As a property manager, it is your responsibility to prevent rent debt and ensure your tenants can comfortably afford to rent the property. If you fail to do so, this could result in complications. So, how can you reduce the risk of rent arrears?

Keep reading for our top tips on how to adopt stricter tenant approval processes to reduce the risk of rent arrears.

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Top Tips For Reducing The Risk Of Rent Arrears

Here are some preventative measures you can take to ensure your tenants can pay their rent on time and in the total amount.

Keeping Better Track Of Your Tenant’s Payments Using Property Management Software

Property management tools provide an excellent solution, allowing you to keep track of your tenant’s payments and quickly view any outstanding fees. With property management software, you can set up an online payment system for your tenants.

Not only will tenants be able to pay more quickly, but they will also be able to view their balance for any payments they have made in advance. Having all renter payment information visible on a user-friendly interface lets you be hyper-aware of which renters have paid and better manage deferrals. Tenants will receive recurring alerts for rent and fee postings to ensure that reminders aren’t part of your already extensive list of responsibilities.

If you have an easier way to manage and keep track of your tenant’s payments, this will be an essential step in reducing the risk of rent arrears.

Improving Communication

To avoid miscommunications and lost messages resulting in rent arrears, you need to centralise your communication methods with tenants.

If you choose to adopt property management software, this can help ensure that all tenant queries and issues are dealt with quickly. If a tenant has problems with making a payment, they need a way to contact you to make arrangements quickly.

You will improve communications and avoid rent arrears caused by poor communication by centralising communications.

Setting Up Stricter Tenant Approval Guidelines

If you want to ensure that your tenants can keep up with rent payments once they have signed the lease and moved into your property, you need some assurances. Some ways you can gain confirmation of your tenant’s ability to afford rent, you can implement these strategies:

Guarantors
A guarantor is an elected family member or friend of the tenant that has agreed to pay the rent should the tenant defer. A guarantor arrangement involves the guarantor submitting their financial information to ensure that they can provide payment and ensure that your tenants do not falter in making their rent payments.

References
References provide a great way to determine your tenants’ reliability for making payments on time. Suppose your tenants are required to provide one or more references from previous landlords. In that case, this will give you a good indication of their likelihood of keeping up with payments and keeping the property in good working order.

Encouraging Tenants To Pay In Advance Or Set Up Standing Orders

If you encourage your tenants to pay their rent months in advance, this will unburden them from the ordeal of remembering to make their payments every month. Or, you might consider asking your tenants to set up a standing order, meaning that the rent payments are automatically transferred from their bank account.

A huge portion of rent deferrals are brought on by tenants failing to remember to make their payments. By implementing these strategies, your tenants’ payments will be on time, and they won’t forget.

What Happens If A Tenant Can’t Make A Payment?

If a tenant can’t make a payment, you could be held liable for mortgage repayments without the cash to pay it. If your tenant defers a payment, you should open the lines of communication to find out why and see if you can resolve the matter. If your tenant doesn’t have the funds, you may wish to settle the case with an arrangement, or you may want to take steps towards evicting the tenant.

If it comes to this, you could have some difficulty getting the tenant to vacate the property. This is why it is crucial to take all the steps possible to ensure that your tenants, or their guarantor, will cover the rent.

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Summary

By creating an organised property management system, you can lower the risk of rent arrears. To achieve this, you must have a robust tenant approval policy and have open lines of communication with your tenants. By installing property management software, you can improve communication with tenants and keep better track of rental payments to identify late payments and resolve the issue as soon as possible.

See details of our Guaranteed Rent Scheme here