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.

Have 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.

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