Rent Arrears – Minimise Your Risk

A recent report by Templeton LPA (part of LSL Property Services) has revealed that during the fourth quarter of 2012, there were 16,000 fewer tenants in severe rent arrears of over two months, compared with the previous quarter. During the preceding four quarters severe arrears had increased by an average 10.8% per quarter so clearly this is welcome news for landlords.

But evictions are still a serious issue and the same report reveals that court orders are up 5.5%. So while the overall trend is positive it highlights the need to ensure strict credit control procedures to minimise the risk of serious rent arrears.

Taking Steps to Ensure Payment
The first step is to have your tenant referenced initially, but in these uncertain economic times, a person’s circumstances can change very quickly – so you need to act swiftly to keep on top of the situation.

We begin by sending tenants a reminder letter even before the rent is due and we follow this with regular phone calls, emails and text messages, together with a formal letter every seven days.

A Professional Approach
We take the issue very seriously so we’ve just recruited a former police sergeant to help us deal with rent arrears problems. With 30 years’ experience in the Metropolitan Police, he is experienced in dealing professionally and authoritatively with difficult situations.

He visits tenants in arrears after 18 days to discuss the problem and try to reach an agreement regarding payment – then again after 25 days if the arrears are still unpaid. His police background and training are a huge asset and so far he is proving very successful in reaching a resolution with tenants in difficulty. Often, tenants are in a difficult financial position and simply don’t realise the effect non-payment has on the landlord.

It’s a significant step in resolving this thorny issue and really shows our landlords how seriously we take the problem of rent arrears. If you need any advice on this subject please feel free to post a comment here.