A tenant falling behind with their rent is something a private landlord dreads. With good reason. Regular rent deposits are essential for any landlord. You have expenses to meet and need the cash flow.
It doesn't matter whether being a landlord is your business, a handy sauce of extra cash or a way to boost your retirement income. If that rent money dries up it can have serious consequences for any landlord. Especially if you are still paying a mortgage on the property.
After all, you still have to pay that mortgage regardless of whether the tenant pays you. And you still have to pay out for insurance, taxes, services and the 101 other things which drain a landlord's bank account.
The last thing any private landlord needs is for a tenant to fall into rent arrears. When this happens the knee-jerk reaction, and sometimes the only option is to begin court action. This can mean more expense of course. But there are steps you can take to deal with rent arrears without going to court. But first of all, it's worthwhile looking at why a tenant may fall behind on their rent.
It invariably comes down to a change in circumstances. These can include:
A crushing blow to anyone. Losing a job can very quickly lead to financial problems. And paying bills, even those as important as the rent, can quickly fall by the wayside.
Tenants who work casual jobs or are on a zero hours contract are at the mercy of their employers. If their hours are cut there's little they can do about it. But the loss of income will again cause financial hardship. And paying the rent becomes impossible.
If your tenant claims housing benefit they may not have received their own payments. This will leave them unable to pay their rent.
Suddenly the remaining tenant has to find double the rent. Not something they will have budgeted for.
The tenant may have got into debt elsewhere or has simply overstretched themselves financially.
It does seem remarkable but a tenant can simply forget to pay. Or, as we have seen recently, IT issues at banks can cause chaos with payments not made despite money sitting in the account.
If this is the case then you can breathe a sigh of relief. The rent money is in the bank. They just need to send it to you. Or the tenant needs to remember to transfer the money - insist on a direct debit in this instance.
But the other reasons for non-payment aren't so easy to put right.
The key is to tackle the issue as soon as it becomes apparent there is a problem. That means if the rent is late by a single day you need to act. And the best way to deal with rent arrears without going to court is to act quickly. After all no private landlord wants to drag their tenant through the courts. Or to start eviction proceedings.
Although you should act quickly don't presume anything. You need to establish the reason why the tenant hasn't paid the rent. As we said above if it's a simple lapse of memory or bank error things are easy to put right. But don't create any bad feeling by going in all guns blazing. Talk to your tenant. Politely point out you haven't received the rent. Let them tell you their story.
Equally though don't be fobbed off. Make it very clear eviction could result from non-payment of rent. If they're having financial difficulties they need to prioritise the rent. Make it plain you will go to court if necessary.
However, if the tenant is willing to work with you to get the arrears cleared and ensure future payments are made you should be able to come to an agreement. It may need some compromise on both sides but it may be possible to get the issue resolved without going to court.
For example, if the tenant has lost their job or seen their income slashed they could be eligible for housing benefit. They may also qualify for a Discretionary Housing Payment. You should encourage your tenant to claim benefits immediately. You may feel you can give your tenant time to make their claim.
It may be that the tenant has fallen into arrears but is keen to come to an arrangement. They may be between jobs but have something lined up. Or their reduced hours may be about to be restored. In these cases, it could be worth coming to an agreement. You may accept a reduced rent until the tenant receives their new wages. They can then pay an increased amount to make good the arrears.
Or you could agree to accept a lump sum payment when the tenant is back on their feet. But whatever you agree to make sure you put everything in writing. Both you and your tenant should sign the document.
So sometimes you can deal with rent arrears without going to court. But there are cases where you can't.
If there is no way the tenant can make up the arrears you may consider it worthwhile writing off the loss if they agree to vacate the property. If you can get the tenant out quickly and equally as quickly install another the financial impact may not be too damaging.
No private landlord can guarantee their tenants will be perfect rent payers. Yes, you will make sure your tenant provides references and carry out a credit check. But circumstances change and even the best and most conscientious tenants can run into financial trouble. There isn't anything you can do about that but you can mitigate against the risk.
You can take out a landlord insurance policy which includes rent protection. MakeUrMove also includes rent protection in our property management service.
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