Tenant’s references:
As a landlord, you want to be
sure that the tenant will fulfil the terms of the tenancy agreement and be able
to pay the rent. Apartment blocks in London are governed by a head lease so if,
for example, a tenant throws loud parties until dawn, this is in contravention
of the terms of the head lease and can result in the owner of the property, i.e
the landlord, facing dire consequences and which could even jeopardise his
ownership of the property. So it is useful to check out tenants thoroughly
prior to signing a tenancy agreement. Be sure to get an employment reference,
bank reference and a previous landlord reference. A former landlord is the best
guaranty on how the tenant will behave and treat your property. Be sure to get
the landlord reference from the agent (who the tenant rented from)- that way
you can be sure the landlord is genuine and not fabricated. Insist that the
reference is in writing and follow up by phoning the landlord yourself.
Insist on seeing as many as
the last six payslips for the tenant and be sure to get an employment letter.
Lettings agents use credit referencing sometimes as their only method of
checking tenants – this is wrong. A tenant could have an unblemished credit
history but still be a lousy tenant. Satisfy yourself that the tenant has been in
employment continuously and it helps to know how long they have worked for
their present employer.
A bank reference letter is
also a useful gauge – ask the lettings agent to write to the tenant’s bank
asking how long the tenant has been a customer and whether he/she will be able
to pay the monthly rent by standing order. The bank will usually indicate that
given the monthly average in the tenant’s account, it would seem that yes they
will be able to pay or not. In my many years as a lettings manager I relied on
my intuition and the three reference letters as above. Never did I bother with
credit referencing as it means absolutely nothing.
Negotiating the lease:
I have seen a sorry trend of
agents who present a standard pre-printed lease that cannot be amended or even
challenged by the tenant. This has more to do with the fact that letting agents
do not have sufficient knowledge and experience in the law to redraft clauses
or terms within the lease that would be binding. I find this a terrible opt out
but sadly, this is the world we now live in.
Landlords need to be sure
that their interests are protected. The law in England and Wales favours
tenants over landlords (which means it is very difficult for a landlord to
evict a tenant). However a well drafted tenancy agreement can also protect the
landlord’s interests.
Ask for a break clause:
Break clauses are essentially
a term at which the landlord or tenant can terminate the lease. The clause
usually specifies that either landlord or tenant can give notice at four months
–and the notice period is two months. This means that the agreement will come
to an end at six months. Therefore a 12 month lease can end at 6 months.
Usually the tenant will insist on a break clause, particularly in corporate
lets where the tenant (the company) may have to end the lease if the employee
(the occupier) is fired or is sent back home. This protects the tenant from
having to pay the rent for the unused term of the lease. The landlord can
insist on a break clause as well for the same period so that he can end the
lease. Tenants usually want to have a break clause but landlords should insist
that the clause is mutual.
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