Landlords should protect their cashflow by putting processes in place to reduce the risk of tenants falling into rent arrears.
When a tenant misses a rent payment or pays late, it can cause serious financial problems for their landlord. Late payments have a negative impact on landlords’ cash flow, which can cause problems with paying mortgages and maintenance costs for properties as well as with their own personal finances.
To protect yourself from the stress and uncertainty associated with late payments it’s important to put in place preventative measures to reduce the risk of problems occurring.
Implement the following tips to reduce the risk of tenants falling into rent arrears.
Tenant references– All landlords should be vigilant with tenant referencing. Using a third-party tenant referencing service can provide you with invaluable insight into an individual’s financial position, rental and credit history to help you to avoid potential problem tenants. As well as paying for a credit check, it is also wise to request references from previous landlords and employers, these may throw up any further warning signs about character that aren’t uncovered by a credit check.
Guarantor – A guarantor is a person named within the tenant agreement who will cover the rent if the tenant is unable to. It is a good idea to request that all tenants name a guarantor, even if they have good a good credit history, but particularly if you have any concerns after the credit check.
Have a late payment process in place – Proactively planning for tenants falling into arrears will help you to act quickly and efficiently if the problem does occur to prevent the debt from growing. Payment of rent should be kept a close eye on, with immediate, formal contact made in the event of a payment becoming overdue. Clear communication is key and regular contact should be made once rent goes overdue. Depending on the situation, a repayment plan may be put in place to help a tenant to catch up with payments and avoid court action.
As always, prevention is better than cure. Take the time to put a clear strategy and process in place for adequately screening new tenants to save yourself time, stress, and money later down the line.
For help recovering debt, speak to our team of experts here at Churchill Recovery Solutions by giving us a call on 0333 320 0748.