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6 types of tenants very thorough - 2006/08/18 03:29
Professionals - These are the preferred tenants for buy-to-let lender. It usually signifies that the property is in a good area. From a lenders point of view that means good property growth and easy to sell on. Generally speaking this type of tenant has a history of looking after your property.
Families - This is the next best type of tenant to aim for as far as buy-to-let lenders are concerned. Generally the property being suitable for a family should easily be sold should the need arise.
Students - Excellent income producer. Not many lenders in the buy-to-let sector will allow student lets. This is especially the case if the property is split into bedsits. This is all down to the difficulty in converting the property back into a 'normal' residential home should the need arise. The reason lenders are offering residential rates is due to the underlying property being a residential property. If it is split up into bedsits then they will consider that to be commercial. If all the students sign the one tenancy agreement a lender is more likely to lend than if there are several tenancies.
DSS or Asylum - This type of tenant can be good for landlords in that you do not have to worry about collecting the rent as it is paid by the local authority. The downside for lenders is that the local authority sets the rent by looking at the going rate for the area. There is also a problem in that if the lender (or you) needs to take possession of the property, it may prove difficult to get vacant possession as the tenancy agreement is with the local authority rather than the tenant. Some lenders will consider DSS, but not asylum, which is considered on a commercial basis. These types of properties are generally in less affluent areas and historically these types of tenants have not got a good record of taking care of the properties.
Did you know? If your tenant receives housing benefit and it is later found out that they were ineligible for this, then if you receive the rent directly from the DSS, they WILL reclaim it back from YOU. If the rent comes from the tenant, then they will reclaim it back from the tenant.
Housing Association - As above apart from they are normally aimed at families and the housing association use a vetting procedure. Therefore, some lenders will consider these. Insurers do not like this arrangement due to the fact that you may not have any control over what tenants go into the property. Could be asylum seekers?
Company lets - Again as this type of property is aimed at professional, the fact that the property is sublet (people paying the rent are not living in the property) is still acceptable to some lenders providing the tenancy agreement is not too long.
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