Managing Rent Arrears

Latest Landlord News by: Colin Campbell

A Mancunian song-smith wrote during the 1980’s “money too tight to mention”, and at no other time of the year is a lack of funds more keenly felt than at Christmas. With the spending review affecting employment levels, the rising cost of fuel and heating, compounded by inflation, arctic temperatures and the added expense of the festive period Britain is in the maelstrom a ‘perfect storm’ of debt.

People up and down the country are finding it harder than George Osborne to balance their budgets. The ‘cash crunch’ will have a knock-on effect for the private rental sector and landlords are fearful that they may become victims of rent arrears.

Changes to the Local Housing Allowance (LHA) will create a financial squeeze on tenants who rely on this support many of whom will be unable to sustain their current tenancy agreements. Rent arrears are a problem that landlords face year in and year out and they are advised to seek professional assistance rather than take matters into their own hands. Recent statistics show that in London the average amount for rent arrears when serving notice is £2350. Tenants who default over the Christmas period take on average nine months to make up the shortfall. The majority of tenants who are correctly served notice of legal action arrange to clear the arrears within three months, but those in arrears during the early period of their tenancy are often found to be in arrears for at least two months during the lifetime of their rental period.

The last point with regard to tenants who default early in a rental agreement is most pertinent. Landlords are advised to have a zero-tolerance attitude to rent arrears because it is your money after all and prevention is better than what can be lengthy and expensive legal procedures.

It is important for landlords in the private rental sector to seek out the best advice and support that is available. Legal 4 Landlords offer schemes, which can help with the referencing of tenants, simplifying the collection of rent with safe and secure transactions and if the worst should happen provide quick and efficient legal services.

They offer their Rental Payment Scheme which once you have completed the Tenant References online, they submit that information to Cardone banking who will set-up an instant bank account for the tenant. This scheme was set-up for LHA tenants primarily, but has been very successful not only for LHA tenants but for standard tenants. By helping tenants manage their money and therefore helping landlords keep track on rental payments Legal 4Landlords can help avoid the problem of ‘holding back the rent’.