Landlords – here are some top tips to reduce rent arrears
Wed 04 Nov 2020
Times remain difficult, with all four parts of the UK now in some form of lockdown and tight restrictions on movement and mixing likely to remain in place for some time yet.
However, in more promising news, the UK government has agreed to extend the furlough scheme until December 2, when England’s national lockdown ends, with the Prime Minister Boris Johnson appearing to suggest that the scheme would also be available, as required, to all constituents parts of the UK after December 2. There has been no clarity on this yet, though, with the Scottish Government pushing hard for reassurances.
In the meantime, though, it is likely that job losses and financial issues among tenants will continue. From a landlord’s perspective, this could lead to loss of rental income and a rise in tenant arrears.
The vast majority of tenants will, of course, be doing their utmost to pay as much as they can to keep their debt to a minimum, but there are things you can do as a landlord to encourage tenants in arrears to gradually pay back what they owe.
Here, we at Letting Solutions – West Lothian’s first dedicated lettings agency – take a closer look.
Be sympathetic to the plight of your tenants
First and foremost, you should seek to employ a human approach to the situation. The coronavirus pandemic has caused hardship for many through no fault of their own, and has been a challenging period for a whole host of reasons.
As a result, if your tenants are having financial bother, it’s vital that you offer a sympathetic ear and do everything you can to help their situation.
You should also take people’s health into account, now more than ever. If your tenants are symptomatic or unable to work due to Covid-19, this is likely to impact their ability to pay rent in the short-term, so you may need to organise a tailored repayment package for them.
Remain proactive and on the front foot
It’s a good idea to contact your tenants and let them know that you are there to assist them, to effectively put the ball in their court.
What’s more, if you aren’t aware of the details of their financial situation, you will be unable to offer any help or assistance.
Taking the initiative and contacting them first can also help you to prepare your own finances, reducing the shock impact of any sudden changes to your rental income.
A successful tenancy relies on a good relationship between landlord and tenant, and by being friendly and approachable – and taking an understanding approach – you can build a strong relationship and improve the chances of them paying back what they owe in a quicker fashion.
Partner with a reputable letting agent
For landlords, dealing with rent arrears can be stressful and intimidating, especially if you have only recently entered the private rented sector.
To put your worries at ease, it’s important to work with an experienced, local letting agency, giving you the peace of mind that they are on top of all aspects of the tenancy. A good letting agent will have years of experience of dealing with rent arrears and will know exactly how to handle the situation, with solid systems and processes already in place.
Letting agents also know how to communicate with tenants in the most effective way and will have tricks of the trade to encourage renters to pay rent and reduce their arrears.
Put everything down in writing
Verbal communication with your tenants is important, but when agreeing conditions surrounding their tenancy, it’s vital that everything is followed up in writing so there’s a clear evidence trail to turn to.
Nowadays, many tenants will prefer to be contacted in writing via email, text or WhatsApp rather than the more traditional letter form.
Consider repayment plans
One of the most effective solutions, if your tenants are struggling to pay their rent, is to come to an arrangement via a repayment plan. This both provides you with more certainty about when you might be receiving rent, and also helps the tenant to organise and prioritise their finances.
More importantly, repayment plans help to build up trust between both parties and enable tenants to pay back at least some of what they owe so the landlord is not completely out of pocket.
Speak to the guarantor
In some cases, when tenancies are signed, a guarantor is named as the person who will be liable to cover the rent if, for whatever reason, the tenant defaults. This is usually the case with student tenants, who use their parents as their guarantor as they don’t have the financial stability that a working person would.
Young professionals just starting out on their renting journey may also require a guarantor, if their monthly income is less stable.
Should your tenant be in arrears, now is the perfect time to contact the guarantor and make them aware of the state of play. Typically, as mentioned above, they will be a family member – but it might also be a close friend or partner.
They will be in a better position to encourage the tenant to pay, knowing that they will be liable to cover the costs if not.
Employ a tech-led approach
Organising standing orders is an easy, effective and well-established way to reduce rent arrears, as it prevents tenants from withholding rent and also means they don’t have to remember to pay you each month, as it automatically comes out of their bank account.
Equally, recording all details of payments digitally can help to provide you with a clearer picture of who owes what and how your overall portfolio looks. Perhaps more importantly, it offers a clear paper trail if you need to provide evidence in the future.
Remain professional at all times
While dealing with rent arrears can undeniably be frustrating, it’s crucial that you as the landlord keep your cool and remain respectful of your tenants at all points.
That means not bombarding renters with phone calls and texts, and always remaining polite and courteous in all correspondence. Here could be another reason why using a letting agent is so vital, as they can take the emotion out of the situation and manage the relationship with your tenants on your behalf.
Communication is always key
As always, good communication is all-important when it comes to handling rent arrears. If you are able to keep tenants up to date with their payment schedule, this can help them to track what they owe.
During these uncertain and complicated times, it’s more important than ever that landlords, letting agents and tenants collaborate successfully.
Here at Letting Solutions, we are open for business, albeit strictly in line with all the required rules surrounding Covid-19. For more information about our current operations, please see our full page details here.
Don’t hesitate to contact us, even if you are not a current client. You can ring us on 01506 496006 where our team are waiting to help. Or you can email us at: email@example.com.