10:55 AM, 19th December 2013, About 10 years ago 4
I have one property that I am currently renting out which has been tenanted for the past year (with no late rent payments) to a husband and wife and their two young children. At the beginning of the tenancy I took out rent guarantee insurance just in case they defaulted on their payments. That way my mortgage and possible legal fees would be covered.
The one year fixed term period has now ended and the fixed term tenancy has rolled into a periodic tenancy. Recently the circumstances of the family have changed whereby the husband has moved abroad for work purposes but he is still sending money over to his wife for support and maintenance. The wife is studying part time at University and is appealing to the university for some extra funds that can help her out. To this extent, they have requested to see her AST proving that she is indeed renting on her own, thus she has asked me for a new fixed term contract with just HER NAME on the AST so that she can show the University.
When I notified the rent guarantee company of the change in their circumstances they said they would need to reassess the tenants before taking on a new policy on a new AST. The assessment has since come back declined and when the tenant’s Mum was added as a guarantor to try and help, it still came back declined as the Mum is a little older and doesn’t earn enough to cover the rent payments in case of default.
What would you advise I do in this case? I was reluctant to issue a new 6 month AST without the rent guarantee as I try to minimize any risk and have heard horror stories of removing tenants who stop paying rent. I have no evidence of this happening with my current tenants, but no one knows the future, and although they have paid on time in the past, this change in their circumstances may change that, even though they have stressed that it wouldn’t. The tenant is a bit stressed about it as she was hoping I would just issue a new AST and didn’t know I had an insurance policy in place.
One last piece of information to add to the equation; they both have a property (possibly council but not sure) which they are renting out, and the insurance company have said the tenant declined to declare her rental income which could have increased her score. They are certainty not experienced landlords so maybe it’s down to fear or because they haven’t got the paper work in place to show the insurance company.
Sorry for the long post but I wanted to try and explain the situation as accurately as possible. Please can you offer any advice about steps I should consider taking?
Should I just issue a 6 month AST or should I not?
Thanks in advance.