Times are tough for a growing number of people, with the cost of living, interest rate inflation and more all making it difficult to maintain the lifestyles we’d grown used to. People who were comfortable are now struggling, and those who were only just making ends meet are having to take considerable steps to stay afloat. For Landlords, this has created a situation in which even longstanding tenants might be starting to struggle to afford rent. With some landlords having to put up the rent in order to meet their own financial needs, the situation is one that more and more people may find themselves in.
Working with tenants who are struggling to make rent payments requires empathy, communication, and a willingness to find mutually beneficial solutions. As a Landlord, there are a few things you can do if your tenant is struggling to make rent that might not necessarily involve reducing the monthly rent and if matters do go further to the point of the tenant no longer being suitable, there are way to approach the end of the lease without creating any undue stress on either party. Here, we’ve put together a guide to help.
Make Sure Your Insurance Is Up To Date
In order to effectively work with your tenants, you need to ensure that you are protected against the eventuality that they can’t afford the rent. Rent guarantee insurance is an additional product to Landlord Insurance policies that offers you peace of mind and keeps you afloat when money isn’t coming in. If you are using the rent to pay off the mortgage or a mortgage elsewhere, losing even a month of rent can set you back and put you in trouble. Rent guarantee insurance ensures that you always have the money needed in these cases.
Talk to Your Tenant
Keeping communication open with your tenant is important at all times, particularly regarding rent and payments. In theory, your tenant will have contacted you ahead of the due date to discuss a potentially late payment, but in some cases, you may need to contact them if the due date is missed. Calling them or sending a text message to start with can open up a line of discussion about potential issues they may be facing and whether it’s likely to be a long-term problem. Having that discussion will put both parties in a much better position to work out the next steps.
Consider Repayment Plans
If the rent problem is likely to be a short-term issue, you could consider setting up a repayment plan for the missed funds. If your tenant has had a particularly difficult month and you can afford to do so, you could opt to spread the cost of that month’s rent over future payments to give them a better opportunity to improve their position and be able to pay back what is owed.
Contact The Guarantor
When renting out to a new tenant, you should always look into setting up a guarantor. This person should be there as a failsafe in cases where the tenant defaults on a payment. If you haven’t heard from your tenant after contacting them about the late payment, you can opt to contact the guarantor instead and explain the situation and let them know. They may be able to get the tenant to pay or offer the money.
Consider Your Own Situation
Rent is important, and while renting out a property is effectively a business, you should consider your own personal situation when debating which steps to take next. If you aren’t in desperate need of the money, having a repayment plan or other options in place for your tenant could help you both through the challenging period. If you are in need of the money, using your insurance or looking for more suitable tenants may be your only option. Maintaining communication and a fair approach will ensure that all parties remain safe and secure in the meantime.
Consider Possession Of The Property, But Keep Tenants In The Loop
If ultimately your tenant can no longer afford the payments and you aren’t getting your rent, it may be time to consider repossessing your property from them. If you haven’t received payment or contact within 21 days, a third follow-up should be sent before you take further action to reclaim the property. The letter should outline any intention to pursue legal action as well as the next steps that they can take in the meantime. Keeping tenants in the loop and ensuring that they remain informed throughout can help avoid tense situations or at least ensure that they have plenty of notice and time to find alternative arrangements.
For more information about renting to tenants and how rent guarantee insurance can protect you against missed payments and rent arrears, Ashburnham Insurance are on hand to help. Simply get in touch with us on 0800 1696137 to find out more.