What to do when your tenant can’t pay rent

13 04 2010

If you are a landlord for any significant amount of time there is probably a reasonable chance that sooner or later you will have some interaction with a tenant who can’t pay the rent for some reason or another. This is probably one of the biggest worries that people considering becoming a landlord for the first time have. However, it really doesn’t need to be a big worry. 9 times out of 10 these problems can be resolved without too larger cost or too much stress, and as long as you know how to handle a situation any financial ramifications can be kept to a minimum.

Preventing a non rent situation

The first thing to do is to take steps to prevent the situation from arising in the first place. There is no need to go out of your way, but a few simple rules of thumb can go a long way.

Get references for your tenants. This is a big bonus to using a property managment company to look after your let, a good letting agent will be familiar with the best referencing companies and will have the experience to make sure that your tenants have a good track record. Pick the right tenants and 99% of the time your rent will be secure.

Keep in touch with your tenants, you don’t need to go over to check up on them constantly, but giving them a call once in a while (not too often) will show them that you are approachable, if they like you, and feel they can talk to you, you are much more likely to learn of any problems before they happen. Again, a good letting agent should be able to check on the property periodically to make sure that everything is running smoothly on both sides.

Get insured against rent default. In case the worst happens, a good landlords insurance policy will cover lost rent. Try to not use it, if you claim too often your premiums will rise, but this is always nice to have in case all else fails. Again, a good property agent can help you to get a good comprehensive policy.

When things go wrong

Most times, rent problems are due to a temporary crisis, or something out of the tenants control. They may lose their job for instance, or have some other unexpected cash flow problem. This is where it pays to be approachable. Having a good relationship with your tenants will mean that they are more likely to let you know in advance that they are struggling, in which case you may be able to come to some arrangement.

Be understanding of your tenants problems. If they have come to you in advance, they are obviously aware of their problem and will be keen to resolve it. If they have come on genuine mis-fortune then it may be worth giving them some leeway, after all, eviction takes time, finding new tenants costs money, and having an empty property earns you nothing. Often taking half rent for a couple of months can ultimately save you a lot of problems. Half rent is better than no rent.

Of course, what you do will depend on how good a tenant you have. If they are respectful of your property and have previously paid rent on time, you may be more likely to help them through a crisis to keep them as tenants, and if you do they will probably remain loyal to you for a long time.

When things go really wrong

There are rare occasions when things go really wrong. Some tenants won’t let you know, they will wait for you to call them and they will then give you some excuse and delay even further.

Be pro-active and act quickly. There is no point in being soft in these cases, by all means give the tenant the opportunity to bring their rent up to date, but do not allow the rent to slip further behind.


The best advice is to attempt to communicate with the tenant. Resolve issues amicably if possible, but always be firm, problems rarely resolve themselves if ignored. And when problems happen, make it clear that if the problem can’t be resolved you will seek legal action. Often open communication makes all the difference, and if you have taken all of the preventative steps above, you are unlikely to have any serious problems.




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