4 Tips For Collecting Rent Payments And Managing Rent Arrears
One of the most important things to stay on top of when you’re renting out a HMO property in Cambridge, is rent collection. But unfortunately, this is something that I hear many landlords struggle with.
Multiple tenancies, differing rents, various payment dates… can make it tricky…
If your tenants aren’t paying up on time, one solution is of course eviction. But, while it’s one possible option, it should never be your first choice.
Why? It’s not just a heavy handed approach. The eviction process takes a lot of effort, time, and money to do correctly.
In fact, it takes around four months and costs around £900 to complete the process, and that’s before lost rental income and potentially delayed mortgage payments are considered.
With this in mind, it’s important to have the information about what to do if your residents are failing to pay promptly.
As experts in the field of HMO property management, we’ve brought together four tips for HMO landlords to help you collect rent payments and manage rent arrears successfully —
1. Starting Right
At Babouris, we know the importance of communication when it comes to managing an HMO property, especially when discussing rent payments.
It’s vital to clarify exactly when rent payments are due and to highlight late payment fees or any other consequences if they fail to meet their obligations. This will help avoid the problem of late payments due to not knowing when they were due.
Being clear about payment schedules helps residents to budget properly for their rental payments – they’ll know precisely how much they’ll be paying and on which dates.
My top tip:
When you draw up your tenancy agreements, ensure each tenant initials and dates each page of their contract. This then provides clear evidence that they have understood and read everything that the lease contains. Provide everybody with their own copy of their signed contract too.
2. Early Communication When Rent Payments Are Late
Act fast and talk to tenants about the reasons why their rent payments are late. You need to establish if they have insufficient funds to make payment? Or have they just forgotten the date that their rent payment is due? Once you have this information, you’ll be better prepared on how to help them.
You could discuss whether altering their payment method or date could help. In some cases, smaller payments made more frequently may be more manageable for your tenants. You could also consider asking them to set up a standing order or Direct Debit to reduce the chance of payments being overlooked.
My top tip:
Schedule rent payments for a frequency and date that meets the tenant’s needs. If a standing order or Direct Debit has been set up, there will no longer be concerns about remembering to make payments and there’ll be no need to chase up late payments.
3. Report Rent Payments To Credit Reference Agencies
Credit reference agencies now have a service that allows landlords to report their tenants’ rental payment statuses. This is a clear incentive to tenants to make rent payments on time and in full as they’ll probably be keen to maintain a clean credit score.
You’ll also be rewarding your tenants who regularly make timely payments since their credit score will improve, enabling them to gain better access to credit.
My top tip:
If tenants are late making their payments, tell them that you’re going to report their late payments to CRAs. That could help encourage them to make payments more rapidly in the future.
4. Offload Risk To A HMO Property Management Company
When you use the services of an HMO property management company like Babouris, you can enjoy all the benefits that come with a hands-off passive income arrangement.
We can handle rent collection from your tenants on your behalf, making it simpler and quicker for you to receive your payments into your account. We have access to a specialist legal services team for support on the process giving you total peace of mind.
My top tip: Get in touch with the Babouris HMO property management team today using hello@babouris.co.uk and find out more about how we can simplify the process of receiving rental payments.
Meet The Writer:
Alex Babouris is a HMO investor with more than 10 years of experience. He is the founder of Cambridge Property People – a community of local property professionals, investors and enthusiasts, and Alex is the founder and lettings director at Babouris – a specialist HMO property investment and management agency.