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Dealing with late rent is one of the most common problems landlords face. What do you need to know and what mitigating steps you can take?
Written by
Ben Luxon
PUBLISHED ON
08
Nov
2022
Dealing with late rent is one of the most common problems landlords face. Late rent can happen for any number of reasons. It could simply be that the tenant forgot, or perhaps they were having financial difficulties at the time.
Because of this, rent arrears and late payments are almost unavoidable. If you’re dealing with late rent there are a few things you need to know.
Firstly, you have to remember that until such a time as you have either legally evicted the tenant or they have surrendered the tenancy, then the property is still their home and they still have their rights as tenants. As such, there is, as always, a proper/legal procedure that should be followed.
In this article, we take a look at key things you need to know and some of the steps you can take should a tenant be late with their rent.
A tenant being a day or two late with their rent payment is not an uncommon thing. And in the grand scheme of things, as long as they pay, whilst it can be stressful, it’s not really a problem.
However, a day or two is different to say a week or two or a month or two. So, how late is late and when should you as the landlord start getting worried?
Ultimately rent that is a little late is highly preferable to rent that never comes at all. So it’s important to differentiate between a late payment and missed payment, because how you treat these two is going to be different.
For a tenant that has stopped paying rent, you will need to go through the eviction process. If your tenant is simply late with the rent then there’s still plenty of time and opportunity to salvage the situation.
Generally speaking, the rent is late after 3-5 days. At which point you will want to reach out and send a rent reminder to ascertain why the rent is late and when they expect to be able to pay. As mentioned already it could simply be a case that the tenant forgot and this reminder will remedy the situation.
If the rent still continues to not be paid you will want to reach out again after 14 days to send a more official rent arrears reminder notice. Should it be any later, you may need to start thinking about either cutting your losses or preparing for an eviction.
There are a few things that landlords need to remember when dealing with and managing late rent payments.
Just because a tenant has not paid the rent does not mean that they have lost any statutory rights in regards to their occupation of the property. You can’t kick them out, you can’t cut the power off, you can’t accuse them of trespassing. You have to treat them as you would any regular paying tenant.
It may take some time for your tenants to catch up on their rent arrears. They may not ever be able to. The process is going to be even slower and more painful if you have to go through an eviction. As a landlord then you have to accept that it may take some time for you to see the money that you’re owed.
There is a good possibility that by the time you have actually gathered all of the rent that you are owed that you’ll be out of pocket in some shape or form.
You have to make a decision regarding how hard you’re going to chase and what channels you’re going to pursue. Because trying to squeeze money out of someone that allegedly doesn’t have could very well be a fruitless and costly endeavour.
It’s going to be a slow process claiming the rent arrears, it may incur additional costs, and you may not get it all in the end anyway. As a landlord, you need to ensure that you have budgeted and planned your finances to absorb this potential loss. This means having an emergency cash fund covering at least six months of property costs including mortgage payments etc.
If your tenant falls two months behind on the rent then you can begin the eviction process. You cannot start the process before two months. Two months is obviously a long time, and an eviction will take even longer – which is why having a solid contingency fund is so important.
You will need to have patience. In the meantime, make sure that you document all communications between yourself and your tenant and are prepared should the worst situation become reality.
If you do need to pursue an eviction make sure you understand the legal implications and ramifications and it is advisable to speak with and use an eviction specialist to ensure everything is done legally and efficiently.
If your tenant is late with the rent the first thing you need to do is to reach out and ask why the rent is late and when you can expect the payment. Often this is enough to settle matters and you won’t need to take things any further.
In order to expedite things, ask if there’s anything you can do to help so that you can work together to solve the issue. Finally, remember that it’s important to document and trace any and all communications that go on between you and your tenants.
This written reminder can take on a couple of different forms. The first can be done reasonably easily using a system like Landlord Studio. With Landlord Studio you can set up automated rent reminder emails to go out a number of days before the rent is due, and a number of days after the rent is due. This will help prevent late rent payments and by automating the process of chasing your tenant you’ll save yourself time and stress.
Should the tenant continue not to pay then you can send a rent arrears notice reminder. A rent arrears reminder notification is normally sent five days after the rent due date, and then follow this up with another 14 days after the rent due date.
Falling into arrears isn’t easy for tenants either. It can be incredibly stressful for them as they fear they might lose their home. And there could be any number of reasons why your tenant has missed their payment. Perhaps they had a large expense this month, they lost their job or recently had a child and times are tight.
Working with your tenant to find a solution that works for both parties is an effective and affordable way to pursue your late rent payments. For example, should your tenant miss one month of rent? Then to avoid overburdening them the following month by demanding two months of rent payments at once, you might suggest they pay that month in installments.
Alternatively, if they’re having financial difficulties and are unlikely to be able to continue affording the rent, you could allow your tenant to break the tenancy agreement so that they can find a more affordable rental and you can move in new paying tenants.
Prevention is the best policy when dealing with late rent. The best thing you can do then is to try and avoid a situation where late rent occurs. You can do this by having a very strict tenant referencing and tenant selection process. Additionally, you can ask for renters insurance policies, tenant guarantors, and even start tenants on shorter tenancies. These are all potential strategies for mitigating the risk of a tenant not paying the rent.
However, at the end of the day if your tenant can’t pay the rent, then you are going to have to ask them to leave. If they don’t leave willingly then you will need to pursue an eviction whether that is a section 8 or section 21. In most cases, simply serving the relevant notice is enough to show you are serious and they’ll pay what is owed and/or vacate the property, but not always.
Once you’ve served a notice, don’t communicate with the tenant unless it is essential or if they contacted you first. It is now a waiting game. It’s tough and extremely frustrating but the next stage is the actual eviction. In order to ensure that the eviction process is carried out as efficiently as possible and to the letter of the law landlords should engage the help and advice of a professional eviction service.
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