One of the unknown factors in letting property is how well your tenants are going to look after it once you agree to let it. Perhaps it’s a difficult thing to predict. But, that’s why most property owners will ask for references, to try and ensure some kind of guarantee on good behaviour.
But what if, despite a so called ‘good’ reference, you end up with tenants that cause damage or worse, even break the law in your property?
Can you detect bad tenants in the first place?
- Make sure you carry out background checks and verify references – someone could steal a person’s identity in order to rent a property. A more common claim of late has been when fraudulent tenants have turned properties into a cannabis factory. They then disappear, leaving landlords with the damage. If verifying references is a condition of your policy then your claim could be refused if you have failed to do so.
- With a new tenant it is good practice to do your first inspection after three months then every six months after. If someone did want to turn the property into a cannabis farm, having the first inspection after three months would probably serve as a deterrent. The time frame is crucial, as it wouldn’t be long enough to do all the work, grow the plants and get everything out.
- Research your managing agent. Make sure that their inspections and referencing complies with the conditions of your policy. A fraudulent managing agent can cause untold trouble.
Beware of reluctant tenants when carrying out inspections – if you’ve given them notice every room should be available. If they don’t let you go upstairs because someone is sleeping, or someone is in the bath, arrange to go back and inspect again. They may have something to hide.
Top tips if you suffer damage
It can be very common for let properties to suffer damage, but there are limits to what will be covered by an insurance policy. It pays to know the difference between wear and tear and malicious damage. If you have had a long-term tenant then things such as chipped paintwork, worn carpets and marks on the wall are not considered malicious. This kind of damage is just wear and tear, which cannot be claimed for. As a landlord you should usually expect to redecorate your property after five years.
Things you should be aware of:
- If you are trying to prove damage is malicious, note any disputes that you have with tenants as this could help when it comes to a claim.
- Should you evict a tenant by issuing a Section 21 (a legal eviction notice), be aware that tenants may develop a lack of care for the property. This might mean mess from a pet, not cleaning up, leaving rubbish behind etc – although not pleasant it’s not malicious and will not be covered under an insurance policy.
- Make sure you take a reasonable deposit – this could help with clean-up costs if they do leave mess behind.
- Taking out legal expenses could help cover costs when trying to evict a tenant.
- Cannabis factories are a lot more common than people would think. Check if your insurance policy covers illegal cultivation of drugs. Also, be aware of any conditions that you/your managing agent need to comply with. Claims costs can run into tens of thousands, so make sure you meet all of the requirements of your policy.
As with any policy it’s important to discuss your requirements with a broker who can advise you of the best cover to suit your needs.
Jelf is a trading name of Jelf Insurance Brokers Ltd (Reg No. 0837227), which is part of Jelf Group plc (Reg No. 2975376) and is authorised and regulated by the Financial Conduct Authority (FCA). Registered address: Hillside Court, Bowling Hill, Chipping Sodbury, Bristol BS37 6JX (Registered in England and Wales). Not all products and services offered are regulated by the FCA. FP18.21