First time landlord with potential tenant - a little advice please

[JonDavies]

Hi All,

I have just purchased a leasehold flat and I'm now ready to rent it out.

The story is that my mum advertised the flat at her work (County hospital) before I'd completed and I have a potential tenant knocking on the door straight away.

I have been reading a lot about doing reference checks etc etc. The potential tenant was a 24 year old nurse BUT my mum has actually worked with her before. I wouldn't say they are friends but they see each other at work. (I keep reading that any friends or family should be avoided).

However I decided to let her view the flat and she was very impressed and pretty much wants to move in. The rent would be 625/month and the deposit 700. She also seems like the perfect tenant. She is very quiet and seems very nice and her mum kept saying she is a tidy freak! (her mum viewed the flat as well)

There are few issues I have though:

- She wants to pay the deposit on 25th May (this would be move-in date also) as she cannot afford the deposit straight away in one go, which leaves me thinking I will have to keep advertising the flat in case she pulls out? I would have to pay bills/mortgage etc in the mean time. However, what is the advice on offering her to pay 1 half of the deposit now and half on the 25th May?

- The reference checking would not be as thorough as the advice I have been reading about. I know her salary as she is on the same wage as my mum. The referee would also be my mums boss who she is very good friends with. What are peoples thoughts on this? I am thinking the reference checking is going to be a bit biased? Although my mum has said that at work she is very nice and very quiet.

- I would want her to pay standing order every month, is there a way for myself to sort this out?

Thanks, Jon

[Snorkerz]

1) So long as you have cleared funds by move-in day, (no rubber cheques) you'll be okay. Taking 50% up front now is a good idea to keep the prospective tenant focused. If you do so, I suggest you clearly show on the receipt that that 50% of the deposit is non-refunadable if the tenant withdraws.

Why will you not be doing thorough credit checking on both tenant and guarantor? Are you sure the document you intend to get the guarantor to sign will be enforceable?

There is a 'standing order' template in the documents section of this website- you'll need to re-register to see it though.

Have you read any 'how to be a landlord' books (from £10 - Amazon)? Do you know what you have to do with the tenancy deposit? Do you know how you will end the tenancy if you have to? Can you afford to go 5 months without rental income? Do you have your lenders and your freeholders permission to let?

[theartfullodger]

Would you mum let you evict her & the recover any debt from her wages???

If not, walk away & find another tenant.

As a 1st time landlord do it all by the book, full normal checks & no favours. If unsure/uncomfortable find another tenant

[JonDavies]

Thanks for the replies.

Snorkerz

1) Well what I would do is let her move in earlier (next week), paying a full months rent and 50% deposit (putting this straight into the DPS). Then on the 25h May request the other 50%. Is something that has been done before and is considered Ok to do?

I didn't mean credit checking, I would definitely do this as the last thing to do. I just meant reference checking. I also wouldn't get her to use a guarantor or would you say this is a must?

I have read 1 book, Successful Property Letting. I am aware of the DPS. I can afford 5 months without rental income as I have set up emergency funds. I am going through the permission asking now but the management company has said this would be no problem as a lot of the flats are let out. One thing I am not 100% is if I had to end the tenancy early. I know I would have to get a court order depending on the situation, this is something I have to read a lot more about. What I do have going for me is that my Dad is a local housing officer with extensive knowledge of evictions etc.

Jon

[Ericthelobster]

- She wants to pay the deposit on 25th May (this would be move-in date also) as she cannot afford the deposit straight away in one go, which leaves me thinking I will have to keep advertising the flat in case she pulls out? I would have to pay bills/mortgage etc in the mean time. However, what is the advice on offering her to pay 1 half of the deposit now and half on the 25th May?

I don't think she's being particularly unreasonable - the answer would be different if she was asking to pay, say, half the deposit a month after actually moving in. However, it's not unreasonable to ask her something up front as a show of good faith - £100 say? You can point out that in return you undertake to take the property off the market, and won't show anybody else round (who might otherwose take up a tenancy earlier than her).

Bear in mind that the £700 deposit is a damage deposit, separate from a holding deposit which is what you now want from her. You need to give her a receipt stating that the holding deposit is non-refundable in the event of her pulling out, and will be deducted from the damage deposit she pays on moving in. And if she's paying on moving on day, make sure you get the full 1st month's rent and deposit in cash before you give her the keys!

the reference checking would not be as thorough as the advice I have been reading about. I know her salary as she is on the same wage as my mum. The referee would also be my mums boss who she is very good friends with. What are peoples thoughts on this? I am thinking the reference checking is going to be a bit biased? Although my mum has said that at work she is very nice and very quiet.

This doesn't worry me. The only reason you know the applicant is friends with her boss is because your mum happens to know. It's not an uncommon situation. Assuming the boss knows your mum's involvement, it's probably likely to make her especially wary of giving a duff reference. You have the added advantage of your mum knowing the applicant in a work situation so can attest personally to most of the qualities you'd be asking her boss about anyway - reliabiity etc. Main other thing I would want to know from employer is that there's no reason to suppose that she wouldn't still be employed in 6 months time, eg she's a permanent employee not agency staff.

What you need to consider regarding your mum is what happens if the tenancy goes bad (it always possible) - will that make life awkward for your mum? Is it possible she could try to put your mum in a difficult position, eg asking for favours (eg late rent)? If not, then don't worry about it.

- I would want her to pay standing order every month, is there a way for myself to sort this out?

Absolutely; I'd even write that stipulation into the contract. You can give the tenant your bank account details and ask her to set it up; my preference is to retain control and ask the tenant to complete a (self-prepared) form there and then, and then I send it to her bank.

[Snorkerz]

Once tenanthas moved in, what would you do if she refuses to pay the remaining 50%? In reality there isn't much you can do, so don't run the risk. One months rent + deposit before she gets keys.

The need for a guarantor is purely your choice, driven mainly by the tenants status. You know her wage, will the rent be more than 33%? I had mistakenly thought you mentioned guarantors in your initial post.

You need to get a court order to end the tenancy full stop. Just because it is a 12 month contract or whatever does not end the tenancy at the end of that period. May I suggest you take a look at your proposed tenancy agreement and ensure it states that the landlord can use any of the grounds specified for section 8 of the 1988 Housing Act.

[Ericthelobster]

One months rent + deposit before she gets keys.

Ab-so-lutely. I make no exceptions to that rule whatever story I'm given!

[mariner]

Expanding OP Q on T, what about LL?
B2L is not just about finding a T quickly. OP mentions mortgage, has he got Lender's pernission or a B2L mortgage? Nothing to do with M Co.
Does he have LL Buildings Ins in place?
What about stat GSC, EPA & poss NICEEC certificates to show prosp T?

T will commence once AST is signed & T occupies, so T commencement date should be no later than when T moves in.
Rent + deposit before keys is best advice.
Though if T can only afford 1 month adv rent + 50% deposit, then consider taking full deposit with remainder as part rent, thus T will have some unpaid rent from start.
Pay a rep agency to do checks on both T and any G on a 'find only' contract. Worth the cost for inexp LL, provided LL sees full file.
Act in haste - regret at leisure.