5 steps to protect you and your next tenants from a previous tenant’s debts
What do you do if your tenant leaves your property and you discover that they haven’t paid their utility bills or council tax? This does sometimes happen, and when it does it is usually because of the delay between the tenant moving out and the service provider sending the final bill. But what if you have had to evict the tenant – for example, because of unpaid rent?
In this article, you’ll learn the five steps to take when a tenant leaves owing money to service providers.
Step #1: Things to do before a tenancy begins
To minimise the risk of a tenant leaving and owing money to you, the local authority (council tax) or utility companies, always:
- Vet the tenant properly
- Put everything in writing
- Ensure that your tenancy agreement is legally binding and includes all clauses necessary
- Conduct property inventory checks
- If the tenant provides a guarantor, ensure that those details are on the tenancy agreement
Step#2: Contact service providers
The first thing to do when a tenant departs is to contact service providers, such as utility companies and the local authority, and inform them of the change in circumstances. Provide final meter readings to utility companies, and the forwarding address to all (don’t forget to ask the tenant’s permission to do so). You’ve now drawn a line under the tenancy.
Step #3: Get your documentation together
Utility providers may ask for proof that the tenant was living in your property. It is best to be prepared for this, so get all your documentation together. The tenancy agreement and a bank statement to prove rental payments were being made are most useful. This proof should be enough to get the service provider off your back.
Step #4: Pay the bills while your property is empty
Make sure that you pay all bills while the property is empty. You are legally obliged to do so, and if you don’t you could find that utility companies stop providing energy or water.
Speak to the local authority as soon as the tenant has moved out – they may provide a discounted rate for council tax while the property remains empty. See our article “How to avoid the new council tax surcharge on empty properties” for more information.
Step #5: Be prepared for bailiffs!
If your previous tenant left owing rent and other bills, it’s likely that they may owe money to others, too. It is best to be prepared for a visit from the bailiffs – and prepare your new tenants, too. Bailiffs usually visit the last known address when chasing debts. Forewarn your new tenants so they don’t get a nasty surprise, and can be ready with identifying paperwork to prove they are an innocent party!
What if the utilities are in your name?
If you kept the utilities in your name (either intentionally or by neglecting to change them into the tenant’s name), then you will be liable to pay them. You may have agreed on a rent amount to include utilities, for example.
If you kept the utilities in your name but it has been the tenant’s responsibility to pay them, make sure that you keep all the bills and that payment is made separately by the tenant and recorded as payment for utilities. This level of documentation may help you should you need to make a claim through the courts.
Documentation is key
As you can see, keeping records is key to proving that you are not responsible for utility bills and council tax. It is always the best policy to put utilities into your tenant’s name and to collect a forwarding address for tenants who move on. When they do, conduct closing meter readings and name changes promptly – there are no prizes for shoddy paperwork and putting off your responsibilities.
Of course, if you let your property through Ezytrac, all of this becomes easier – that’s effortless property management for you! Contact us at +44 0 1522 503 717 to learn why we’re one of the fastest-growing investment property management companies in the UK.
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