Tips to mitigate the risk of financial loss when you evict a tenant
In the past, saying how much an eviction might cost a landlord has been a little like asking how long a piece of string is. Now, thanks to a study of government statistics by Simple Landlords Insurance covering the whole of 2017, we can answer these common eviction questions:
- How long might it take to evict a tenant?
- How likely is it that you will need to evict your tenant?
- What is the average cost of evicting a tenant?
- Where are buy-to-let landlords most likely to need to evict?
- How do you mitigate the risk of loss because of an eviction?
How long might it take you to evict a tenant?
The study found that evicting a tenant takes an average of 118 days, from the date of bringing a claim to court to the date that bailiffs will remove the tenant. This is almost four months, during which time it is unlikely that your tenants will be paying rent, and you will need to ensure all bills and costs are paid.
How likely is it that you will need to evict your tenant?
If the possibility of a four-month period for an eviction to happen is a blow, the likelihood that it will happen should serve to soften it.
In 2017, there were a total of 21,439 possession claims made by landlords. This equates to a 0.5% chance of needing to make a claim for vacant possession. However, of these possession claims, just 6,260 ended in requiring the bailiffs to remove the tenant.
So, across the nation, landlords have a 0.5% chance of needing to evict and an approximately 0.2% chance of needing to use bailiffs to evict. In other words, the law of averages says that out of every 500 tenants you have, only one will need the bailiffs to step in and get them out.
What is the average cost of making an eviction?
The costs of evicting quickly mount up. There will be legal and bailiff costs, as well as the cost of unpaid rent. Legal costs are likely to be in the region of £1,500 to £2,000. To this, you need to add on the cost of unpaid rent. You’ll need to make mortgage payments while you are not receiving rent, and may have to pay utility bills, depending upon in whose name they are administered.
The average insurance payment made to buy-to-let landlords for claims because of eviction was £4,341.22 in 2017.
Where are buy-to-let landlords most likely to need to evict?
The study also found that eviction numbers were highest in London. They were lowest in the South West of England, followed by the North East and West Midlands.
How do you mitigate the risk of loss because of an eviction?
The good news is that it is unlikely that you’ll need to claim vacant possession through the courts and make an eviction. The bad news is that if you do, it’s going to cost you a lot of time and money, as well as the mental stress. Fortunately, there are ways to mitigate the risk of this cost. Here are our top four tips to avoid the cost of evicting a tenant:
1. Make sure you vet tenants properly
People who have been poor tenants in the past are most likely to be poor tenants in the future. Comprehensive tenant vetting should catch these bad tenants before they become your nightmare. Always make sure that you thoroughly check a tenant applicant’s background – including employment history, credit history, and rental history – and learn to spot the five tenant types every landlord should avoid.
2. Keep a four-month reserve
To ensure that you can meet the cost of an eviction process with ease, ensure that you have enough cash held in reserve to cover such an event – unlikely as it is. As the average period that an eviction takes is four months, we would suggest four months’ costs as being appropriate.
3. Make sure your landlord insurance covers you
Rent arrears may be a particular concern of yours, but you should not discount the possibility of needing to evict a tenant. Even if you have had the same tenant for years, circumstances can change, and good tenants can turn bad. Make sure your landlord insurance covers rental arrears and legal expenses.
4. Make regular property inspections
Regular property inspections give you or your investment property manager the opportunity to assess that the tenant is looking after your property and whether their circumstances may have changed. It’s probably the best early warning system available.
Property inspections and tenant vetting are among the comprehensive services we offer buy-to-let landlords. To discover the full list of our services that combine to offer effortless property management for you, contact Ezytrac on +44 0 1522 503 717 .
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