Most landlords depend on rent payments. For some landlords it may be their only income. So if a tenant fails to pay, you will need to take proper action.
However you will find this difficult if you don’t have proper records.
- First of all you need to be in a position to prove how much the tenant has paid and what is owing to you.
- Second you need to be able to refute any (untrue) allegations from the tenant that they have paid the rent and that your records are wrong.
You will find this easier if you have kept proper records from the start.
Recording rent payments
You need to set up a procedure for recording the rent payments (or non payments). Don’t assume you will remember that the tenant failed to pay £40 in March 2010 because you probably won’t.
You can keep paper records in one of those accounts books they have in stationers (or even in an exercise book) but most people now keep records on their computer.
Many landlords use special software made specifically for this purpose. These can be excellent, and will normally also keep records of other things such as when the gas and other inspections are due, and when notices were served. Some will even work out your tax for you.
However you may not want to get special software if you just have one or two properties. In this case, I suggest keeping records on an excel spreadsheet.
Note that if you ever need to go to court in connection with rent arrears, for example with a claim for possession, the Judge will expect to see a schedule rather like the one below:
You will see that this records every payment due and payment made, with a running total along the right. This makes it very clear if the tenant has fallen into arrears and for how much.
It can be a nightmare creating a schedule like this from scratch where there is a long history of rent arrears (believe me, I have done it) but it is well worth it as the arrears are often much more than the landlord realises. Keeping a record like this from the start will allow you to see the full picture.
Yes avoid weekly rents and try and use monthly rents! Firstly you only have 12 transactions not 52 to record (and much less confusing as to which payment something is) but also you can get direct payments of LHA and serve your section 8 notice 3 weeks earlier.
@David – Definitely! AND it makes it much easier to work out the expiry dates for section 21 notices served during a periodic tenancy.
Its also worth noting when considering whether to opt for weekly or monthly rents that under Section 4 of the Landlord and tenant Act it is an offence for a landlord not to provide a rent book, whereas with Monthly tenancies there is no similar requirement.
I deal with many less than honest landlords who dont like reciepting for rents so there is no paper trail leading to them and when they unsurprisingly find themselves with less than honest tenants who dont pay their rent they find that they cant claim the money back, so they shoot themsleves in the foot from the start. False economy they call it
I have a tenant who has 3 whole excel spreadsheets all to himself. He’s been on and off in arrears for well over a year – soon, I’ll be able to turn it into a book! The mad thing is that it never goes over £400 or under £200 but just fluctuates in between.
@Hmolandlady Yes that is very irritating! But at least with proper records you know where you stand
Excel spreadsheets is a good idea. You may want to add a column for the date the rent was paid as it appears on your bank statement for easy reference.
How hard would it be to set up a separate bank account for each tenancy and require all rent to be transferred into that account?
There would never be any questions, as the bank statement would be an independent record. (I would not like to send a tenant a copy of my bank account showing they have not paid, if it had payments from other tenants on it.)
Do any bank offer a service of “virtual accounts” when many account numbers point to the some account, but you can get separate statements for each account number?
Is there still a legal requirement to take payment in cash?