Tenants, UK Property

Tenants 

London is a global city and attracts talents from all around the world.  The same can't be said for the rest of UK, so we have not gone into UK property outside London.  Your tenant pool will be wider if you keep an open mind. You should however be mindful of protecting your own financial interests.

Significant Voids Not Expected
If your property is correctly priced, you should not experience significant voids. If your letting agent is not actively marketing your property, switch out. You can also list your property for let with multiple agents, though that will mean more coordination work for you.  This has been our experience for our London properties.  Not sure about UK properties, outside London.

Significant voids unlikely, as long as your price is right.

If you have multiple units, you have more bargaining power. Pick the arrangement that works best for you. In general, we give sole marketing rights to a single lettings agent only for a limited time, say one month.

Tenant's Deposit Must Be Protected
The most important thing about tenant deposits that you as a landlord of UK property must know and heed is that you are legally liable to ensure the deposit must be registered with an approved authority within 30 days of receiving it. There are strict penalties if you do not observe this.

This webpage explains it well. If the letting agent is registering the deposit for you, ensure that you have a copy of the registration certificate. We had a rogue letting agent who did not register the deposit properly and our tenant was in a position to take legal proceedings against us! UK property landlords, do not mess around with deposits! Thankfully, the deposit serves as a good protection and buffer for landlords, to recover damage costs and/or unpaid rent.

Some tenants are lovely.

What sort of tenants should you look for?

First, do familiarize yourself with UK legislation regarding the eviction of tenants. A non-paying tenant is every landlord’s nightmare, especially if you have to take steps to evict the tenant. As such, it is in your interest to ensure that the tenant is able to afford the flat financially.

Second, discuss with your lettings agent on the profile of the applicant. All the lettings agent we have used so far generally go by the rule of thumb that the rental should not exceed more than a third of the applicant’s monthly income. Thankfully, we have not had experienced a rental default thus far with individual lets.

Our tenants have all been regular salaried individuals, some of whom are working in the City of London. They value their tenant profiles and credit history and would not want to blemish their own records. They have also kept the apartments in good shape.

Should one then insist only on professional tenants? Our view is, perhaps not. There are many categories of tenants who are able to afford the rent, but for some reason or other, do not have employment records in the UK, and thus will not pass the traditional affordability checks.

Take for example, students, as well as professionals who have just moved over to the UK. They would make good tenants too, but as a way to mitigate your risks, you can negotiate to have rent paid upfront, or to request a copy of their bank statements as proof of funds.

Corporate Lets? 
How about corporate lets? One of our apartments has been let to three different companies to date. Corporate lets tend to be above market rental rates. However, there is huge disadvantage in that they tend not to be pay deposits, but have a letter of guarantee in lieu of a deposit. The letter of guarantee is pretty much useless if the company goes under.

Do research the company to ascertain if it is likely to make a good tenant. If your apartment is let to a big corporation like Barclays or Morgan Stanley, I think there is little cause for concern. However there are many other smaller companies looking to rent apartments as well.

Also, check the eviction clauses to see what recourses you have if the tenant defaults on payments. A lack of deposit does increase the risk for landlords – you will have to weigh out the potential benefits and costs vis-à-vis a private let. We have experienced a rental default by a serviced apartment company before and we had to evict the tenant. It was a costly exercise for both the letting agent and for us.

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