Tenants who don’t pay their rent are the number one problem for landlords. Even if you are investing in property for capital growth rather than income you will need the income to pay your property expenses.
Avoidance
Avoidance is always the best cure. Taking enormous care in choosing your tenants should be a top priority. I wrote about this here.
If you like a tenant but are worried about their ability to pay, there are a few precautions you can take:
- Get them to pay their salary or benefit into a Credit Union jam jar account or the Tasker Payments service, or
- Make the rent payment date a day or so after their salary is paid – so you get paid first
- Take a property-owning guarantor (and make sure you check them out as carefully as your tenants – there is no point in having an impecunious guarantor)
The best protection of all is rent guarantee insurance but this may not be available for all tenants.
Monitor rent payments carefully
Your best chance of getting your tenant to pay is immediately after the first default, before they have had a chance to run up a big arrears bill.
Ideally you should contact them the day after the payment was due to be made, asking them (nicely) why they have not paid. That may be all you need to do.
If they don’t pay on request you should arrange a meeting with them to see what the problem is. You may be able to help by:
- Changing the date when they pay rent to a day after their salary is paid into their account
- Allowing them to take in a lodger (although there are often problems associated with this and you need to be careful that you are not creating an HMO (see here)
- Giving them (if they are very good tenants you want to keep) a temporary rent reduction
I have a Rent Arrears Action Plan as part of my Landlord Law Service which has more guidance.
If it is clear that they are not going to pay
Then you need to move swiftly. If you have rent repayment insurance you should already have contacted your insurers. Otherwise you need to move to evict the tenants as soon as possible before a big arrears bill is built up.
This sounds harsh but it will take you some 4 – 6 months or more to get vacant possession and if you get no rent during that time this could prove catastrophic for your own finances.
Don’t delay in serving eviction notices and issuing proceedings on tenant’s promises to pay. Tell them that you are sympathetic but that you have to protect your position and that you will stop the proceedings after payment has been made, not before.
Tenants seeking to halt possession proceedings upon a promise to pay are in reality often just negotiating a further rent-free period in your property. So, don’t be too sympathetic. Families with children will be eligible for re-housing by the Council – that is their responsibility not yours.
I will be looking at the eviction process in the next article in this series. But if you need information now see here.
Further information on this and other topics can also be found on my Landlord Law Blog at www.landlordlawblog.co.uk.
Tessa Shepperson
Tessa is a lawyer specialising in landlord & tenant law and runs the popular Landlord Law online service for landlords.
The Tenancy Deposit Scheme (TDS) is a government approved scheme for the protection of tenancy deposits; we offer both insured and custodial protection. We also provide fair adjudication for disputes that arise over the tenancy deposits that we protect.
These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees. Content is correct at the time of writing.
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