How to Handle Late Rent Payments as a Landlord | ATP Ep. 25

 How to Handle Late Rent Payments as a Landlord | ATP Ep. 25

Late rent rarely starts with a big dramatic moment. It starts small: a day here, a week there, and before you know it, it's a pattern. In this episode of All Things Property, Simon Bacon and Ian Sadler break down what landlords should actually do when rent payments start slipping.

What You'll Learn: 

• How rent dates are set and when they can be changed 

• The difference between consistently late and worryingly late 

• When to communicate and when to escalate 

• Why documentation is the most important thing you can do 

• How Section 8 persistent late payment works in practice 

• Why tenant referencing is your first line of defence 

• The real cost of court proceedings (12-month waits and £5k minimum)

Key Topics Covered: Setting the Rent Date - Your tenancy agreement locks in the payment date. Changing it is feasible but needs to be formalised in writing, and it does not change the tenancy anniversary date.

Communication vs Escalation - The process always starts with a phone call. Early action and honest conversation prevent most problems from becoming serious.

The Paper Trail - Documentation is everything. Without it, you leave yourself exposed if things do escalate to legal proceedings.

Section 8 Persistent Late Payment - On paper it's a useful tool, but in practice a judge is unlikely to grant possession where rent is paid consistently, even if a few days late. It's designed for escalating, unpredictable patterns of non-payment.

Referencing and Prevention - Do not take shortcuts with tenant referencing. Agents who cut corners risk professional negligence claims, and landlords risk months of problems that could have been avoided.

The Bottom Line: Most rent problems are preventable. Clear expectations, early action and good communication make all the difference. If you're dealing with late rent or want to know how to handle it before it becomes an issue, this episode is for you.

Chapters

00:00 Changing rent payment dates

05:16 Handling late payments communication

06:49 Handling late rent payments

10:38 Handling late rent payments

13:53 Handling tenant communication issues

17:11 Importance of following admin processes

19:36 Preventing rent payment issues

Got questions about rent payments or arrears? Get in touch with Preferential Properties for friendly, no-nonsense advice.

#PropertyManagement #Landlords #LateRent #RentalProperty #UKProperty #AllThingsProperty #LettingAgents #PropertyAdvice #RentArrears #TenantManagement #Section8 #PropertyInvesting

______________________________

Get in touch with Simon for all your property needs. 
www.prefprop.com

E: simon@prefprop.com

T: 0121 2402244

Transcript

SPEAKER_00 0:00

Today we're going to be talking about rent payment problems explained. Late rent, due date and what you can do. Welcome to the All Things Property Podcast with me, Simon Bacon of Preference Properties. Every week, Ian Sadler and I will delve into All Things Property. We'll guide you through with friendly, no nonsense advice. Welcome to the All Things Property Podcast with me, Simon Bacon. And me, Ian Sadler. So now late rent isn't usually a big dramatic moment. It starts small, a day here, a week there, and before you know it, it's a pattern. So let's talk rent theme. Setting the rent date, why it matters more than landlord's thing. Talk to me about setting rent dates.

SPEAKER_01 0:46

Well, your initial rent date is stated in tenants agreement. So if it's due on the if you start your tense on the second and you pay your first month's rent in advance, then it's due on the second of the following months and monthly thereafter. On occasion, tenants uh request a change of payment date, which is understandable. For example, if you start your tense on the 15th, a lot of people don't get paid until the last day of the month or the first day of the month. So to change that date is feasible, not advisable, but feasible, just by charging perhaps the um the rent from the 15th to the end of the month, and then monthly by standing on the first of each month thereafter. What I would suggest is that you get this put uh in writing so that you've got a record of it.

SPEAKER_00 1:31

Yeah, it has to be it has to be formalised, but um why why would why would you agree to that? Does the landlord have to agree to that?

SPEAKER_01 1:40

Under the terms of tenancy, no, but I think it's kind of live and let live and try and solve a problem, really. If it's a genuine causing genuine hardship, then you should look at trying to do it.

SPEAKER_00 1:52

Wouldn't the trying to be doing that to say at the beginning of a tenancy? Yeah. Well people have been able to change jobs in tenancy, haven't they? So that happens. Yeah.

SPEAKER_01 2:03

I think you you you deal with the situations that arises, each case is different.

SPEAKER_00 2:09

I think one of the issues though is that you know a a lot of you know what I've heard is that landlords will often charge six weeks' rent for so you you change a you pay your rent on the 15th normally and the tenant says, Oh, can I change my pay date to the first of the month? Then often they'll the landlords will make them pay the two weeks up to the first of the month, and then I'm not sure you can do that, Simon. You can't. You're right, you can't. The other thing is if they change their pay date, does that change the anniversary date of the tenancy anniversary date of the tenancy?

SPEAKER_01 2:45

That's stuck fast in law from a possession perspective?

SPEAKER_00 2:52

Yeah. And again, I've I've had instances where tenants have changed their pay dates and then assume that because their pay date has changed, that actually that's changed their notice date, so that when they give notice, it's it's pay my rent on that day.

SPEAKER_01 3:07

So it's a clear area, it's a clear area, but people's understanding of notice dates and notice needed is um it's a lot clearer with the renters' rights act now. But so just devil's advocate here. So you've got a tenant and he his rented due on the 15th of every month, and it regularly comes in on the 16th or 17th of every month. What would you do about that?

SPEAKER_00 3:31

I think well the first thing I would do is is write to them or give them a call to say, look, your rent is due on the 15th. We always encourage tenants to set standing orders up so they can forget about it. I know they don't, I know that lots of tenants don't do that, but that's what again the the tenancy agreement does stipulate. So going back to your question, if they're if they start paying their rent a couple of days beyond the date it's due, you've got to have that phone call with them, you've got to have that contact with them and say, you know, why why is your rent not being paid on on the 15th? You have to do that.

SPEAKER_01 4:12

No, I get that, but then when you have that conversation with them, you take a view, is it genuine? It's being paid regularly for 12 months now, two days after due date. Would you you wouldn't get snippy about that, would you? You wouldn't have to I wouldn't get snippy about it at all.

SPEAKER_00 4:26

What does snippy mean by the way? Well, you should know that one. Really? I don't think so. So anyway, so no, if they're if they're consistent with so what's the difference then between consistently late and so you'd say I think if it was consistently late one or two days, and I had had a conversation with a tenant and I was happy that it was genuine, then I would let it have it on file and have the conversation noted, but I I wouldn't take any action.

SPEAKER_01 5:00

If it's it's a lot of it's got instinct. If you've got a tenant who's who's paying late and it's varied from one week to four days to seven days to ten days, and you something tells you it could lead to bigger problems, then I think you need to do things strictly by the book.

SPEAKER_00 5:16

Yeah, I would say under section eight, persistent late payment, you know, the where the date changes. If someone's due date is the 15th, they always pay it on the 17th, then I think like you, I would probably go, Well, it's consistent. I might say to them, Look, is there a reason why you're paying it on the 17th, not the 15th? They may just go, well, sorry, I just that's how I set it up. But if someone is paying on the 18th one month, and the 16th the next, and the 20th uh month after, you do have to, you know, nip nip that in the bud. And I would always say it's that first mispayment. The first payment that is not prompts a discussion needs to, you know, prompt the discussion. Early action, communication are absolutely essential. Um, so what's the difference then between communication and escalation?

SPEAKER_01 6:13

Well, the process starts with communication, the communication process starts with a phone call, probably possibly followed up by an email. And then based on the reaction you get and the gut feeling you get for the situation, you can decide whether to escalate it, whether you ask the landlord what they want to do. I think keep keeping the landlord in the loop is important. Um late payments for by tenants can affect landlords' mortgage payments. So, yeah, once again, it's all about communication.

SPEAKER_00 6:49

It's very we talk so very much about documentation, isn't it? Is that you know you might notice if you don't tackle it straight off, because you know, there will be lots of landlords who go, well, it's fine, you know, he pays his rent three or four days afterwards, and then maybe you know, you're expecting it on the fourth day, and it comes in perhaps a couple of days after that. It's very easy to let things slide and then you suddenly have a problem. So, what would your advice be to any landlord who's you know got a tenant who perhaps their rent isn't uh paid on a certain day each month? Stay on top of the situation, communicate with them and document it. It's a documentation. The paper trail is crucial. Yeah, it's the documentation that is the most important, and that really is a common theme of probably a whole host of podcasts that we have done or are going to do in the future. That you know, without the right documentation and without keeping on top of things, you will get yourselves into difficulties, you know. So arrears chasing, rent monitoring, you know, all crucial parts of the the actual tenancy uh tenancy process. So how do you deal with persistent late payers? So someone who consistently is is not paying, what would you do about it?

SPEAKER_01 8:20

It's so difficult, isn't it? I mean you can only th threaten so much, you can only escalate so much before you face the expensive prospect of legal proceedings, which you need to avoid at all costs.

SPEAKER_00 8:32

But surely the introduction of section eight persistent late payment is a good thing, isn't it?

SPEAKER_01 8:39

On paper, yes, but that's how it works in practice. For example, your tenant is throughout his tenancy, life for his tenancy is five days late every month, but pays the rent religiously. Section eight for consistent persistent late payment will never get approved by a judge on that basis.

SPEAKER_00 8:58

No, no, no, I don't think it's meant to, but surely it is meant to, where the the the pattern of the late payment is not the same. So if they're always paying five days late, is that persistent? A week here, two weeks late payment. Someone who pays it five days late and then it stretches to two weeks late and then it's a week late, that is persistent late payment, isn't it? Isn't that what the the Section 8 notice is meant to do?

SPEAKER_01 9:25

Is it kind of is that if it's but if it's paid regularly but intermittently, seven days here, ten days there, four days next month, is a landlord realistically want to serve Section 8 notice? What does that tell you though?

SPEAKER_00 9:40

It's like if you pay, I I don't know, I don't know if you have a mortgage, but or a higher purchase agreement on a car or a PCP plan or your you know electricity bill or your credit card statement, there's a s there's a date for paying that, isn't there? And you have to pay that. You can't go, oh, I think I'll pay my credit card in a week's time.

SPEAKER_01 10:02

Paying a utility bill is not the same as having a tenancy. Somebody's got possession of your property, they're living in your property, yeah, and the rules and regulations around that and the potential pitfalls that you can fall into.

SPEAKER_00 10:17

What are you saying?

SPEAKER_01 10:18

That rent as long as they pay their utility bills.

SPEAKER_00 10:22

They don't have to pay their rent on the bill.

SPEAKER_01 10:23

If you try running a rigid system then and see how that works out.

SPEAKER_00 10:29

Well I think, but isn't that what we're saying to landlords is that you have got to be a bit.

SPEAKER_01 10:33

You've got to interpret circumstances sometimes. Maybe you and I are different in that respect.

SPEAKER_00 10:38

Well, I don't think you it's about you and I being different. I think from a landlord's perspective, so how would how would you then, you're a letting agent, how would you deal with a landlord who says, My mortgage comes out on the 20th of each month, and if I haven't received my rent payment by then, I'm effectively having to cover that mortgage payment myself. The rent is due on the 10th, that's fine. Plenty of scope there for the landlord to have their rent by the 20th. So you suddenly find that the rent's five days late, but you haven't have you monitored that and gone, oh, that's five days late, I'm going to give them a call. Or they always pay it five days late, so I'm not going to chase them. Don't be facetious. I'm not, but what what are you saying?

SPEAKER_01 11:28

I'm saying is that you you need to your system and my system instantly says when a rent is due. You can check your rent rate at any point by a click of a button. So you have finger on the balls all the time. If somebody's a day late, I wouldn't call them on the same day, but if they were two days late, then I would say everything okay, could you send rent over to you on such and such a date? So you've got a written record of it.

SPEAKER_00 11:51

But they always pay five days late, so uh you're not chasing them for those first five days, so that becomes five days grace where they haven't paid their rent, but they always pay it five days late, so you haven't tackled it, so already you're a week behind, and then so you then check it maybe day six, so at that point they're six days late, but in your eyes, or in the tenant's eyes, well, they're only a day late. At what point do you does it start to become actually no, this is this is a problem?

SPEAKER_01 12:27

Experience instinct. So you have to judge each situation on its merit, I think. You can deal with certain people, and they're good honest people, you can deal with rogues, whether you're buying a car or renting them a property, and you will get a feeling for that person. If you you can you've been in its business long enough and survived a sense when there's a potential problem, and you would deal it deal with it in a more severe sense if you felt that if you had that feeling. Okay.

SPEAKER_00 12:56

So how many times have you phoned, you know, a tenant up and said, you know, I'm just ringing with regard to your rent. I've noticed that the it's late. Could you could you please make uh could you please make a payment? And they go, yeah, yeah, yeah, I'll I'll I'll do that.

SPEAKER_01 13:14

And then Well, if they said it like that, yeah, yeah, yeah, I'll do that, then I probably wouldn't believe them. Okay. But if they came up with uh what I felt was a bona fide excuse or reason for it, then I'd I'd let that one lie until the following month. But I'd my antennae would be twitching for the following months to see what happened.

SPEAKER_00 13:36

Yeah, it's it's that balance, isn't it, between again, if a tenant doesn't pay their rent, is it at what stage do you escalate into confrontation? Well, what's what's what's confrontation?

SPEAKER_01 13:51

Confrontation is landlord saying I've had enough, I want him out.

SPEAKER_00 13:54

Yeah, but if you've got to that point, you've you've things really have failed, surely the what you're trying to you're trying to avoid confrontation, you're trying to make sure your communication is really spot on. But again, I would go back to on occasions the tenant that phones you and says, I'm sorry, you know, my rent's going to be late this month because something has happened, that's easier to deal with than a phone call to a tenant say, Where's my rent? Where's where's my rent? Oh, yeah, I'm really sorry, but you know, my car broke down, so I had to get that fixed because I needed Christmas is coming, so I needed to buy some presents.

SPEAKER_01 14:31

Yes.

SPEAKER_00 14:32

Yeah. What's what you cannot write a textbook for this? No, I know well that's why we're here, isn't it? To give landlords some guidance and and you know, maybe tenants some guidance as well to say, look, communication guidance. Yeah, it's gonna be like tellers. Yes, yeah, because I always think if a tenant phones you to say, look, this has happened, my rent may be a few days late this month, that's a much more acceptable conversation to have with them with us and us with our landlords, isn't it? To say, oh, you know, the tenant's phone to say, it gives you a different feeling.

SPEAKER_01 15:12

Well, it comes back to that. The biggest word in in lettings or management of properties is communication, it applies to every aspect of it, and if you haven't got that, you're screwed. Yeah.

SPEAKER_00 15:22

And what's your opinion, what's your feedback, I suppose, or what experience have you got of landlords when you go to them about, you know, non late late payers, if you like?

SPEAKER_01 15:33

My portfolio is different to yours, so uh very rarely they would say, Oh, it's okay, just keep an eye on it. Your average landlord is gonna have uh a far more strict view on the situation, and some more than others and once again it's it's each circumstance is different. Yeah. But section eight is there, isn't it, to to help? Yeah, it is. So you serve a section eight as a means of getting possession of your property. You know the weight, if it's contested, the weight for a court case is what, 12 months now for possession? Depending on depending on where. You've got the cost involved, which is going to be five grand minimum to instruct a solicitor. At what stage do you decide it's viable to go down that route rather than handle a situation and get to a hopefully a satisfactory conclusion?

SPEAKER_00 16:28

Yeah, but isn't that the the conundrum for all landlords? At what point, at what point does you know a late payment become an issue?

SPEAKER_01 16:40

When a landlord and his agent have a discussion about the whole situation and they make a joint decision and have a joint view on what they should do next, very, very few people are going to want to go down the route of possession to the courts, particularly now it's it's surrenders.

SPEAKER_00 16:55

Okay. So where does the you know, take that right back to basics then? Where does where does the referencing, where does choosing the tenant, the referencing process for the tenant sit within all of this, do you think?

SPEAKER_01 17:12

It's it's the very bedrock of uh your admin needs, it's something that has to be done, has to be done properly. Do not take shortcuts and references. If you're an agent, you leave yourself open to being sued by the landlord for professional negligence. You create more crap for yourself as an agent by shortcutting the system. Um it's rigid on a yours, same as me. You just you do not take shortcuts. If somebody can't provide any specific information or fails a specific area, I'll pay six months up front. You just you just do not do it.

SPEAKER_00 17:47

You cannot take shortcuts there. But that I guess that I know that would lead into a completely different conversation, but you know, when when you're looking at applications and you know you've got a single person on or someone on one income as against two people on two incomes, often that can be, you know, when a prospective, you know, when an applicant says to you, you know, how how how's a landlord going to decide? It's it's impossible to say, but there will be lots of landlords out there who would much prefer to have two paying tenants than than one paying tenant, obviously.

SPEAKER_01 18:26

By having one paying tenant, you mean one tenant on tenants agreement, one tenant in the property?

SPEAKER_00 18:31

Yeah, yeah, yeah. So if you have no, what I'm saying is if you've got a property available and you chose one person around it and it's for them on a single income, or you show a couple round who are on two incomes, there are do you not have landlords who say, well, actually I would prefer the the couple because it's it it mitigates me.

SPEAKER_01 18:54

Well, first thing I I'm I kind of with my vast experience, I make all the decisions on very rarely does it get referred to landlord. But references are based on affordability. How can you just count somebody who's on 60, 70 grand and has got disposable income of 1500 pounds a month?

SPEAKER_00 19:09

But you're making an assumption then, aren't you? What I'm saying is if you had yeah, if you had an applicant who was on 40 grand and that was well within the affordability criteria, or you had uh a couple who are on 80 grand, would your landlord not want you to go with uh the two-income household rather than the one income household? It's never been raised. Has it not? No. Okay. So only in your head, this one, mate? No, I don't think so. Um anyway, so bringing it back to where we where we started, most I think what we've tried to show is that actually most rent problems are preventable. You need to have clear expectations and early action and good communication make all the difference. Again, if you have any issues or want to talk about uh anything to do with rent payments or rent arrears, how to action it, how to move it forward, then please do give us a call. Thank you. Thanks for tuning in to this week's episode of the All Things Property Podcast. If you found this episode useful, don't forget to subscribe, like and share. These things really help us reach the people who need to hear this advice. See you next week.