As research reveals that the number of tenants seeking help with rent arrears, affordable property developer FreshStart Living reveal 10 steps for landlords and buy to let property investors to take to lower the risks involved with late rental payment.
Debt charity, the Consumer Credit Counselling Service recently revealed that more than 10,000 people asked the charity for help with rent arrears in 2011 – a 27% increase on 2010.
According to a recent buy to let index, in March 8.7% of all rent was late or unpaid and an average of 94,400 tenants were more than 2 months behind with their rent payments.
Affordable property developer FreshStart Living is urging landlords and buy to let property investors to take actions to minimise the risks to avoid the problems that late rental payments can cause.
FreshStart Living has compiled a list of ten steps for landlords and buy to let investors to take in order to lower the risk of having to take legal action against tenants.
1. Keep on track of tenants’ financial situations – If they have a habit of missing payments, ensure that your arrange a date each month when they are guaranteed to have the money ready. This could be the day after pay day.
2. Chasing the rent arrears – Establish a firm rent chasing timetable including letters before legal action, telephone scripts, serving notices etc, and make sure that that all staff are aware of these procedures.
3. Get the right tenant – Work with a good tenant referencing partner and don’t cut corners in the checking procedures.
4. Is the Tenancy Deposit correctly placed? The changes in legislation under the Localism Bill took effect in April, and we have heard of solicitors acting for tenants on a no win-no fee basis to catch out landlords and agents if they haven’t complied with the regulations.
5. Guarantors agreements – Buy to let investors need to ensure that they maintain up-to-date contact details for Guarantors so that they can copy them in on all correspondence you send to the tenants regarding their late/overdue rent. This helps apply additional pressure to the tenants to pay.
6. Is your procedure for serving Section 21 notices compliant? Last year it was reported that 70 per cent of notices were thrown out of court because they were wrong. More landlords are relying on the accelerated procedure to regain possession. If the notices are incorrectly served, there will be delays and additional costs that the landlord may seek to recoup from their agent.
7. Make sure tenants know the landlord – Tell them if there are any mortgage or other outgoings at the start of the tenancy and your attitude to risk if the tenant was to default. It takes approximately eight weeks from a possession claim being issued to an order being made – as a landlord can you afford this situation? A Legal Expenses and Rent insurance policy from a specialist supplier may be the solution.
8. Know your tenant – landlords should maintain contact with the tenant, to establish why the rent is late or unpaid. It will improve the landlords chances of a successful outcome.
9. Making an insurance claim – contact the insurers at the earliest opportunity and follow their claims procedures.
10. Keep a record of all payments, transactions and missed payments – If a case does go to court landlords will need to have all the paperwork to prove that rental payments are not being made, or if they are not being made on time. This will act as vital evidence in your case against a tenant.
FreshStart Living specialise in developing affordable residential and student properties in the UK which are sold on as buy-to-let property investments to investors all over the world.
The company offers property investment opportunities starting at just £29,950 with guaranteed rental yields for up to ten years.