Rent Arrears – How to deal with them effectively

By | 2019-01-10T16:58:04+00:00 December 4th, 2018|News|0 Comments

We’ve all heard the horror stories of landlords with significant rent arrears. So much so that TV programmes such as “Can’t Pay, We’ll Take It Away”, “Nightmare Tenants, and Slum Landlords” have increased in their popularity in recent years.

Fortunately, the reality is that in most cases it’s actually quite rare for your tenants to stop paying their rent. After all, most people need a home to live in and will respect the fact that you are providing this for them and not plan to fall into rent arrears.

That being said, we’ve created the following handy guide for preventing or dealing with rent arrears.

1. It all starts before your tenants move in.

Ensuring your tenants are correctly vetted from the outset will play a vital part in reducing the risk of arrears later down the line. This is why our vetting process starts from the very first phone call. Asking careful questions over the telephone can often provide you with key information and allow you to decide whether or not to move forward to a viewing. One that works particularly well for us is ‘Why are you moving home?’. If the applicant advises you that they are being evicted or cannot get on with their current landlord then this might be a red flag and would need to be investigated further.

The viewing stage is critical – we’ve always worked under the guise that we would rather a property sit empty for a few days longer if it means finding the right tenant, as opposed to proceeding with a tenant who you know does not feel right and then regretting this later down the line. Your gut feeling will play a big part in the decision making process here. Our advice; if it doesn’t feel right then it probably isn’t.

2. Credit checks and referencing

tenant referencingWhilst credit checks are no guarantee of a tenant paying their rent, they will at least provide you with a heads up on any previous problems. Make sure you get a proper credit check done on every applicant. You could even go a step further and ask to see bank statements. These are a great indicator of how an applicant manages their finances and will also allow you to look out for rental payments having been paid to a previous landlord.

Aim for at least two references – one landlord reference and one employment reference. Character references are ok in theory, but the reality is that it’s unlikely an applicant is going to request a character reference from someone they don’t get on with! We’ve found that in most cases character references aren’t worth obtaining. A friend is unlikely to say something bad about their friend. For more information on how we do our best to avoid bad tenants see our handy tips here https://slaterandbrandley.co.uk/tenant-referencing/

3. When rent arrears happen, act quickly.

It’s key to ensure that if the rent isn’t paid on time then this is acted upon quickly. We allow 2 or 3 days as a maximum before beginning to follow up on rent arrears and then use a set process after this. Leaving it longer than 2 or 3 days could lure your tenants into a false state of security and give the impressions that you are not ‘hands on’ enough with your rental property (which in turn could have additional consequences).

4. Keep it professional.

In most cases when rent isn’t paid this is down to an oversight which can quickly be resolved. Give your tenants the benefit of the doubt and don’t instantly jump down their neck if they fail to pay the rent on time. It could well be that there has been a genuine mistake, so sending an angry text message or voicemail is only likely to jeopardise relations.

Dealing with early signs of arrears in a professional and clear manner will pay dividends later down the line. State the facts, outline your tenants responsibilities but also ask if there is anything you can do to help them get back on track. Don’t let your emotions get the better of you.

5. Establish contact and then nurture it.

The last thing you want is for your tenant to bury their head in the sand and for rent arrears to increase. If you aren’t logical then this can quite easily happen. Establishing and maintaining contact can be a key step in ensuring that the rent does eventually get paid.

Work with your tenant to reach a suitable arrangement and then nurture the relationship. IF they have agreed to pay by a certain date, give them the opportunity to do so before re-establishing contact. If they feel that you are being reasonable with them they they are much likely to return the courtesy.

6. Next Steps

If rent continues not to be paid then it could be time to move up a gear. It’s essential that you make your tenant aware of the consequences of non payment. Again, keep this factual and do not make things sound bigger than they are. It isn’t unheard of for courts will to throw out eviction cases in case where they feel a landlord has been misleading or too overbearing.

Our advice is to send written correspondence at each stage which clearly outlines your next course of action. This way there can be no surprises. It’s important at this stage to know exactly what you can and can’t decide to do if arrears persist. For instance, you can serve a prescribed legal notice requesting that your tenant leaves, but you can’t threaten to throw them out on the street or change the locks.

7. Serving the correct legal notice.

This is a vital part of the process as failure to serve the correct notice, with the correct wording and at the correct time could end up with your case being thrown out. There are more than one type of document to serve dependent on the circumstances and so you may wish to seek legal advise on which is the correct one.

8. How to serve the notice.

Aside from ensuring that you serve the correct document, you must also ensure that the way in which you serve it is correct. Handing the notice to the tenant would be an ideal method (taking a witness with you also), although in reality its unlikely that your tenant is going to accept this!

If you are unable to hand the notice to your tenant then you could post it through the letterbox (again with a witness present) provided it is not a shared letterbox. Alternatively, you could send the notice in the post provided that you obtain a proof of postage.

NOTE: We would recommend seeking the official legal advice on the above to ensure you are serving notice in the correct way.

9. Instructing solicitors

If your tenant does not leave following expiry of the notice then you could look at obtaining a possession order through the courts. At the time of writing, this is something that you are able to do yourself for a cost of £325.00, however we would recommend instructing the services of a reputable solicitor to take over at this stage.

A good solicitor will be worth their weight in gold and you should ensure that they have experience in housing possession claims.

10. The eviction

It’s likely at this point that you may find yourself having to instruct a bailiff to carry out an official eviction of your tenant. In many cases, you or your representative will be required to attend the eviction and we would recommend also arranging for a locksmith to attend in order that you can instantly change the locks.

Your tenant may not take kindly to being evicted and so it’s important that you remain professional at all times. It’s natural to feel frustrated that you have lost out but letting your emotions run wild could only add fuel to the fire. Concentrate on obtaining access, re-establishing possession and then move on.

In summary

Unfortunately, there is no ‘sure fire’ way to ensure that you won’t fall victim to rent arrears during the letting of your property, but the above steps could assist you if the circumstances ever arise.

It goes without saying however that if you follow the above methods correctly, in particular the first steps, then you will drastically decrease your chances of experiencing rent arrears against your property.

Want to find out more about how we can help? Simply call us today on 0115 981 9651.

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