Dealing with late rental payments
In an ideal world, tenants would pay their rent on time. Unfortunately, this is not always the case, so how should you broach the issue of late payments with your tenants?
For the majority of property investors, rental income is relied upon to repay their loan on the property.
So when a tenant fails to pay their rent on time, the ramifications can be far greater than simply being out-of-pocket for a short period.
Conversations about money can be uncomfortable at the best of times, so if you’re managing your own property, late payments can put you in an awkward situation.
However, it’s critical to take the correct action immediately, otherwise, it sets a bad precedent and the tenant may believe that it’s okay to pay their rent late.
If you’ve engaged the services of a property manager, you won’t have to worry about the hassle of dealing with late payments, though, because the property manager will take care of this for you.
To help mitigate the risk of late rent, payment periods should be agreed upon with the tenant prior to signing a lease agreement – this information should also be included in the lease contract.
Tenants should also be encouraged to set up direct debit payments, so rent is automatically transferred to coincide with the due date.
It can be a good idea to have the transfer set up 2 or 3 days prior to the due date to take into consideration transfer delays between different banks.
If a tenant fails to pay their rent on time, it’s important not to jump to assumptions and conclude that they haven’t paid deliberately.
The tenant may have simply forgotten and needs reminding. Perhaps they’ve transferred the rent but there have been technical issues between banks.
Alternatively, the case could be much more serious and they may have been injured at work or lost their job. In these instances, it’s important to take a sensitive approach to the situation.
Of course, if a tenant continues to fail to pay their rent, there are a number of legal avenues to take.