A tenant in rent arrears is one of the biggest and the most common problems for landlords. Tenants who either can’t or won’t pay their rent leave landlords stressed and struggling for capital themselves to pay the bills and meet deadlines for services, mortgage and solicitor’s fees etc. Moving to legal action to force a tenant to pay or order their eviction can be very costly both in time and money and of course stressful and upsetting for the tenant and the landlord. The ideal situation is to prevent rent arrears on your property and should there be any problems on this front, aim to deescalate them and resolve them before legal action becomes your only resort.
Here are our top tips on preventing rent arrears:
1. Tenant Selection
Often it is in the initial stages of letting a property where things can go wrong; don’t jump at the first prospective tenant you get, make sure you do your due diligence on them and choose the right tenant for your property. You must take up references, including those from previous landlords. You should interview potential tenants and get them to complete an application form. You should run a credit check on the tenant to make sure that it is within their means to pay the rent. Many landlord insurance policies are only valid if a credit check has been conducted prior to contract. In the case of bad credit history, you can ask a tenant to provide a guarantor.
2. Payment Type
Ask your tenants to set up a direct debit/standing order to pay their rent. This should be clearly referenced with their name and address and payment should always come on the same date each month. This means that the money will be given to you if it is available in their account, it is also hassle free and protects tenants who aren’t as good with money from spending cash they need for their rent. You should check your bank statement on the day payment is due as the sooner you notice a problem the easier it is to deal with it.
3. Communicate
As soon as you notice a problem with rent collection you should contact your tenant. Delaying on these matters only gives the tenant licence to think that you are not that concerned about the money. Find out why they are late on their payment, there could have been a bank error or a late payment to the tenant. Ask politely rather than accusingly to keep relations harmonious and if you keep up good communication with your tenants these types of situations shouldn’t be too awkward to handle. if there are personal problems you can still be a kind landlord whilst also sticking to the terms of your contract and charging late fees etc.
4. Help
Tenants may be able to get help with their rent in the form of Housing Benefit. Direct them to gov.uk for more information on this. If you can afford to help them, you could come up with a repayment plan that fits in with their finances and time scale. Any kind of agreement you formulate for repayment of arrears should be written down and signed by you both to show mutual understanding and agreement. You do not have to help them in this way but it could prevent you from taking them to court to get rent repaid which causes further delays in payment receipt and is costly.
5. Evict
If a tenant is not paying their rent and is refusing to leave your property, then you can evict them by issuing them with a Section 8 notice. This can be issued after 8 weeks (or 2 months) of missed rental payments. If the tenant doesn’t leave the property within the time specified on the Section 8 notice, then you must go to court for a possession order. From then on things get even more complicated and costly so if you can avoid this route you should do so! Most landlord insurances cover 12 months of rent so check your policy and make sure you are covered.
For more help or information on the eviction process do get in touch with the team here at NFPM services as we would love to advise and mentor you.
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