#7: How to manage rent arrears

In this week's episode of Good Landlording, we discuss one of the most difficult aspects of our jobs as landlords, and that's handling rent arrears. Rent arrears are challenging, even if landlords use an agent. The essence of the agreement between a landlord and a tenant is that the landlord provides a well maintained and legally compliant property to live in. In return, the tenant pays rent. If tenants don't pay the rent when it's due, they are in what's called rent arrears. Private landlords run a business and need to be paid the same as any other business that doesn't receive government funding. Being a good landlord doesn't mean you're a charity and you need to provide the property free of charge. If we don't get paid, we can't pay our bills, and may end up going out of business. However, there's a lot landlords can do to help tenants who start to fall into rent arrears. Managing rent arrears is something that all landlords need to understand, so we can minimise the risk of rent arrears, and know what to do if our tenants fall behind with their rent. Richard Jackson and Suzanne Smith share practical tips to help landlords avoid rent arrears, what landlords should do if tenants do fall behind with their rent, and how to help tenants. We also go through options are for evicting tenants in rent arrears both now and if the Renters Reform Bill had come into force. Eviction should be the last resort for landlords, if everything else has failed. What we cover in this episode at a glancePractical tips for landlords to minimise the risk of rent arrearsWhat should landlords do if tenants are in rent arrears?Practical tips to help tenantsWhat is Breathing Space?Late payment processThe last resort: Evicting tenants because of rent arrearsUsing Section 21 Housing Act 1988Using Section 8 Housing Act 1988The new Mandatory Ground 8A in the Renters Reform BillGolden nuggetCredits >> Submit a question: Click here for question form Practical tips for landlords to minimise the risk of rent arrears Prevention is better than cure, and landlords should try to avoid tenants falling into arrears in the first place. Here are 7 practical tips to minimise the risk of rent arrears: Tenant selection. Choose tenants that can comfortably afford the rent. For more information, see Episode 1: What makes a good tenant? Choose the rent payment date carefully. When entering into a new tenancy agreement, ask the tenants when they would like to pay the rent. The best date is shortly after they are paid. You can pro-rate the first payment so that if they move in on the 15th of the month, but want to pay on the 25th of the month, they pay the extra amount in their first rent payment. After that, they'll go onto the new rent payment date. OpenRent have a facility to calculate and set this up automatically for you as part of their RentNow package. Standing order. Ask tenants to set up a standing order so they don't forget to pay the rent. You can tell if they have done this as the rent payment will come in overnight, rather than in the daytime. Track rent payments. It's important to keep track of whether tenants have paid the rent. You can check your own bank account on the payment days, or automate it with (say) Alphaletz. The Alphaletz platform can send the tenant a reminder that the rent is due, and send a chaser if the tenant doesn't pay the rent on the due date. Rent guarantee insurance. Richard recommends taking out rent guarantee insurance for the first year with new tenants. If they are good payers and are never late paying,