Landlords, are your tenants not paying your rent on time? Whilst its tempting to show your tenants the door as soon as they stop showing you the money, beware. The National Landlords Association tell us it takes around 4 months and £900 to bring a tenancy to a conclusion and get your tenants gone. Factor in the cost of rental loss, and the knock on effect that may have with your own financial responsibilities, not to mention the sheer emotional strain and…well you see where we’re going. Eviction is an option off course, but look at it as a last resort not a knee jerk reaction. There are currently 68,000 tenants in the UK more than two months in arrears with rent. If you’re fortunate enough to have some of them on your books, read on.
1. Let me be clear:
Yes its the kind of thing politicians say just before they confuse the hell out of us all, however as obvious as it seems, outlining everything as clear as day like rental amounts and possible repercussions for non payment is first on the list. Whatever the contract, every last detail must be documented, understood and agreed to. That includes anything via email, text, WhatsApp…hell smoke signals for that matter! However you’ve been communicating with your new tenants they need to be under no illusion as to what their responsibilities are, and you need to record it. Every time. Make sure each tenant initials every page of the contract with the obligatory signature at the end of the document to show they’ve read and understood it, page by page.
2. Diplomacy is key:
Your dog ate your bank account? Really? Or was it one too many student jollies this month, spaffing my children's inheritance away on shots out of God knows what and kebabs? We all know excuses for not paying rent are as creative as they are abundant but remember, as with most things in life diplomacy is key.
Consider proposing more convenient payment dates, or maybe smaller more frequent payments are more manageable? We strongly advise getting your tenants to set up Direct Debits or Standing Orders over manual payments as a matter of priority. This makes it easier for them and more likely you’ll get paid.
Remember not all excuses are made up, and sometimes excuses exist to mask real problems that they wouldn’t be comfortable sharing. Every tenant understands the terrifying risk of being kicked out of their homes, so talk to them early on and do what you can to alleviate any fears.
3. Late Fees:
Whilst we always propose the delicate approach, a healthy deterrence can work wonders so consider implementing a charge for continual late payments. Let’s not go too draconian here, we’re not trying to sanction a rogue state, however something around the ?% mark should do the trick early on.
4. Carrot over stick:
Check this out, credit bureaus now offer landlords the ability to report late rental instalments! Keep missing rent and their score goes down. Make payments on time and it goes up. Simples.
By offering your tenants the chance to improve their credit score by just setting up an automated payment from the word go provides a simple and easy incentive for them early on.
5. Even more carrots!
Some landlords are now introducing discounts for tenants that pay on time. Maybe they’re cumulative over the year and come in to affect at key times when they’d prefer to spend their money on other things like Christmas or the holiday season. Maybe its free food or beer for every three months of on time payments.
Obviously this means some financial adjustments your end but prevention is better than cure. A pre-emptive approach like this can eliminate issues early on and create good working relationships with those that are helping you invest for your future. Hey lets face it, there’s a big gap in the market for well reputed and respected landlords, and higher the regarded the more your reputation will precede you.
6. Charity, mate:
What appeals to a sense of responsibility more than helping out your fellow man? Consider offering your tenants the chance to contribute a small percentage of their automated payments each month to a well respected charity, possibly something of the moment and in the public eye.
Each time a scheduled payment goes through you’re making a small contribution to helping someone you’ve never met. Each time one fails so does the donation and the arrangement has to be set up all over again. Oh yes people, this is what is known as shaming, but as a landlord what you’re actually doing is creating a socially responsible image for yourself and for your business.
