Landlord Rent Arrears by Heather Hilder on January 10, 2018 “Rental Property Arrears” Landlord Rent Arrears? You’re filled with the flush of successfully letting your property. Your tenants have moved in, having paid their deposit, and first month’s rent in advance. All is looking rosy! But the ongoing concern for all Landlords is that rent is paid throughout the tenancy. Are you financially challenged because of Landlord rent arrears? In today’s article, we look at how to avoid rent arrears. Your Letting Agent will have, should have: ‘referenced’ your prospective tenants before processing their application to rent made clear the Tenant’s obligations relating to rent payment explained the Tenant’s obligations under the Assured Shorthold Tenancy (AST). This legal document clearly shows when the rent is payable, the amount, and what to do if the Tenant finds himself in a position where he can’t pay. A reputable Agent’s Terms of Engagement will contain a clause about how rent arrears are managed in case of late payment or default. The agent regularly contacts the Tenant. As soon as the rent doesn’t appear in the Client Account, the agent must get in touch with the tenant to find out if there has been a momentary lapse of memory on the due date. It could be that there has been a genuine case of financial difficulty in paying the rent. Often, it is simply down to the Tenant having forgotten to set up a standing order, or a bank holiday delaying payment, or even the tenant arranging to go on holiday when a rent payment due date comes up. It’s easy to forget to set the transfer up in advance! Generally, we find that a ‘heavy hand’ is not always needed – a gentle reminder is all it takes on most occasions. Mostly, the tenant is very apologetic and makes payment almost immediately. Art of Negotiation An ability to negotiate with the tenant is a prerequisite. There may be a need to compromise, or change a ‘rent due date’ following e.g. a change in the tenant’s employment and salary pay dates. It goes without saying, that any changes must be recorded and issued by drawing up an Addendum. In our experience, Tenants often find it easier to speak to the Letting Agent than go direct to their Landlord. We have on occasion arranged payment plans suitable for Landlord and Tenant to get back on track. We find that if Landlords become overly friendly with their Tenants, it can be difficult to ask for rent; therefore having an impartial agent (who is there to ensure rent is paid to their client, the Landlord) is often simpler. Your Letting Agent is not as emotionally attached to the non-payment of rent as is the Landlord. In all circumstances we adopt a level-headed and business-like manner. The last thing either the Letting Agent or Landlord needs is to be accused of harassment if too much pressure is applied on the non-paying Tenant. We recommend that Landlords looking to engage a Letting Agent to manage his properties should talk to at least three letting agents. Find out whether they have a well tried, tested and trusted rent arrears procedure. If (worst case scenario) your Tenant fails to pay rent consistently and continually, your agent should know how to issue Section 21 or Section 8 Notices. This will keep your losses to a minimum. Arrears How many Tenants fall in arrears? Callaways on average have less than 1% rent arrears. It’s after the Christmas period, when generally people have overspent, that we notice this spills over into rent payments. We always explain to Tenants that paying rent should be at the top of their list. It is just one of those bills that should be paid! And if they ever have problems they should come to us first rather than ignoring the issue. Tenants are generally asked to provide Landlord references when they move properties. As agents, we are asked to provide details of whether rent has been paid on time, and kept up-to-date. Our records are very accurate! It is worth trying to resolve rent arrears in the first instance, by finding a solution that suits Tenant and Landlord. Otherwise, there will be void periods and additional charges to replace the Tenant and prepare the property for a new let. Where the Landlord has Legal and Rent Protection, he should consult first with his insurer before negotiating rent arrears. There are many legal requirements. Documents are issued at the beginning and during the tenancy. You and your Agent must meet all the requirements in order that a Section Notice can be issued and for a Court to agree. Lastly, your Solicitor will require all documents to manage the process if an eviction (generally a last resort) has to take place. Letting Agents will have copies of all correspondence on file. Are you having trouble collecting rent? Do you have to chase your tenant regularly for rent due? Callaways offer a Tenant Find & Rent Collection Service. Call 01273-735237 or enquiries@callaways.co.uk for more details.
