Tenants who stop paying rent is often a worry for most landlords. We have all heard stories on how long it can take to evict a non-paying tenant and how a landlord can potentially lose thousands of pounds due to lack of rental income.
In the last five years we have come across various situations where tenants stopped paying their rents. The reasons vary. For instance, it can happen when tenants are going through challenging moments in their lives and, for one reason or another, had to delay the rent payment. On other occasions, tenants would simply stop paying, without giving us any notice or saying anything to us. Whatever the situation is, it is important to spot the issue on time.
One of the most important things you can do is to ensure you have a system in place that allows you to check your tenants’ rent payments.
If you have just a few tenants, then simply using basic online banking will suffice (and I would also recommend having a basic spreadsheet where you track all payment dates). But what if you have dozens of tenants?
In this case you should opt for a more sophisticated system. For instance, we use an online accounting software package that enable us to monitor the rent payments. When a tenant misses a payment, this is immediately flagged up in the system and we know straight away that there is a delay, since day one.
The second most important thing is communication.
In most cases, the tenant will contact you and inform you about the situation. When you liaise with the tenant, you need to make sure that you are understanding but also assertive at the same time. The most important thing is to ask the tenant for the exact date when he/she expects to be paying the rent. If the date is too far ahead, then ask the tenant to pay the rent in parts; the first amount would be paid as soon as possible and, the remaining part, in their proposed date.
When a tenant is late with their rent payment, the longest we would suggest you to wait is two weeks. After this period, you really need to know what’s going on so that you can take action and sort out the situation.
If rent is delayed for two weeks, the first thing we would do is to suggest to the tenant to start looking for more affordable accommodation. In addition, we would offer the tenant a payment plan. As an example, even if it’s just £50 a week, it will start clearing out the rent arrears.
If the tenant is not willing to create a payment plan, I would suggest you to serve a Section 8 notice straight away and also fill in the online money claim applications. The process is very easy and quick and it just costs £25. The court will then contact the tenant within the next 14 days to arrange the repayment.
It is important that you offer the tenant the option to find alternative cheaper accommodation as often tenants feel that they are tied to a long contract and therefore discard his possibility straight away. In my view, it is preferable to have a tenant who’s not paying the rent to move out earlier and to have a new tenant moving in as soon as possible, rather than waiting for the rent arrears to accumulate.
In summary, these are the main points to consider when dealing with non-paying tenants:
- Have a good system in place that allows you to check the rent payments.
- Communication – always know what’s happening and in what situation your tenant is in.
- Offer to pay the rent arrears in parts.
- Suggest the tenant to find cheaper alternative accommodation.
- Time – if the tenant is not communicating with you, do not wait to serve a Section 8 notice and fill in a court application.
- If there are any arrears after the tenant has moved out – fill in the online court money claim.
If you have any questions with regards to this topic, please do not hesitate to contact us.