When tenancies go wrong

I’ve been sworn at, abused, threatened and accused. Why? Because some tenancies go bad. Over the years working in the property management industry I have dealt with a large number of bad tenancies, both within property management and through our consultancy service which specialises in resolving these issues. The industry itself has been through some large changes in recent years. If you are considering managing your own investment, I’ve collated a list of reasons tenancies go bad so you can avoid the common pitfalls.

Knowledge.

With minimal training and no required industry standard of education, a lack of basic tenancy knowledge is by far the biggest issue. Inadequate industry knowledge can define how effective the tenancy will be from the beginning and what protection the landlord has should issues arise. Misinterpretation of the Residential Tenancies Act can result in exemplary damages being made against the landlord.

Communication.

It has the potential to erode any good relationship. In Property Management it is of absolute importance to record any correspondence between you, the Landlord, and the Tenant. Lack of evidence and insufficient record keeping can severely affect a Tenancy Tribunal Hearing. To safeguard yourself; put processes in place to keep records, email rather than call, or back up every verbal conversation/agreement with a written confirmation. Keep an open line of communication between you and your tenant, sometimes when they’ve done something incorrectly or will be subject to the discipline of the Tenancy Tribunal,  tenants will stop responding at all which makes the situation incredibly difficult. Make sure the tenants are comfortable in contacting you, even in tense and emotional circumstances. This will result in you having more control resolving the issues.

Maintenance.

Not maintaining a property will eventually result in issues with the tenants. As a rule of thumb, a landlord either spends money consistently over the period of time they own a property, or spends nothing until issues arise then a larger amount all at once. There is also an issue with the term “maintenance”. This word is open to interpretation and often an issue that a tenant believes is a maintenance issue is not deemed one by the landlords. Generally if areas of the property would devalue over time from normal use (eg: carpets, ovens etc) then it would be considered maintenance, whereas removing old carpet stains is not a maintenance issue as the tenants still have full use of the feature.

Tenant selection.

This is a very tricky area to discuss as the issue has many factors. It is the hardest part of property management and can be the difference between a strong financial future and financial ruin. The issues can range from a Landlord’s trustworthy nature where an applicant’s first impression is the sole base of an application, to a lack of checks and supporting information and a Landlord’s own financial position resulting in a sub-par tenant being accepted because they can move in earlier than other applicants. Additionally, personalities play a huge role in a tenancy and can contribute to small issues being turned into a Tenancy Tribunal application, or just a stubbornness to allow easy access. Making sure you have an adequate feel for a tenant’s personality can be just as important as the agreement they sign. Unfortunately, there are many war stories to be told from versions and combinations of the stated reasons but the main points are very simple. Treat your property investment as if you were a fully working property manager. Learn the key elements of the RTA 1986, understand why the information is required in a tenancy agreement and realise that there is a high probability that at some stage you will have a bad tenancy. You should approach every tenancy as if it will eventually turn bad. That way you will either be sufficiently prepared to deal with the issue or have a great tenancy with the comfort of knowing you are as protected as legally possible Happy Investing.

The opinions expressed in this article should not be taken as financial advice, or a recommendation of any financial product. Squirrel shall not be liable or responsible for any information, omissions, or errors present. Any commentary provided are the personal views of the author and are not necessarily representative of the views and opinions of Squirrel. We recommend seeking professional investment and/or mortgage advice before taking any action.

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