Payment of rent – isn’t this why we are landlords?

birds-nextWhen a tenant begins to look for a new home to rent (s)he will begin by choosing an area. (s)he  will work out how must (s)he can afford to pay, (s)he will choose the number of bedrooms needed, (s)he she will decide what style of property (s)he needs.

Therefore a landlord can assume that if a tenant is viewing a property (s)he can afford the rent and that the property meets most of the tenants criteria.

Setting the right rent levels:

Landlords often face long voids because they have set the rent at a level that will pay their overheads rather than setting the rent having checked the local letting market.  In the perfect world the rent will not only cover our costs but will give us a profit but this is not always the case and we need to be realistic.

An empty property is a liability and these days many people are letting a property simply because they cannot sell it in the current market.  The rental value of a property is only what tenants will pay and that is not always enough to cover all of the overheads.

Professional landlords will have done their homework before buying a property to let and the rent that they set will achieve a profit.  What are known as “accidental landlords “ will not have chosen to buy the property to let and therefore they must adjust their rental expectations according to the market.  Getting the rent right is key to getting the viewings and avoiding the voids.  Holding on for a higher rent is expensive and often produces tenants with high expectations.  High expectations are hard work and can result in the landlord being at the beck and call of the tenant who feels that they are paying over the market rent and therefore they have the right to more service from the landlord.

Protecting the rent with Essential or Complete Rent Protection

We cannot take the tenant’s ability to pay for granted, that is why we always conduct comprehensive reference checks and request a guarantor if necessary.

Even if they meet the income requirements, this doesn’t guarantee they will pay their rent. This is why we obtain a character reference from their previous landlord, as well as an employment reference and 6-year credit check.

LettingaProperty.com offers Reference Checks and Rent Protection in their Essential and Complete plans, which guarantees protected rent to landlords.

Defining the payment terms:

It is important that we state clearly in our Tenancy Agreement the amount of the rent, the dates that it is due and how it should be paid.

Some tenants will not use the landlords preferred method of payment but if the rent is paid in full and on time we cannot insist that that they pay by another method.  No Court will entertain a claim from a landlord who refused to accept rent that is offered just because it was not paid by the method described in the Tenancy Agreement but it is always worth including the preferred method because most tenants will comply.

If a tenant pays in cash on a weekly basis there is legislation in place that requires the landlord to provide a Rent Book.  The correct way to use a Rent Book is for both the landlord and the tenant to have a copy and for each to sign the others copy for every payment made.  This is known as a double receipt system.  While it is not a legal requirement for cash to be recorded in this way for any other frequency of payment it is a good method to use and will help if you have to take legal action against a defaulting tenant.

Keeping tenancy records:

Some landlords do not keep rent records but it is important to have a document of some kind that we can produce in evidence should we ever need to prove that rent is outstanding or if we need to ask a local authority to make the payment of housing benefits (LHA) directly to us as where a tenant is in 8 weeks rent arrears. A simple excel spread sheet or a series of bank statements, that clearly show the payments made, will do but without documentary evidence you may be faced with a tenants word against yours and that will not turn out well for a landlord.

If you get to the point that you need to repossess the property because the tenant is in arrears with the rent  you can to do this under Section 8 of the Housing Act 1988 (known as a Section 8 Notice). Providing that your Tenancy Agreement states that the rent is due monthly in advance, as all Tenancy Agreements should even where you make a private arrangement with the tenant to pay weekly or fortnightly, when the rent has not been paid for a second month on the first day of that month you will have 8 weeks contractual rent arrears and that is ground 8 of Section 8 (as above If your tenant is reliant on state benefits (LHA) to pay the rent  at this point you also have the required rent arrears to ask for the local authority to pay the rent directly to you under current legislation.

In my experience a change of circumstances like the loss of a job or a relationship breakdown can be the cause of rent arrears and your tenant may not want to tell you that (s)he is now on benefits.

A local authority cannot tell you either because of Data Protection but you can still give them a copy of the Tenancy Agreement and record of rent arrears and ask them for direct payment “if this tenant is claiming LHA”.  They will not be able to confirm or deny that the tenant is in receipt of benefit but if they are you can expect the local authority to communicate with you about your request for direct payment.

It is not uncommon for a tenant to ignore a landlord attempts to contact her/him if there is rent outstanding, no one likes to explain why they are short of money.

Making sure that we have as many contact methods as possible before the  tenancy begins is vital and sending a message via email is an accepted way of reminding a tenant that the rent is late while at the same time giving us a document to prove that the tenant was fully aware of the amount outstanding.

We need to keep copies of these reminders in case we need to take legal recovery action.  I have seen some reminders that verge on offensive and it is important to stick to the facts without making comments and to be polite, despite that fact that we are angry because the tenant has let us down.

Stick to the facts:

I was once asked to help a landlord with a really bad case of rent arrears that ran into many thousands of pounds.  This was a high end property and the amount of arrears grew very quickly.  It is a myth that professional tenants always pay their rent.  The landlord had been trying for several months to persuade the tenant to pay and had sent a series of emails to which the tenant had replied.  Without breaking the confidentiality of that case I can tell you that after reading the correspondence between them I felt the need to ask the landlord if she has been in a personal relationship with the tenant.

They addressed each other as “Sweetie” and “Honey” and part of the content was about their personal lives.  The landlord explained that she liked to remain friendly with her tenants to keep them on side. Our tenants are not our friends they are our customers and therefore polite and professional should be the tone of our correspondence.  Remember the saying familiarity breeds contempt – this is exactly what had happened in this case and the tenant was giving this landlord the run around.

It may be some time before people accept that landlords are in business to make money just like any other business, if we are not going to make a profit why would we invest in property?  While we are waiting for this acceptance we can do a lot to help by behaving in a professional manner and treating our tenants as we like to be treated when we are the customer, even when they are in the wrong.

Mary Latham, Landlord

Follow me @landlordtweets

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