The effect of sudden rent arrears
If you are a landlord, it can be catastrophic if you tenant stops paying your rent.
After all, you have to carry on paying your mortgage, the insurance premiums, maybe Council tax and untilities and all the other outgoings you may have.
They are not going to let you off payment just because your tenant is not paying rent!
But often landlords, particularly new landlords, have no idea what to do. How can you deal most effectively with this disaster? How can you get your tenant paying rent again and keep paying rent?
Dealing with rent arrears
You need to remember that your tenant will no doubt have lots of creditors all calling for a part of his limited resources. He will probably pay first the one which is shouting loudest!
So you need to make your tenant decide to pay YOU first, before all the others. How can you do this?
- Get on to it promptly. Ring him up or write to him the day after he fails to pay. Let him know that your eye is on him
- Be sympathetic. Let him know that you understand his situation, and will do what you can to help. For example by allowing him to spread the payments, or maybe change the payment date. Or even (for the best tenants who you don’t want to lose) a small temporary rent reduction
- Warn him of the dangers of non payment. The risk of being made homeless and the effect this will have on his earning capacity – to say nothing of family life. The negative effect also of having a CCJ registered against his name. That sort of thing
- Make it clear that you WILL take action if necessary, even though you are sympathetic. You cannot allow him to stay in the property rent free, and will have no alternative but to take steps leading to eviction if the arrears situation is not dealt with
Generally if you take this approach, if the tenant is able to pay rent, he will.
And if your tenant STILL does not pay his rent?
Then I suggest you move as swiftly as possible towards eviction. It is neither right nor necessary for you to subsidise impecunious tenants who won’t even make an effort to pay your rent.
I’m always amazed when landlords tell me they don’t check bank accounts regularly.
Staying on top of tenants is paramount to making sure you get the rent paid. I usually send a text message on the day rent is due if it hasn’t been received. Quite often its a genuine error and its put right straight away.
If I receive no response I will call the tenant. If this achieves no response and I’m lucky that I’ve only had to get this far once, I issue the section 21. You have 2 months before you can get them out make sure you don’t delay on this. If it’s genuine which again in my case it turned out to be then everything settles back down. If not you are well on the way to gaining repossession of the property.
I agree Sandra, it doesnt do to let these things slip for either landlord or tenant. Rent, as with mortgages and council Tax, are ‘Primary debts’ they need to be paid before any other considerations – everything else can be negotiated.
Having said that, I am very concerned about rent rises in London which are becoming ridiculous. Everywhere in landlord magazines I read what a great time it is to be a landlord because of high demand and high rents but there is a flip side to this. If you read the less well trumpeted stories, rent arrears are on the increase, which knocks on to landlords.
There is only so much the market can stand before it crashes. What price a great rent if your great tenant has to move because they cant afford it, or worse, runs into arrears meaning the landlord cant pay their mortgage.
Nowhere have I read a call to a bit of caution or a long term view here. Its glut time and that cannot be sustainable with rent outstripping wage growth. I’ve seen rents in my area rise £200 a month this year alone.