Rent arrears are a real problem for landlords and can especially impact at times of economic difficulty like we are experiencing now.
If you feel that one of your tenants may be struggling to meet their rental payments I would advise you to open a line of communication with them immediately.
Perhaps it is as simple as the fact that the date the rent is due and the date they get paid is not synchronised so they experience a cash flow problem within the month. You can easily change the payment date of their rent and pro rata the difference so the rent is up to date. One conversation here has resulted in a win win for both landlord and tenant.
Perhaps the rent is too high for your tenant? With the cost of living increasing monthly at the moment, more and more households are stretched. I have recently reduced one of my tenants rent by £25 per month so that she did not fall into rent arrears and ultimately have to leave. When you have an excellent tenant who looks after your property a reduction in the rent of £300 across a year is much more agreeable to me than an empty property and a one month void of £500.
If the rent is late then you need to be contacting your tenant on the very first day and you need to find out why. Perhaps there has been a problem with their bank or standing order, if they say the funds have left their account then ask for a screen shot from their banking to prove this.
If your tenant says they can’t pay the full month rent at this stage for whatever reason ask them for something. Do not let a month go by without them making some form of payment. In order to minimise an arrears situation they need to be making payments regularly rather than letting the debt build up to an unmanageable amount.
If after 48 hours the rent has not landed in your account then follow up your phone calls with a letter and or text message. It is good to have a paper trail of correspondence.
Become friendly with your local solicitor, perhaps the one who does your conveyancing could send a formal letter to your tenant asking for prompt payment. You can also instruct the services of www.tenantarrears.co.uk which offer a great service for landlords, I have used them myself and can personally recommend the service.
Some landlords are now requesting multiple months rent up front from their tenants. This means your rent is paid in advance and rent arrears can not occur. We often find that some of our foreign tenants do this and it is a great way to have security. Of course it is still important to reference these tenants to check their rental history.
Ultimately you can really minimise the risk that rent arrears poses to your business by selecting the very best tenant you can initially and keeping a good line of communication open throughout the tenancy. Perform quarterly inspections so you see your tenant often and can get a feel for their situation and if they are struggling financially in any way.