Q. One of my biggest fears as a landlord is that my tenant stops paying their rent. What can I do to avoid this happening in the first place and, if it does happen, what should I do?
It is pretty scary if a tenant stops paying their rent – especially if you haven’t got a lot of savings to pay the bills in the meantime.
The first thing to check (if we manage your let, we’ll do this for you) is whether it’s just a mistake or if it’s a longer-term affordability problem. The good news is, if the tenant does stop paying for any reason, we offer a rent protection product, backed by Aviva, which covers you for up to 6 months’ rent. The cost of this insurance is often a fraction of the cost of losing one or more months of rental income, which is why many of our landlords currently take advantage of this Rent Protection Insurance Scheme. Find out more here.
However, if you need to evict a non-paying tenant because they refuse to leave the property, you will need to issue a Section 8 notice. You can do this when they owe more than 8 weeks’ rent for weekly or fortnightly payments, or more than 2 months’ rent for monthly payments.
Here are five measures we (and landlords who self-manage) adopt to avoid our tenants falling into arrears:
- Reference thoroughly. Ask for 3 months’ bank statements so you can see their income and expenditure patterns and whether they can afford your rent. Also speak to their previous landlord to find out whether they had any problems with payments.
- Check your bank on the day rent is due. The sooner you notice late payments, the sooner you can take action.
- Communicate with your tenant/agent right away if rent is late. If it’s a simple error or temporary problem, put a payment plan in writing to ensure the rent’s made up as soon as possible.
- Be aware of tenants trying not to pay you. While you may sympathise with a tenant’s financial difficulties, you are running a business with costs attached and if they can’t afford to stay in your property you both need to find an affordable solution.
- If in doubt, get the tenant out! If there’s an ongoing issue, or you suspect a tenant is deliberately withholding payment, issue them with a notice to leave immediately. Delays will cost you time and money.
If you currently self-manage and would like to discuss our services, or need any advice about dealing with arrears, just call into your local Reeds Rains branch.
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