Useful Tips for Landlords with Troublesome Tenants

Good tenants are worth their weight in money in the bank.  But what should you do when your tenant becomes a problem?  Such problems come in two categories – those whilst they are still in occupation and those when they have gone.  Here are some of the issues which clients have brought to me over the years.

Still in occupation:

• How do I get them out?  It is illegal to evict a tenant from residential premises without a court order.  Some tenants are experts at using the system.  If you force them out without a court order, they will pursue you for compensation and the sums can be significant.  The cost of lawful eviction is far less in the long run.
• What can I do about any breaches of the lease?  This ranges from letting the premises fall into rack and ruin, allowing others to occupy them, making alterations without your consent or not paying rent or service charges.  The important message here is not to ignore the breach.  Deal with it as soon as you know about it.  If you ignore it, you may be deemed to have given consent to it.  One of the most complicated issues is where a tenant has allowed someone else to occupy part of the premises.  You may end up with your tenant leaving and the “subtenant” maintaining rights of occupation which prevent you from letting the whole of those premises to someone else.
• How do I make sure that I can get the tenant out at the end of the lease?  Both residential and commercial leases can extend beyond the term of years or months set out in the formal documents.  There are ways of restricting those rights but the lease has to be set up in the correct manner from the start.  Once a tenant is in occupation, those rights are usually theirs if they have not been excluded already.

Once the tenants have left/gone bust

• They have left goods in the premises - can I take them, sell them and keep the money to pay the rent or to compensate me for my losses?  The answer is a frustrating “no”.  You need to go through the process of getting your bailiff or an enforcement officer to do that job through proper legal channels.  Otherwise your tenants can pursue you for selling their belongings.  This is particularly frustrating for landlords who know that a tenant is not coming back and has abandoned the goods.  Throwing them out into the street is also not an answer.
• Do I have to take a surrender of the lease from a liquidator?  No, and nor should you if there are guarantors.  A surrender will bring the lease to an immediate end and that may affect your rights to claim in the insolvency and pursue any third parties.  Take legal advice if you are not sure what impact that surrender will have on your rights.
• How do I stop a bailiff coming round and bothering my new tenant for debts run up by my former tenant?  Your former tenant will not tell his creditors where he has gone and your new tenant will expect you to sort this out. There is little you can do other than to tell your local county court bailiff that this tenant has left the premises and to return letters addressed to your former tenant back the sender marked “gone away”.  
• What do I claim in any liquidation?  Loss of rent, dilapidations, unpaid management charges, legal costs, managing agent’s fees and anything else which your tenants should have paid or which you have incurred because they have not done so.  The liquidator will have to decide how much he will accept as a valid claim but under the law you can challenge him if you disagree.  If there is to be a payout from the insolvent estate, you want to maximise your return. I must, however, warn against fictitious claims.  Nevertheless, it never ceases to amaze me how much creditors fail to claim to which they are entitled.

Mike Sharp is a partner and head of the Commercial team at Raworths. To contact Raworths, telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate HG1 1HF. Or email mike.sharp@raworths.co.uk.