How do I minimise my losses?

by Readers Question

9:35 AM, 14th March 2019
About A week ago

How do I minimise my losses?

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How do I minimise my losses?

If a house is let out to a group of 3 people on a signed 10 month contract and one of them is stuck outside uk due to his own fault;
– do the other two pay the full rent?
– Do I keep the deposit to fulfil as much of the rent as possible
– do the other 2 find a substitute for the third room?

I would be grateful for any help from readers on how best they think I can minimise my losses?

Many thanks

RM



Comments

paul robinson

11:42 AM, 14th March 2019
About A week ago

If joint contract they are all liable for each others rent.
Best to try and take a fair and practical approach however, discuss with all parties and consider an assignment for the 3rd room with the leaving tenant covering the associated costs. Assuming they are not moving back to the UK any time soon.

Graham Bowcock

11:51 AM, 14th March 2019
About A week ago

Dear RM

How you proceed will depend entirely on the basis of the agreement that you have. If the tenants occupy on a single AST agreement they will be jointly and severally liable. You do not say if they came to you as a unit (i.e. they are friends, colleagues, etc.) or if you found them as individuals.

If there is one AST then you can pursue any of them, or all of them, for any losses.

If you have merely let the rooms to three individuals then there is presumably no reason why the tenants would be responsible for the third person disappearing.

As always in such cases, the pragmatic approach will be best in the first instance. It may be best to visit the tenants and get their view. Maybe they can readily find a third person who is acceptable to you to fill the void with only minimal loss and disruption.

You do have to be careful though about unilaterally ending the agreement of the person who is stuck abroad. You cannot just assume they are not coming back; if they turn up in a few weeks they may well be entitled to continue living in the property. Make sure you dot the i's and cross the t's otherwise you could be in trouble.

Graham

Ross Tulloch

17:49 PM, 14th March 2019
About A week ago

If on one agreement, I would with them do my best to replace the person with another and do a new agreement. Hopefully they would want this. I of course do not know the circumstances, but we have done this in the past

R Maher

20:49 PM, 14th March 2019
About A week ago

Reply to the comment left by Graham Bowcock at 14/03/2019 - 11:51
Thank you for your reply Graham. As an update to all the replies....
It's a single AST and all 3 tenants are friends. Additionally this week we have managed to fill the empty room and I have raised an addendum to the original AST to include new tenant, however can I use deposits of original 3 to offset lost rental?

Mark Shine

21:22 PM, 14th March 2019
About 7 days ago

IF it’s a single joint AST for the property, then as others have said: they’re all jointly and equally liable for the whole rent, as effectively all of them are ‘THE tenant’. Been in similar situs myself, so I’d suggest they themselves find a replacement occupant to join what would be a replacement agreement, who they think they’ll get on with etc. That’s probably the best option.

paul robinson

7:20 AM, 15th March 2019
About 7 days ago

Reply to the comment left by R Maher at 14/03/2019 - 20:49
That’s good news. You’d be best to check with the bond scheme you have registered with but yes you should be able to for unpaid rent and assignment fee if noted in the contract. You say deposits though, not deposit - if 2 tenants have stayed and 1 replaced probably better to use the replaced tenants portion of the bond and leave the others, otherwise will likely create a bad relationship with ongoing tenants. I’d always agree any bond deductions with the tenant and been as fair as I can to allow them to agree and avoid the extra admin/hassle of them disputing it and involving the bond scheme service.

Mark Shine

10:25 AM, 15th March 2019
About 6 days ago

Reply to the comment left by R Maher at 14/03/2019 - 20:49
Hi RM, your message hadn’t yet appeared when I wrote the msg below it. Now that it has appeared my msg looks odd! 😂

Been in similar situations a few times in past with only one person in a group leaving or causing other problems.

BTW for joint tenancies for some time now I have asked if they can pay the rent from 1 single account. This sometimes means it’s a day or two later than if came from separate accounts, but that’s fine as find it has helped to minimise risk of potential individual arrears.

R Maher

18:21 PM, 15th March 2019
About 6 days ago

Reply to the comment left by Mark Shine at 15/03/2019 - 10:25
thanks mark
good idea

Mark Shine

21:16 PM, 15th March 2019
About 6 days ago

Reply to the comment left by R Maher at 15/03/2019 - 18:21
No probs. Many of my properties are 3 beds let to ‘cohesively living’ sharer friends on single tenancy agreements (tho some are now technically additional HMOs due to licensing requirements, but that’s a different headache).

I now *always* try to encourage ‘clients’ to pay from one account, but I don’t *insist* on it.... just in case such a request would fall foul of some regulation or directive somewhere!

Michael Barnes

18:01 PM, 17th March 2019
About 4 days ago

If the original tenancy is in its fixed term, then the tenancy continues until it is terminated by Deed of surrender, signed by all the named occupants and the landlord (Law of Property Act 1925).
Given that one of the Ts is outside the UK, then it seems unlikely that you will be able to achieve this.
By granting a new tenancy (or attempting to effect a "tenant swap" (which almost certainly has no standing in Law)), you are open to being prosecuted for illegal eviction if the original person comes back.
I would have gone for the new person coming in as a lodger and not changing the tenancy (far easier with property law and deposit protection law).
It is the responsibility of the remaining people to pay the rent, and you can pursue either or both of them for the rent through the courts if necessary; they can then pursue the third person for the rent they have paid on his behalf.
As an aside, you are running a HMO; I hope you have complied with all the requirements.

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