In an ideal world, renters pay their rent on time every month, and we all live in a happily-ever-after. Of course, not everything is ideal, and there may be some scenarios where renters are unable to keep up with rental payments on your buy-to-let investment.
This doesn’t automatically make them a lousy renter; unforeseen circumstances can arise, which are no fault of their own. However, it leaves both yourself and the renter in a tricky situation as you try and navigate a scenario which sees them unable to pay rent.
In this article, we’re bringing you the lowdown on what you should do if a renter hasn’t paid the rent. From opening a line of communication to safeguarding yourself against potential issues, read our tips for handling scenarios where renters default on the rent.
Communication is key
If you find that the renter hasn’t paid on the due date or a few days after, get in touch to remind them that the rent is overdue. A simple text message or quick call should be fine. If you don’t hear anything, follow up with a more formal email.
The renter may have forgotten to pay, and sending them a reminder is enough to solve the issue. If, however, they are having financial difficulties, opening a line of communication is the best way to move forward and ensure there is no bad blood between yourself and the renter.
If it turns out that the renter is having financial difficulties and is unable to pay rent, it can be troubling for both of you. They will be worried about a possible eviction, and you may have other financial commitments that rely on you receiving regular rental income.
No matter your situation, it’s best to remain calm. There may be a few steps that you can take to recover the rental income as quickly as possible while the renter remains in the property. These include:
Talk to the guarantor
Do they have a guarantor? If so, then you can get in touch with the person who guaranteed the rent on the renter’s behalf and inform them that they’re responsible for covering the rent. However, not all rental agreements have a guarantor, which means this option isn’t available for everyone.
Rent guarantee insurance
If your renter was professionally verified before the tenancy commended, and you signed up for rent guarantee insurance, you should be eligible to claim back the missing rent. Rent guarantee cover often pays out in the event that the renter can’t make rental payments, and usually covers landlords for up to £2,000 per month.
Set up a repayment plan
No guarantor and no rent guarantee insurance means that you won’t have any back-up options should your renter fall on hard times. It might be the case, then, that you need to set up a rental repayment plan which ensures they can pay back what they can afford. You can also make them aware of Universal Credit, which they could be eligible for.
When should you evict?
Evicting your renter with a Section 21 notice should be a last resort, and only happen if they have chosen to ignore all attempts of communication from your side. It’s important to remember that your rental property is their home, and eviction could leave them facing a much worse scenario.
Rules have also changed in the wake of Covid-19, as an increasing number of people face difficult financial situations. Possession orders are currently suspended until further notice. For information about current evictions, it’s worth looking at the official government website, which will update on the constantly changing rules
A happy outcome
It's vital that both you and the renter are open and honest when discussing potential rental payment issues. In most cases where the renter can’t pay the rent, continued dialogue between both parties will ensure a smooth outcome for all involved.