Tenant Has Just Lost His Job

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    Tenant Has Just Lost His Job

    Hi

    I'm a first time landlord and would appreciate your advice. Apologies if the following gives too much background, but I thought more was better than less.

    Decided to move in with my new partner and our children. Rather than burn all my bridges I decided to let out my own home (furnished) on a 6 month AST which commenced 27 May 2006. In turn we've rented (unfurnished) a larger property in a different town on a 6 month AST which also commenced 27 May 2006.

    My tenant is an ex-pat with property in the Far East. He returned to the UK to undertake an 18 month contract (self-employed) with a multi-national company.

    I planned to let the property to him (6 month AST and then periodical) until his contract ended. After that I would put the house up for sale and use the (hopfully increased) equity to buy with my partner.

    My tenant called me on Friday to tell me he had just lost his job. He said that he was not in dire straits (financially), that he knew there was work out there (mentioned Norway) and that he would have to cut short his planned trip home (Far East). [Apparently he was due to fly out for a fortnight on the Saturday but said he wouldn't go now until mid-week.]

    Speaking to him he appeared to be in shock so I suggested that he take time to digest what had happened and call me back before he returns "home" for his trip to tell me what he wants to do.

    In anticipation of his phone call, I thought I'd best clarify what our responsibilities are in this situation. As he has no work in this area, I doubt he'll want to remain in my property, however the AST still has months to run.

    As I understand it, he can surrender the tenancy, but I cannot be forced to accept it before the end of the term and I must still hold him responsible for the rent until another tenant is found. However, if I decide to market the property for sale rather than to let, is he still responsible for the rent?

    He has been no bother as a tenant, although I've yet to undertake an inspection of the property since he moved in so I can't comment on that aspect of things. I do hold his deposit as everything was arranged without the benefit of a letting agent. I used a Lawpack Furnished AST, read up lots from this Forum and bought the Lawpack Residential Lettings book.

    Any further advice you can give would be most appreciated.

    Many thanks.

    PiP x

    #2
    Originally posted by prettyinpink7890
    As I understand it, he can surrender the tenancy, but I cannot be forced to accept it before the end of the term and I must still hold him responsible for the rent until another tenant is found. However, if I decide to market the property for sale rather than to let, is he still responsible for the rent?
    I think the use of the words "surrender" and "accept" are probably unhelpful. If he wants out before the end of the term, then obviously he can leave, but he is responsible for paying the rent until you've found a suitable replacement tenant, and for paying costs incurred by you in finding the new tenant. You have to make proper efforts to find someone; eg, if after 3 months you still hadn't done so, then the aggrieved outgoing tenant could probably sue and you'd need to provide documentary evidence of your attempts to find a new tenant.

    I don't see it makes any difference if you want to openly market the property for sale; you could do that with a tenant in situ anyway, but in that case wouldn't be able to actually sell before the tenant's AST expired and he'd moved out. Would make it pretty unlikely that any new tenant would want to move in, if the place was obviously for sale already.

    Comment


      #3
      What strikes me here is that:-
      1. The tenant wasn't referenced to any great extent.
      2. There is no guarantor in place, which there should be.
      3. The "job" he had was probably not very secure anyway; self-employed means he was likely to lose his job at anytime!
      4. If he lived abroad before then how much did you know about his background? How long had he been out of the UK?
      5. Don't make decisions until you have inspected the property - a surprise might be in store!
      6. Although he is responsible for the rent during the fixed term you should consider accepting surrender and move on!
      7. Next time think it through more thoroughly or else you will make probably a more serious error!
      8. Are you selling because it's inconvenient or do you want to raise cash? Property is about the best investment you can make, and it (usually) earns money without even doing anything much.
      The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

      Comment


        #4
        Originally posted by Ericthelobster
        I think the use of the words "surrender" and "accept" are probably unhelpful.
        Thanks for your comments Ericthelobster which were very helpful. I took the words "surrender" and "accept" from the Lawpack book where it was discussing when a tenancy ends. Didn't mean it to come across heavy, just wanted to make sure I used the right terminology and not talk at cross-purposes.

        Comment


          #5
          Thanks Paul_f for taking the time to look at this and reply. Addressing each of your points in turn:

          Originally posted by Paul_f
          What strikes me here is that:-
          1. The tenant wasn't referenced to any great extent.I took the advice from this Forum and did a comprehensive credit check with references through www.TenantVERIFY.co.uk.
          2. There is no guarantor in place, which there should be. I didn't ask for a guarantee as - given the salary confirmed by his "employer" - his ability to meet the monthly rental payments (which were less than 10% of his monthly salary) was never in question.
          3. The "job" he had was probably not very secure anyway; self-employed means he was likely to lose his job at anytime! His application form said he was "on contract". His employment reference (through TenantVERIFY) said he had been "employed for the period of 1 year 0 months". The Assessment result stated that the "employment is considered full time/permanent contract and the employer does not see the situation changing in the next 12 months." This matched what he'd already told me.
          4. If he lived abroad before then how much did you know about his background? How long had he been out of the UK? I knew as much as what he'd put on his application form (ie what he'd been doing since January 2002) and what he'd told me verbally. In addition to the credit check, I used the information he told me to research him on the internet and everything added up.
          5. Don't make decisions until you have inspected the property - a surprise might be in store! Noted.
          6. Although he is responsible for the rent during the fixed term you should consider accepting surrender and move on! Yes, that's my school of thought too.
          7. Next time think it through more thoroughly or else you will make probably a more serious error! I thought I had taken all reasonable steps. I went through a proper credit reference agency, obtained employment, financial and previous landlord references (12 month UK tenancy ended May 2006) - all ok. Reviewed postings from knowledgable people such as yourself and others on this Forum. Read books. Read websites. Used the right forms etc
          8. Are you selling because it's inconvenient or do you want to raise cash? Property is about the best investment you can make, and it (usually) earns money without even doing anything much. No, it's not inconvenient, but within the next 12 months or so I'd like to raise some cash to put towards a deposit for a new house with my partner. All my "money" is in the house, so if I don't sell it I'll need to look at switching to a BTL and releasing some equity - but that's a whole new post!!!
          I know I'm not stupid, just inexperienced, and I genuinely believe I had taken all reasonable steps with this tenancy. At the moment there is no financial loss - his rent is still being paid - so I'll wait and see what he wants to do when he returns from his break.

          Thanks again.

          Comment


            #6
            The next act in what I feel is going to be a saga!

            Tenant telephoned me on Thursday evening whilst I was driving. He told me he has found a new job in London which he starts a week on Monday. He will move some of his things out this weekend but leave his "classic car" locked in the garage as he has some work planned on it. He will remove this in "a couple of weeks". He went on to say "as a gesture of goodwill" he will pay next month's rent (due 27 July). He said that once he had moved all his things out we should have a meeting at the property. I agreed that a meeting would be a good idea and asked him to let me know, in writing, that he wished to give up his tenancy and the date he wished this to take place. I assured him I would deal with finding another tenant as quickly as reasonable in order to release him from his Agreement and to mitigate his costs.

            The call was very brief and on reviewing the conversation I was left with the impression that he thought that he could pay the rent due on 27 July and that would be it.

            The next morning I emailed him, detailing our conversation and reminding him of his obligations. (Tenancy is 6 months Furnished AST from 27 May to 26 November 2006.) I also pointed out that I would give him at least 24 hours written notice before any access to the property. Finally, I sent a copy of the email by 1st Class Post to him at the property.

            I got a text from him this morning saying "House is all yours". I've texted him back and asked him to confirm that he is happy for me to enter the property with a view to remarketing it. I will be in that town (30 minutes away from where I live) today and Wednesday. As I write I've had no response.

            General consensus of friends is that he's done a runner. If he defaults on the rent I've got his bond which (provided no repairs need doing) could be used to cover one month's rent.

            I know that I'm not allowed to enter the property unless by appointment or by invitation of the tenant. Also that, unless a genuine, emergency, I should never use my keys to enter the property without my tenant's knowledge or permission.

            I feel the sooner I access the property and get the ball moving to find another tenant the better, but I don't want to infringe his rights. I want to do it by the book.

            Given the circumstances outlined in this and previous posts, what is my best course of action? I've tried searching the site, but I'm having real problems getting the search facility work today. Any advice would be helpful.

            Thanks.

            Comment


              #7
              Tenant advised me by text yesterday afternoon that he has "left the property. note is there". I went to the property with a friend and gained access using my keys. The house alarm had not been set and the garage had been left unlocked. The house looked like it had been vacated in a hurry. Odd socks, carrier bags, litter and boxes were scattered on the floor throughout. It was generally very dirty, but fortunately only minor damage to the shower, back doorstep and garage.

              The undated note left said "...I thought I had done the decent thing by not only giving you as much notice as I could but also telling you that I would pay the August rent even though I would not be residing. Perhaps I should have read the small print before I signed but I am of a trusting reasonable nature." [The AST was a standard Furnished Lawpack agreement and immediately before this tenancy he had held a 12 month furnished tenancy in Manchester. I did not point out that clause to him, but neither did the agent who let to me and my partner. He had the opportunity to read the T&Cs before signing.]

              "Therefore, bearing in mind that you should be so officious in your acknowledgement of my notice..." [the acknowledgement referred to in my earlier post.] "...I had no choice but to leave the house as it stands.... as for...electricity...you can take that out of the deposit." [He had left his utility bills - which are all in his name - on the worktop for me.

              "...I am so sad that our 'deal' had to end this way. As it is I gain nothing from it and you 'lose' the August rent." [ie the rent due to come out on 27 July.]

              I conducted an inventory, did meter readings and took photographs of personal belongings remaining and damage to property. I have not removed anything (other than discarded fast food containers which were attracting flies) from the property.

              There were no keys left at the property for me.

              I texted tenant to advise I had inspected property, and asking when I could expect return of keys. I also requested forwarding address and told him I would be in touch about other matters. No reply has yet been received. I'm reluctant to call him until I'm clear as to what the next step should be.

              He is clearly in breach of his AST Agreement. On the basis of his note and texts am I right in treating it as a "surrender" of his tenancy? How long do I wait for the keys before changing the locks?

              I have decided to put the house up for sale. It needs a good cleaning before I can get the agents in. Can I go ahead and do that now or will any ongoing dispute between me and the former tenant affect any potential sale?

              Sorry for longwinded post. Please help.

              Comment

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