Why Landlords Should Conduct Affordability Checks When Divorcing Tenants Stay On

As a landlord, managing tenants' personal situations is often part of the job. One scenario that might arise is when married tenants inform you they are divorcing

, and one party decides to stay on in the rental property. While this may seem like a simple change, it’s critical to carry out a new **affordability check**—both for your peace of mind and to meet the requirements of your landlord insurance policy. Here's why.

 Protecting Your Rental Income

When a couple rents together, their combined income often forms the basis for the original affordability assessment. With one party moving out, you need to ensure the remaining tenant can continue to meet the rental payments on their own. If you don’t reassess affordability, you risk facing missed rent payments in the future, which could result in financial loss.

Landlord Insurance Requirements

Landlord insurance policies often include conditions related to tenant screening and affordability. If there is a significant change in your tenants’ circumstances—such as one person leaving due to divorce—failing to reassess the remaining tenant’s financial situation could invalidate your insurance. Conducting an affordability check ensures you meet the insurance requirements, keeping your policy intact.

Steps to Conduct an Affordability Check

1. Reassess Income: Request proof of income from the tenant who is staying. A general guideline is that rent should not exceed 30-35% of their income.
   
2. Check Credit History: Review their credit report to ensure there are no red flags, such as missed payments or high debt levels, that could impact their ability to pay rent.
   
3. Guarantor Option: If the remaining tenant’s income is insufficient on its own, consider requiring a guarantor who will be responsible for the rent if the tenant fails to pay.

4. Update Lease Agreement: Amend the lease to reflect the change in tenancy and ensure that the legal documentation is aligned with the new financial arrangement.

Maintaining Stability in Your Rental Property

Divorce can be a turbulent time for tenants, and it’s in your best interest to ensure the remaining tenant is in a stable financial position. Conducting an affordability check not only helps protect your rental income but also contributes to a smoother transition for all parties involved. 

By taking these steps, you’ll be better positioned to manage the risks associated with a tenant's changing financial situation, while ensuring that your landlord insurance remains valid.