Delayed rent payments can be a major hindrance for landlords.
Continuously following up with a tenant for payment is unpleasant and can put immense financial strain on you, the property owner, especially if you’re using the rental income to pay off the mortgage.
On the other hand, landlords and RMC directors still need to be empathetic and compassionate towards a tenant who might be struggling financially due to an unforeseen situation, such as job loss or illness.
In this article, we’ll look at some of the top strategies property owners can adopt to effectively deal with delayed late rent payments.
1. Clear Communication
Clear communication is often the first step in ensuring your tenant pays their rent on time. It’s important that you and your tenant discuss the due date for rent, tenancy fees, rent amount, and late fees even before you agree to rent out your property. When you’re screening potential tenants and showing the property, inform them of the terms and conditions before they sign on the dotted line.
You should also clearly mention the details in the rental agreement. That way, if (in a worst-case scenario), you do have to take legal action, you have a written record.
If your tenant consistently pays their rent late, contact them and arrange to have an honest conversation. Make sure your tone is neutral and non-accusatory—you never know what situation they might be in.
By maintaining open and regular communication, you can avoid delayed rent payments and reach a mutually agreeable solution in the case of an unforeseen situation.
2. Charging Late Fees
It’s important to give your tenants the benefit of the doubt once in a while, but if late payment becomes a common occurrence, you should charge late fees. This can act as a deterrent and incite your tenants to pay their rent on time.
Property owners should note that a late payment clause must be included in the rental agreement and highlighted to the tenant at the start of the tenancy period.
According to the law, the fee for late rent payment in the UK can’t be more than 3% APR above the Bank of England base rate. The late charges can also only be levied 14 days after the due date has passed. So, if the due date is the 1st of every month, you can only charge the late fee after the 15th of the month, and not if it’s paid on the 10th.
3. Maintaining Record
Whether you need to charge a late fee for rent payment or take the tenant to court for eviction, it’s important to have proper records and documentation of every interaction. Maintain a record of your rental income, including any late rent fees that might have been charged.
Ensure you have a written record of every communication with your tenant regarding rental payments on paper. So, instead of calling for a late rent payment notice, you can send your tenant an email, letter, or even a text message. This way, you’ll have documentation notifying your tenant of delayed rent payments.
Make sure that every clause regarding rent payment is clearly mentioned in the tenancy agreement. If you need to seek legal recourse, this will come in handy.
4. Offer Payment Plans
One of the best ways to deal with late rent payment in the UK is by offering flexible payment options to tenants who might be struggling financially and finding it difficult to pay the rent on time. You can create payment plans based on individual circumstances and shouldn’t make them the norm.
Some payment plans that landlords can use, which will help them be considerate towards their renter without hampering their own finances, include:
- Allowing the tenant to pay the overdue rent over a couple of months
- Taking the rent in bi-monthly or weekly instalments instead of monthly
- Offering a certain degree of flexibility in terms of rent due date
It is important to note that any alternative payment method must be mutually agreeable and properly documented to avoid misunderstandings in the future.
5. Legal Remedies
The rental sector and landlord-tenant relationships in the UK are governed by several legal frameworks, including the Housing Act 1988 and the Landlord and Tenant Act 1985. These laws state the legal resources that landlords have at their disposal to address delayed rent payments, and how to recover the amount.
The first step in seeking legal remedy towards rent arrears is to start with a formal communication, which can be a phone call or an email (remember our comments about written communication being better) inquiring about the delay in the rent payment. Make a note to keep a paper trail.
If the tenant doesn’t pay the rent despite repeated reminders, property owners can issue a late rent payment notice. Under the UK law, the late rent payment notice must include the following information:
- Amount of unpaid rent (including any late fee)
- The due date for rent payment
- Terms of rent payment in the tenancy agreement
As a landlord, if two months or eight weeks have passed since the last rent payment, you can serve the Section 8 notice under the Housing Act 1988. This notice will allow you to seek possession of the property and is grounds for eviction due to non-payment of rent.
If you can’t reach an outcome from negotiations with the tenant, you can apply for court-ordered possession if the tenant doesn’t vacate the property despite being issued the Section 8 notice. You should seek advice from an advocate before applying for legal remedies.
6. Eviction
Even after offering payment plans and issuing legal notices under Section 8 and Section 21, if you still find the tenant hasn’t cleared the rent or vacated your property, you can apply for an eviction order.
Remember that this should be the last resort. Eviction procedures are extremely lengthy and can be both costly and emotionally draining. If you wrongfully try to evict a tenant, you may land in more trouble than before. This can include tenants pressing criminal charges against you or even filing for compensation. Speaking with an advocate is very important, so you understand your rights as a landlord and how best to tackle the situation.
Contact Habitare for Assistance in Collecting Service Charges
As an RMC director or landlord, if you struggle with delayed rent payments and collection of service charges, you’ll benefit from working with a specialised agency such as Habitare. At Habitare, we offer a complete range of property management services, including regular property upkeep, secretarial services, recordkeeping, and communication with residents.
Our in-house financial team can manage your apartment block’s financials to ensure transparency in all matters, including rent collection and tax payments.
Contact us today to learn more about our services.