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Managing Rent Arrears

2nd January 2014 Simon Holland

As a letting agent, one of our responsibilities is to collect rent from our tenants, and also manage the arrears when, for whatever reason, they don’t pay!

Dealing with people, whatever industry you work in, can be difficult and challenging, as ‘life happens’. People lose their jobs, fall ill and relationships breakdown. This is especially true in the lettings industry, when a change in a tenants circumstances can have a very negative impact on the cash flow of a landlord.

With this in mind, how these arrears are managed becomes important, as there are legal implications regarding what an agent, or landlord can do. For example, care must be taken not to harass a tenant, not to make threats to ‘send in the heavies’ or call them at work, leaving a message about the fact they haven’t paid their rent.

At Jacob’s Ladder, once a tenant is overdue on paying their rent, we usually send them a text message the day after it was due. The next day we would make a phone call and leave a message and if after 7 days they haven’t cleared their arrears, we would write them a letter and charge them a £15 fee for the privilege. In 9 out of 10 cases, the arrears have been cleared by this point, and it was usually an oversight, a short-term cash-flow issue or a bank holiday may have got in the way.

In my experience, trying to speak with tenants can be an effective and quick way to resolve the situation.

Usually, we would have spoken to the landlord within a couple of days of their account falling into arrears, to explain our process and that we are aware of the situation and doing what we can to resolve the matter as swiftly as possible. We understand landlords need their rent, as cash flow is vital to them also, so we always aim to bring accounts up to date as soon as possible, and importantly, we do not charge our monthly management fee until such a time as we have brought their account up to date!

We always keep accurate records of all correspondence and conversations with tenants during the managing of rent arrears, as these notes can prove vital should a landlord ever need to pursue the tenant through the court system at a later date.

Sometimes, there is a guarantor to fall back on, a family member or friend who signed up at the outset of the tenancy to pay the rent should the tenant fail to do so, and if this is the case, we would also write to the guarantor informing them of the situation and seeking payment.

Thankfully, we only encounter serious difficulties with rent payments occasionally, and usually following a major change in peoples circumstances. We always try and work with our tenants, understand their needs and assist them when possible. We aim to have settled, long-term tenants, which we believe is much better for our landlords as they have fewer void periods and the property is generally better maintained.

For a more in-depth chat about how we manage our tenancies, please call and speak to one of us on 01706 828229.