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Existing tenant in debt


Cool_Breeze

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Hi all, I'm new to this forum. I'm a landlord of a small studio flat for nearly 2 years now. The tenant is on an AST that expires in April. 

He fell behind with his rent 8 months into the first year after suffering a mishap at work. After over-promising to catch up within a couple of months, we agreed a more realistic 6 months which ended up being more like 8 months before it was cleared. 

Fast forward to now and he rang me up at the end of March the day rent was due to ask if he could he have until the end of next week to pay it. Before I agreed, I asked him what had happened. He revealed that he'd borrowed some money from some company at the time of the work incident and they'd taken all his money from his account and he'd now cancelled his direct debit to them so would be able to clear the rent next week. This set a whole load of alarm bells ringing off in my head and a little more probing revealed it was potentially £1500 he'd borrowed. It was one of these payday loan type companies that charge nearly 1000% pa interest. Checking the FCA website, they are licensed for short term (<1yr) high interest as well as lower interest longer term loans. I had no idea before now that he'd borrowed money. 

The tenant won't tell me how much he still owes them nor how much interest they're charging so I'm in the dark as to how bad things actually are. I don't know if the loan company has broken any rules by allowing a short term loan to go beyond a year, or if it's a lower interest longer term loan. 

I suppose I could simply tell him to move out when the AST ends, but at the same time I do want to give him a chance to put things right if possible. Apart from this arrears issue that appears to have stemmed from his work accident, he's otherwise a good tenant and looks after the place and hasn't been a bother in any other way. 

Given his reluctance to share his current financial situation with me, I've directed him to Citizen's Advice who have put him in touch with the National Debt Helpline. He's following their advice which should hopefully help him find his way again, but from my standpoint, I'd obviously prefer a stable rental income with non of the time consuming hassle involved with rental arrears. And without further information, I'm left unsure whether I want to renew his Tenancy Agreement. 

The question is, am I entitled to information about his debts? Can I make it a condition of renewal that he be more transparent about his financial affairs? He openly shared 3 months of his payslips and bank statements when he first applied to become a tenant, but his secrecy now makes me feel uneasy. If he really does hope to have things sorted soon, why the secrecy? Why cancel the direct debit, which seems to indicate he potentially has no intention of paying the loan company back?

 

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22 minutes ago, Cool_Breeze said:

 

The question is, am I entitled to information about his debts? Can I make it a condition of renewal that he be more transparent about his financial affairs? He openly shared 3 months of his payslips and bank statements when he first applied to become a tenant, but his secrecy now makes me feel uneasy. If he really does hope to have things sorted soon, why the secrecy? Why cancel the direct debit, which seems to indicate he potentially has no intention of paying the loan company back?

 

No you have no right to info on his debts and you have no right to make renewal conditional on him providing his financial details.

Surely you can just claim on your rent guarantee insurance or claim any loss from the home owning guarantor you insisted your tenant provide at the start of the tenancy ?

 

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If you have rent guarantee insurance then use it.

Serve an S21 now (providing you have complied with deposit protection and other rules), get rid of the tenant and let to someone better.

The time to take a close personal interest in a tenant and to carry out due diligence is before they move in.

Good luck.

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Provided you have followed all the guidelines to renting your property to a non UK Citizen then in view of what you have written I would start the procedure to evict him. 

I cannot see the situation getting any better for you in the future and perhaps you are delaying the inevitable outcome of your present and future situation?

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