What To Do When Rent Arrears Rears Its Ugly Head

Bullet-Proofing Your Assured Shorthold Tenancy

That time in my property investing career has finally come. I have had my first experience of rent arrears (never will I let this agent let my properties again). It’s such a headache, especially if you are like me and have no idea how to deal with it.

I knew I needed to act fast but had no clue what actions to take. What is a professional amount of pressure to apply to get the rent? How strict do I become when the tenants message me all day saying they thought the other tenants were sorting it out? What upper hand do us landlord’s have over tenants?

Thankfully I’ve found a solution!

Put admin charges in your AST

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Who has two thumbs and gets rent on time? THIS LANDLORD! Image Credit: Anthony Kelly

I was sick of having all these texts/WhatsApp messages from my tenants on a joint Assured Shorthold Tenancy (AST) who couldn’t figure out how to pay the rent from one bank account. It was a nightmare and ballache to deal with.

I don’t want to spend my day WhatsApping tenants who have no idea how to manage themselves. My friend Saj suggested I put a clause about admin charges in my ASTs. These admin charges will cover any texts, phone calls, letters issued due to rent being in arrears.

I had no idea how much I should charge for each. Then I remembered, this is my business. Within reason, I can charge whatever the heck I want and so can you.

This is the clause I added to my ASTs:

  • If rent arrears occur, the Tenant agrees to pay all admin charges and legal fees related to their rent arrears. Please see examples of charges attached.
Admin charges for rent arrears
Text/Whatsapp message£5
Phone call/Voicemail£10
Letter£20

The intention of this clause is more to discourage tenants from entering arrears than it is to make money. Highlight this clause when discussing the AST with prospective tenants.

Again this method is not designed to make money, it’s to ensure there is a large enough incentive for tenants to pay their rent on time. Allowing you to focus on the things in your life that really matter.

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Image credit: Wikipedia