Protecting yourself against Rent Arrears – There has been a lot of concern recently from landlords and political figures over the amount of people in the UK who are in danger of falling into rent arrears. Already there have been reports that the number of people who have missed two or more rent payments has increased by a substantial amount in the first quarter of this year alone, so what do you do if you are concerned about your tenants falling into rent arrears?
Keep your Ear to the Ground
The best way to keep your business safe is to try and make sure you understand the rental market and what difficulties may be coming your way in the next couple of months. For instance, the welfare reforms were mentioned in the press almost six months before they came into effect, and clever landlords started doing their research on how the reforms would change their business then. You should also try and keep up to date with what is happening with your tenants as much as possible, especially if you are worried that they are facing financial difficulties. Preparation is a great way to protect your business and make sure you don’t get hit by any nasty surprises.
Don’t Panic
If one of your tenants misses a rent payment the most important thing to do is not panic or make any rash decisions. Obviously, a missed rent payment will affect your income, however if your landlord insurance policy comes with rent protection then you will be able to claim the money. After your tenant has missed a payment it would be a good idea to arrange a visit so that you can discuss their situation and create a payment plan so that you can recover the money that you are owed. This may take a while but if your tenant is going through a hard time they may only be able to afford a reduced amount of rent each month, and some money is better than none!
Make a Decision
Unfortunately, as a landlord you can’t constantly help your tenants and eventually you will have to say enough is enough. Decide now what your cut off point will be and stick to it no matter what! For example, you could decide that if your tenant misses three months’ rent payments then you will have to issue them with a notice to evict your property. This may be tough but at the end of the day you need to do what is best for your business, otherwise it will be you missing payments to the banks!
The problem of rent arrears needs to be dealt with head on, otherwise it could catch you by surprise and have negative consequences for your business. Talk to your tenants, keep an eye on the industry and have a plan and you should be able to deal with any future problems.