My tenants have flooded my property but who’s problem is it?

by Mark Alexander

6 years ago

My tenants have flooded my property but who’s problem is it?

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My tenants have flooded my property but who’s problem is it?

I received a phone call a month or so ago to saying that my tenants have flooded my property and wanted me to pay to get the damage fixed. I suspect your response would have been the same as mine. Obviously I asked what had happened and they said they didn’t know. Apparently my tenants had been away and left relatives in the property when the problem occurred. I asked if anything was leaking and it wasn’t, nothing was blocked either. The scale of the damage was quite bad, the problem was a flood in the bathroom which had effected downstairs walls and ceilings. I didn’t need Sherlock Holmes or Miss Marple to solve this mystery, their guests had obviously let the bath overflow.

Obviously I refused to pay for the damage and I told the tenants to claim on their insurance. They don’t have any. Not my problem I say, you’d better work out what you are going to do about it. I heard nothing more so I left it. Life is never that simple though is it! This morning I received a phone call from my tenants sister …………

Hi, I’m Cherry’s sister she says, I’m just calling to let you know that Cherry will not be paying the rent this month because she’s spent up this month because of the work she’s had to get done to put your house right.

Now if you are deciding what you would do at this point, STOP, there’s a lot more to this.

tenants have flooded my propertyHave you ever purchased a property and regretted it?

About seven years ago I had this idea that every property, no matter how bad, has a value and that all properties will increase in value over the long term. I still think there’s some truth in that argument but I still wish I’d never purchased this property. It’s the roughest house in the roughest street in the roughest area. It’s a rural council estate dominated by one very large, very rough family. If you ever come to mid Norfolk and want to find this place just follow the first set of blue flashing lights you see and there’s more than a 50/50 chance you will be lead right to it. I was warned never to buy in this particular location by my brother, who has a lot of friends in the Police force, but I just couldn’t turn down what looked at the time to be the bargain of the century.

Anyhow, to cut a long story short, I got lucky and managed to let the property to a member of “the family” and this one seems to be the most decent of the lot, i.e. no criminal record and to date she’s been a good payer too.

If I kick her out there is a very good chance the property will be vandalised as soon as it’s vacant and I will never know who did it. The chances of re-letting the property to a better tenant are zero. To make things worse, this property has plummeted even further in value. The only way I might sell this property is in this market is in an auction with no reserve. I could lose a fortune! To make matters worse, I mortgaged it to 85% LTV when I purchased it as the cashflow is awesome (15% yield on what I paid for it) so I didn’t see that as an issue at the time. Cashflow now is even better than is was as it’s on a bank base rate tracker at 1.75% over base.

So, do I bite the bullett, keep the tenant and let her off the rent this month? Do I take the cost of the damage out of her rent deposit and accept that she now has no deposit? Or do I kick her out and risk losing a small fortune on lost rent, a “short sale” and potentially a load of extra issues to deal with as soon as the property is vacant? If she gets away with not paying rent this time though, the chances of there being a next time increase – experience has taught me that one.

It’s quite a dilemma I have isn’t it?

What would you do if you were me and why? Please add comments below.


Your tenant flooding Mark.

Obviously you can only take any money now from the deposit if:-

1. For some reason it is not in a Scheme

2. If it is it is not in DPS!!

3. If in an Insured Scheme you have an excellent watertight tenancy agreement
that specifically states deductions can be made from the deposit mid term and
not just at the end of the tenancy.

4. Even if you have (3) above in the event of an eventual dispute (a 100%
certainty when it comes to the tenant expecting their deposit back especially as
they will say they have now 'improved' your property!!) the Schemes will take a
very dim view of dipping into the deposit unless the tenant specifically

And clearly they won't

6 years ago

Don't understand; any flooding, no matter how caused would be repaired via a claim on the buildings policy.
Any contents damaged would be covered by the LL contents inurance or a tenant's insurance.
Ir there is neither in force then possibly items damaged that belong to the LL may be claimed from the deposit when the tenant leaves.
If it can be proven that the flood was caused by a maintenance issue not caused by a tenant's doing then a tenant may have a claim against a LL for damage that has occurred to their belongings.
They would have to use the county court process which most LL would just ignore.
Of course what would happen if such a flood caused irrepairable damage to their priceless Rembrandt!!!!?

6 years ago

I think yours is an example of perhaps not just looking at the fantastic positive cashflow you can achieve on this particular property.
You now have no viable exit strategy.
You can make all the positive cashflow in the world.
It will NEVER equal the losses you would make if you try to evict the tenant or sell the property.
Best solution would be take out the new RGI policy you can get on LHA tenants, claim on your buildings insurance.
Had you a buildings policy with you would have £5000 of FREE LL contents cover plus other LL related stuff.
Next payment she defaults on evict her, courtesy of the RGI company.
Any damage or theft she causes, claim on buildings policy along with the contents you are allowed and malicious damage.
I suppose if they do it you use a PSL arrangement with the council

Mark Alexander

6 years ago

Thank you Paul and Industry Observer for your comments so far. I hold the deposit in my client account and it is protected with MyDeposits insurance scheme. The flooding was clearly accidental damage, whilst my tenants family will not admit to it it's pretty obvious they let the bath overflow as there are no blocked pipes or water leaks. My tenants claim to have spent £575 to fix the damage, coincidentally that's exactly one months rent! If accidental flooding is covered under the insurance policy it's certainly not worth me making a claim. To reduce the insurance premiums by a few thousand pounds across my portfolio I elected for a £500 policy excess. Industry Observer - what makes you so sure that my tenant will object to using the damage deposit to pay the rent in lieu of them having used their rent money to fix the damage?

It's interesting that you have raised the point of exit strategies as I have a very clear exit strategy which I will be sharing in part 10 of my latest series of articles - link to part one >>>

6 years ago

If you have the damage insured, then you should claim and the tenant should meet any excess. You have a duty to maintain the property and the tenant could have claimed that it was not in a habitable condition and expected to rehoused. Any action regarding the deposit will lead to a dispute and whichever case examiner looks at it will say that its an you can't expect the tenant to underwrite an insured risk. To recoup money, I think you could sell the rest of the story to Eastenders as a plot line.

Mark Alexander

6 years ago

Hi Eric

I think we may have been typing at the same time. The damage was cosmetic only and the value of the claim would only have been £75 above the excess.

Great idea about selling the script to East Enders, to take it a stage further I think between the columnists and commentators here we have enough stories to create our own soap opera LOL

6 years ago

If I was you Mark I would register this tenant on our national database ; where you can register her outstanding rent default and property damages.
Then I would notify her that she is on our system, and that if she doesn't pay the outstanding arrears make sure she realises that her next landlord/agent will be aware of what she has done; and will be less likely to find her desired accommodation in the future.
AND her future landlords/agents will be forewarned and forearmed e.g. make sure that she takes out building/contents insurance..!!

Good luck!

6 years ago

Given the returns on this, and the likely costs of booting them out I'd be tempted to allow it, but make it very clear in writing that you are allowing them off one months payment only, and that it is not going to be repeated. Also add that you need copies of all receipts for either works or materials, and that you need to inspect it to make sure it is done properly.

6 years ago

I think the issues you have experiences and are presently subjuect to are salutory lessons about this industry.
Your very pertinent points just go to show no matter how right you might be there will be things that are just not worth pursuing.
Shows no matter how much experience you have there will always be situations where you have to let pragmatism to the fore.
Essentially having a sinking fund fo those little issues that crop up.
Is there a rule of thumb sinking fund one should ideally have per properrty owne!.
These issues are even more important for a little LL who operates a very much just in time operation.
This is obviously not ideal but many LL are in this position.
Access to afffordable monies, be it credit or loans or savings are critical to esure that life's little problems as Mark has experienced don't trip you up big time.
To follow what protocols Mark uses would be no bad thing for ALL LL to follow if we can!!!?

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