Rent arrears are dreaded by all landlords, mainly because it means that your income will take a substantial (and probably unexpected) hit. Furthermore, as the housing and rental markets are so precarious right now, finding one of your tenants in rent arrears can lead to very serious consequences. This is why Just Landlords provides our customers with rent guarantee insurance, which for less than £100 per year can protect you should the worst happen.
Falling behind on the rent is unfortunately becoming more common these days, especially as the cost of living means that a number of people are struggling to keep up with their outgoings.
However, there is a big difference between missing a single rent payment and falling behind on the rent; the former should be dealt with calmly and logically, while the latter may require firmer action. As a landlord, it may be easy to just evict a tenant if they fail to pay the rent, however, don’t forget that your tenant may be going through a situation they couldn’t have possibly prevented. Sometimes people make harmless mistakes too, so what may seem like a serious situation at first could be resolved quickly and easily.
What do I do if my tenant misses a rent payment?
Finding that your tenant has missed a rent payment is frustrating, however, taking this frustration out on your tenant could make matters worse. If your tenant pays you by direct debit, the first thing you need to do is call your bank to make sure the payment didn’t get lost along the way – sometimes it could just be as simple as that.
However, if your tenant pays by cash, or you know that your bank hasn’t made an error, you will need to contact your tenant to discuss the issue. At this point, it’s important that you remember to stay professional at all times, as even though the situation is frustrating for you, it is probably also embarrassing for your tenant.
If your tenant is going through financial troubles, it’s better that you know sooner rather than later. This is for two reasons – firstly, it means that you can prepare your finances and start thinking about finding a new tenant should matters escalate, and secondly, so you can potentially sort out a payment plan with your tenant if you know they are just going through a short difficult period.
How can I protect my business?
One of the best ways to protect your business against rent arrears is to accept that they are going to happen at one point or another and then plan accordingly. There are other measures you can put into place, for example, it is essential that you make it clear in your tenancy agreement what will happen should your tenant miss a payment, such as charging late fees or starting the eviction process.
It is also essential that you have a contingency fund in place in order to protect you and your business should a tenant fall into long-term rent arrears, or a number of tenants all fail to pay their rent at the same time. Knowing that you are financially secure no matter what happens not only ensures that your business is safe, but also prevents you from having to deal with sleepless nights.
Missed rent payments are never welcomed, however, if you deal with them appropriately, you will find that they don’t have to be as stressful as you might think. Remember, talk to your tenants first, protect your business any way you can, and use your tenancy agreement to help you should you decide to evict your tenant.
- Private Renting – Rent Arrears. (2013). Retrieved from the GOV.UK website: https://www.gov.uk/private-renting/rent-arrears
- Rent Arrears. (n.d.). Retrieved from the Citizens Advice Bureau website: https://www.adviceguide.org.uk/wales/debt_w/debt_rent_arrears_e.htm
- Rent Arrears. (2014). Retrieved from the Shelter website: https://england.shelter.org.uk/get_advice/money_problems/rent_arrears
Disclaimer: This article is for information only and is not official guidance, FCA approved, or legally precise. Just Landlords has used all reasonable care in compiling the information but make no warranty as to its accuracy. If you require information on landlord legislation or best practices please contact your legal representative. For details see our conditions.