How to prevent rent arrears once a tenancy has started
Once a tenant moves into your property it’s tempting to think you’re in for a carefree six months. The tenant will be as a nice a person as they seem and will respect and look after their new home. Above all you hope the rent money will arrive in full and on schedule.
Unfortunately, as most private landlords will know it doesn’t always happen like that. Rent can sometimes be unpaid. Arrears can pile up. Even comprehensive referencing and credit checks can't guarantee your tenant will always pay their rent on time.
Why tenants fall into rent arrears
There can be many reasons why a tenant doesn’t pay the rent. These include:
- They’ve made a conscious decision not to pay.
- They are withholding their rent because they’re in dispute with you.
- The tenant has lost their job and is experiencing financial problems.
- Wages have dropped because of a reduction in working hours.
- They simply can’t afford the rent anymore.
- A joint tenant has moved out.
- Third party fault.
How a private landlord can prevent rent arrears
Returning to our list of why tenants may fall into rent arrears let’s look at the different scenarios we’ve mentioned above.
Thankfully the first two are rare.
Every private landlord will have heard horror stories of tenants who take up residence and then cut themselves off from the landlord. They withhold the rent and are aware of the lengthy eviction process. They know they can live rent free for some time. But this so very seldom happens it’s not worth worrying about.
However, some tenants may withhold rent if they aren’t happy for some reason. Even though the law says they can't do this. But you can take steps to avoid this scenario. Make the tenant aware withholding rent can lead to eviction. But do try to resolve the tenant’s issues and avoid any similar situations in the future.
The tenant suffering financial problems is probably the most common reason for falling behind with the rent. Sudden unemployment or a drop-in wage will hit anyone hard. Unfortunately, the first you will usually know of this is when the rent fails to arrive.
When income falls the first reaction of many is to stop paying the rent. It’s a similar story when the tenant simply becomes financially overwhelmed. In trying to balance their finances the first instinct is to often stop paying the rent.
In these situations, you have to act fast. Don’t wait for the arrears to build up. If you don’t receive the rent when expected get in touch with the tenant within 48 hours. Ask politely if there’s a problem and give your tenant a chance to explain. An email or phone call can do this. But follow up with a letter if no response is forthcoming.
It may be the tenant is experiencing temporary problems and you can come to an arrangement to pay off the arrears. Do stress the importance of paying the rent. After all a roof over their heads should be the priority for most people. You could also suggest your tenant reaches out to an organisation such as Citizens Advice for help.
If the tenant is in serious financial difficulties it may be best to suggest they surrender the property. You may lose out on some rent but by taking immediate action you prevent the situation from becoming worse. Your goal is to keep the arrears to a minimum.
If the arrears reach eight weeks you can then begin the eviction process by serving a Section 8 notice. Make sure you’ve retained copies of all the correspondence you’ve had with the tenant. You’ll have to produce this along with statements of account and the tenancy agreement to obtain a possession order.
Joint tenant moving out
A joint tenant moving out will have a huge affect on the remaining tenant(s). If the remaining tenant(s) is happy to meet the rent then there is no real issue.
But when the joint tenants were a couple problems can arise. Suddenly the remaining tenant’s share of the rent has doubled. You need to act if this results in unpaid rent. You may still be able to claim the missing rent from the tenant who has left and you could also ask the remaining tenant to surrender the property. Again, if the arrears have already built up before you contact the tenant you’ll probably have little option but to evict.
Third party fault
It’s never good news when the rent isn’t paid. But if it’s genuinely not your tenant’s fault it’s not entirely bad news.
Sometimes banks can make mistakes. They may be late in sending a payment. Or may not send it at all. Your tenant will be able to sort this out and you’ll get your rent eventually. This is why you should always contact your tenant quickly to discover if there are any problems before issuing warnings about unpaid rent. Or it could simply be your tenant has genuinely forgotten to make the payment.
Other practical steps you can take
There are some pre-emptive steps you can take to reduce the risk of your tenant falling into arrears:
- Make sure the tenant is aware when the rent is due. Send a polite SMS reminder every month. It's best to send the reminder a couple of days before the due date.
- Keep in touch with your tenant and build a relationship. A happy tenant is more motivated to stay on top of the rent.
- Encourage the tenant to set up a direct debit.
- Remind the tenant of the consequences of not paying their rent.
Remember you can keep on top of rent collection by taking advantage of the MakeUrMove property management service.
Private landlords can find tenants fast by listing their property with MakeUrMove the original online letting agency.