Dealing with Bad Tenants

What can you do once you have bad tenants in your rental property?

This can become complicated. Thanks to some unscrupulous landlords in recent years, the rights of tenants have been tightened up a great deal. This provides the good tenants with more protection, but reduces the protection for good landlords when they find they have bad ones.

However, there are web sites containing bad tenant registers and these are accessible at least to estate agents, and sometimes to landlords as well. There is - unfortunately - currently no register in the UK and the US.

Once the problem tenants are out of your property, both parties can take the matter to the Department of Fair Trading, which will give you a form referring you to the Consumer Trading & Tenancy Tribunal. You will be given a court date at a local courthouse, and on that day, both parties must show up. If you don't, the case may be decided against you.

You are then given half an hour outside of the courtroom to sit down and negotiate a satisfactory settlement together, and come back to record it with the magistrate. Make sure you have copies of receipts (or at worst, quotes) for all repairs done to the property, and make absolutely sure that you have photographs of the damage, preferably with a date-stamp on the photos (or you could use "poor man's insurance" and post them to yourself for the postmark on the envelope, which must remain unopened until the day in court).

If no satisfactory settlement is reached, the matter will proceed to a hearing at a later date. It has occurred that cases involving landlords and tenants have gone all the way to the High Court of Australia, but it is rare. Most bad tenants never show up for hearings, or, indeed, for anything…

If serious damage has been done to your investment property, it pays to have good landlords insurance in place from the very start.

I know I've said it before, but bad tenants have a habit of disappearing off the radar when they move on. Often they are not even on the electoral roll - especially if they have left a string of bad debts behind them in the form of telephone, electricity and childcare bills. This was our experience when we shifted problem tenants out of our first home (which became our first investment property too). We had bailiffs showing up on the doorstep for the next twelve months, and one even tried to reclaim our TV!

Remember it's not all bad!

As long as you are aware of the dangers and take measures to avoid them (eg: by using a tenant checklist), though, remember that there are far more good tenants out there than bad, and you should have a good investing experience!

Got a question about tenants?

So... ask away!

Do you have a question about property investing that's not answered here or elswhere on this site?

Ask it here and we'll try our best to answer it for you. Sometimes there's some research involved, so please forgive us of we take a little while to post back.

Others can also comment (politely, please!) too and help you out. It's a bit like a forum and FAQ rolled into one!

Just remember, we're not financial advisers, so you should use the information we give here as a guide only (in relation to your personal circumstances) and see an accountant or financial adviser before proceeding further.

Useful Links

Department of Fair Trading (NSW) for Tenants, Homeowners and Landlords

Residential Tenancies Act 2010

Consumer Trading & Tenancy Tribunal (NSW)

Go to our Tenant Checklist to find out how to keep bad tenants out in the first place!

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