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The 8 Keys to Ensure Your Tenants Pay on Time
One of the biggest worries faced by any landlord is the concern that a tenant might default on a payment or pay late. Often landlords are relying on rent coming in on time to pay mortgages and other costs so receiving your dues is highly important. If a tenant fails to pay on time you may be forced to evict them which is a costly exercise and leaves you with an empty property to rent again. Follow these keys to ensure that your tenants pay in full and on time.Here are 8 keys to help:1. CommunicationMake sure you clearly explain the terms of the tenancy agreement at the start of the rental period to your tenant. Get them to sign every page of the agreement tp show their agreement. Communicate clearly what you expect from them including payment amounts and timings. If a tenant is late with payment communicate with them immediately to find out why the payment is late.2. Late FeeThe addition of a late fee to your tenancy agreement acts as a deterrent against late payments and hopefully decreases the risk of this happening. Should a tenant pay late at least you will have received some financial compensation for the inconvenience caused, which would also cover any charges you may face should you not be able to pay the mortgage without the rent money.3. Credit Check BureauCredit checking bureaus now provide the facility for landlords to report on tenants payments. Good credit scores are essential in life so the threat of a black mark against them on their credit score should push most tenants into making payment sooner rather than later.4. Direct DebitRequest that your tenants pay by direct debit as this payment method has a lot of advantages for them and for you. For the tenant it takes away any hassle of payment and any chance of forgetting to pay and thus incurring a late fee. For landlords, taking payment by direct debit means you will be informed by the bank immediately if payment is failed to be collected, having the tenant set up this payment for their pay day means you are more likely to receive it before they get into financial difficulties.5. DiscountsConsider offering a small discount for prompt payment or upfront payment, or a reduction in cost for those willing to set up a standing order/direct debit. Offering a small discount serves as a big incentive to tenants to pay on time and could save you the hassle of chasing late rental payments.6. No CashWhilst it may be tempting, accepting rent payment in cash is not a good idea. Cash leaves no trail and can indicate that the tenant is getting their finance from less desirable means. You should state in your tenancy agreement the payment methods that are acceptable and don’t accept cash under any circumstance. Cash is too easily lost and there is no proof of it being given to you or not so for your own protection don’t accept it.7. Tenant SelectionChoosing your tenants wisely is a great first step in avoiding late rental payment. Look for tenants with a proven income that is around three times the rental amount as a rule. Make sure you get references from previous landlords and ask about their payment timing. Get a credit report prior to accepting any tenant8. Stay professionalAs tempting as it may be to threaten your tenants with their utilities being cut off etc try to remain professional throughout your interaction with them. Any type of threat to a tenant will not be looked upon well by a judge should you end up in court over the situation. Keep written record of your communication with the tenant where possible and go through the appropriate steps as outlined in your tenancy agreement rather than losing your temper with late payers.For more clear and relevant insights into property management make sure you check out the rest of our site and contact Nick Fox to get the help and advice you need to develop your property portfolio.