How a lettings agency manages rent arrears

How a Lettings Agency manages rent arrears

Any professional Lettings Agent in Southend needs a reliable system to identify when rent is overdue on the properties it is managing. Small agents may be able to work with a paper based system but once an agency has numerous properties to oversee, an electronic tracking system is a must. In order to be efficient and therefore cost effective, a lettings agency must be able to identify who is in arrears easily and quickly.

At Pace, we have a robust, organised system which works well. Each morning the accounts team post all rents collected the previous day on to a computerised system. We currently collect rents by standing order, online card payment via our website or by telephone. Occasionally, when a tenant has no other option, we will accept cash in person at our office. Once all rents for the following day are processed, our computer system identifies which accounts are overdue.

At Pace, we believe rent collection is an integral part of what we do as a professional Southend lettings agent. That’s why we have a highly trained property manager specialising in rent collection who checks overdue rents each day. Part of this role includes telephoning all tenants identified as having not made a payment to investigate why rent owed has not been received.

If we cannot immediately make contact with tenants, we try other methods of communication such as text messaging, email or letter. We keep trying to contact people on a daily basis until we have an answer or need to escalate the situation further. Throughout this process, we communicate with the landlord to ensure they are aware of what is happening.

After a few days, depending on the rent history, knowledge of the tenant and amounts involved, if we’ve still been unable to reach the tenant we change the tone and content of our letters to be more formal and demanding. We may also visit the property at this stage, or send a letter stating we intend to visit the property in 48 hours for an inspection and must be allowed entry to the rental property in Southend.

However we must say it is unusual not to reach a tenant. It’s more common that we do manage to speak and they explain the reasons for late rent payment. At this stage, we ask as many questions as possible to identify whether they are telling the truth. Many of the untruths we hear are similar – a favourite is a tenant being a victim of internet banking fraud but they rarely seem to have bank statements to prove it…!

We try and build a rapport with the tenant at this stage to identify what they can afford to pay. Depending on their income and previous payment history, the landlord may be understanding and allow a payment plan to catch up on monies owed. Alternatively, we may recommend, or our landlords may insist, the outstanding sum is paid immediately.

Should a tenant refuse to pay, we will continue with regular contact and letters explaining they will lose their property in Southend. At the point where rent is 2 months in arrears, we do have the right to serve a notice under Section 8 of the 1988 Housing Act. This notice is used in England & Wales by landlords to gain possession of a property that is let under a short hold tenancy where there are rent arrears of at least two months or more (or eight weeks for a weekly tenancy).

A section 8 notice is different from the more common section 21 notice to quit in that it is served on the tenant by a landlord wishing to regain possession of a property during the fixed term of an Assured Shorthold Tenancy (AST). A section 21 notice can only be used for regaining possession at the end of a tenancy agreement.

We would strongly recommend against going to court on such a notice even if there were a long history of payment problems. Taking the legal route can be expensive, time-consuming and stressful. A reputable managing agent will work for its clients, and with the tenants, to resolve the issue of unpaid rent: Saving landlords the cost and inconvenience of court action and the inevitable loss of rent and void period after the tenant has been evicted.

Next time, what happens once you serve a Section 8 notice.

We are happy to offer half an hour of face-to-face advice to local landlords in difficult situations free of charge. Please telephone and ask to speak to Martin, Marcus or Crystal.