Apart from actually finding a tenant and agreeing the rent, the one headache about which many landlords are concerned is, “will the rent be paid – on time?” Many landlords have stretched themselves in order to purchase a buy-to-let investment and even one month’s rent in arrears can put strain on the finances as mortgage payments, insurance etc still have to be paid.
According to recent research by LSL, up to 7% of all rent is not paid on time, with 1.6% of tenants being in arrears of at least two months and some 67,000 households were struggling to pay their rent each month.
This seems so unnecessary when there are certain procedures that a good managing agent should have in place to ensure that a tenant always pays on time, not least the following:
- Extensive referencing at the outset including previous landlords’ references and formal credit check.
- Qualifying tenants by securing clarification of income and expenditure.
- Never compromise. Only let to fabulous tenants!
- Where a property is has more than one tenant, ensuring that every tenant is jointly and severally liable for payment of the rent. People don’t like to let their friends down!
- Guarantors in place, who have also be credit checked. A tenant is less likely to default if their arrears might be disclosed to their guarantors.
- Ongoing friendly communication with the tenants. A tenant is far less likely to default when they are on good terms with their landlord or managing agent.
- Nipping issues in the bud as soon as they occur. In our book, even one day late would be cause for concern!
- Ensuring that the property remains well maintained and that issues are addressed promptly. Happy tenants are the best payers.
It is the combination of all of the above that has been a fundamental part of our success and we are proud to report that our minimal arrears rate is a fraction of the national average, at just 0.03%.