How to prevent your tenant from falling into rent arrears
As a landlord, you can never be 100% certain that your tenant will pay their rent on time, in full or at all. When you become a landlord, this is a risk that you take on.
If your tenant is in a bad financial situation and accrues a large amount of rent arrears, you may need to evict them which can cost you a lot of time and money. On average, it takes 51 weeks and £3,000 to end a tenancy through legal proceedings. On top of this, you will be losing rental income during that time and may have to pay additional costs, especially if you have a buy-to-let mortgage and fall behind on the payments.
There are some things you can do to reduce the risk of this happening when you let out your property.
- Credit checks and references for potential tenants
When tenants apply to rent out your home, you can carry out checks to determine how reliable they will be at paying their rent and staying out of rent arrears.
Firstly, ask for a reference from a previous landlord. They will be able to confirm if the tenant paid their rent on time and in the correct amount.
Secondly, ask the tenant to provide recent bank statements and payslips for the past three months. You can also request a reference from their employer to confirm they are in secure employment that is not due to end during the tenancy period.
Thirdly, carry out a credit check on the tenant. Credit checks look at the address and credit history of the tenant and show if they have had any county court judgements (CCJs). The tenant will need to provide permission in writing for this to be carried out, but it is common practice for many landlords to ask for this.
- Make paying rent easy
Give the tenant the ability to pay their rent in an easy way, such as online via a standing order. Some landlords offer a small discount for paying on time each month, which will further incentive tenants to set up regular outgoing payments via their bank and reduce the risk of them paying their rent late.
- Request a guarantor
A guarantor is another person who agrees to bear responsibility for the financial obligations of the tenant if they are unable to pay. This is usually a parent or guardian of the tenant and is commonly requested for students, first-time renters and foreign nationals as they usually do not have references from a previous landlord or a detailed credit history.
When using a guarantor, make sure you conduct references and credit checks on them as if they were another tenant, to ensure they will also be likely to pay if the tenant can’t.
- Build a good relationship with your tenant(s)
Communicating well with your tenant, responding to any requests they may have about minor repairs or redecorations and being available for them to contact you if they need will allow for a good working relationship between the two of you. The tenant is then more likely to reach out to you if they have concerns about paying their rent. The sooner you know, the sooner you can offer advice, support and guidance and prepare yourself for any shortfalls in income.
- Maintain the property
When you rent out your property, you are legally obligated to adhere to the tenancy agreement just like the tenant. This includes keeping the property in good condition, responding to requests for repairs and resolving any other issues the tenant may have with the property. By responding to requests in a reasonable timeframe and fulfilling your obligations as a landlord, your tenant will not have any reason to withhold rent. This will also improve your relationship with the tenant and encourage open communication.
Now that you've finished reading this blog, it's time to take action! Whether it's implementing the tips you just learned, sharing your thoughts in the comments section, or spreading the word to others who may benefit from this information, don't let this knowledge go to waste.
