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Every other landlord has had a problematic tenant

25.05.2022

Every other landlord has had a problematic tenant

A survey conducted by Rendin showed that every other landlord has had problems with at least one tenant. The main problems included debts and damage to property. The average estimated loss for landlords who had incurred damages was 1900 euros.

Rendin, a solution for renting (out) homes and signing secure rental agreements, conducted a mini-survey among landlords to map their current experience and understand how to improve it. The local rental market is very fragmented in several ways, which is why earlier comprehensive information on the activities of market participants is not readily available.

Every other landlord has had to face a problematic tenant at one point, whereby 55% of them have experienced problems with one person, and 45% of respondents have experienced problems with two or more people. “This perfectly illustrates the fact that facing a difficult situation as a landlord is not a matter of if, but when,” Alain Aun, CEO and co-founder of Rendin reveals. “This also confirms that the rental market, which has remained unchanged for a long time, needs a new approach which would help prevent possible risks and establish a secure rental agreement,” he adds.

A major part of the problems included unpaid rent and utilities (44,8%) and damaging or destroying property in the living space (28,1%). Additionally, inappropriate behaviour by the tenant (e.g., partying, noise), ignoring the terms of the agreement (e.g., moving out without notice) and insufficient cleaning were brought up as examples.

The deposit does not cover debt or damage to property

Of respondents who reported having experienced problems, 30.2% did not incur financial loss and 23.8% of such respondents were unable to estimate the cost. Among the rest of the respondents, the financial loss varied between 50 euros to thousands, averaging 1900 euros per landlord.

“The convention on the rental market is to ask for one month’s rent as deposit, which is considered a secure solution to deal with potential problematic tenants. The tenant missing payment of one month’s rent is enough to lose out on the traditional deposit. This very clearly shows that the concept of the deposit does not work,” Aun explains.

He adds that this is backed by Rendin’s experience. “In two years, our platform has been used to enter over 2000 rental agreements with guaranteed rent and services payments for 3 months and property damages protection for the landlord and deposit-free renting for the tenant. “When a problem is developing, our first aim is of course to resolve the situation and prevent damages. However, that is not possible every time and when we handle damages, we generally see that these extend to larger sums than the sum of the previously mentioned conventional security deposit.”

Landlords operate independently

51.5% of landlords who responded to the survey rent out one living space, whereas 31.5% of respondents own three or more objects, which places them in the realm of real estate investors. As expected, the rental homes of the respondents are mainly located in Tallinn (52%), but also Tartu (17.9%), elsewhere in Estonia (29.3%) or abroad (0.8%).

Landlords operate independently, as the main means used for finding tenants is social media, followed by real estate portals. A little over one tenth of respondents enlist the services of a real estate agent, which are usually required by landlords who live in different town or abroad and cannot travel between several cities.