the issue just goes away as far as the LA is concerned.

I don't see any reason why a tenant being on UC would have any impact on this at all.
Other than boletus contention that they are more likely to have rent arrears than non UC recipients.