Rent collection post-pandemic
Efficient rent collection has become even more important following the severe pandemic in the UK. Many tenants found themselves without jobs as businesses were forced to make large-scale redundancies or close. Despite the crisis, figures indicate that numbers of residential rentals are rising, with a corresponding rise in rents as shortages hit the sector.
The commercial sector has seen major variations across the country. One large property management firm claimed to have collected 71 percent of rents due in June, contrary to analysts’ forecasts. The firm suggested that its collection methods played a major part in maintaining revenue. In contrast, the retail sector showed landlords facing severe problems. Property firms reported successful collections numbering 40 percent or less, while the British Property Federation reported that around £2.5 billion was owed by retailers for third-quarter rents.
In both residential and commercial letting sectors, the government has ordered landlords not to use high-pressure tactics or the threat of eviction during the present crisis. That means landlords have to improve collection efficiency and put more emphasis on negotiation and ‘time to pay’ arrangements for tenants facing genuine difficulties.
Changing patterns of rent collection
Landlords have traditionally used a variety of methods to collect rent. Some favoured personal collection of cash or cheque at the property. As well as maintaining contact with tenants, landlords had the opportunity to inspect the property, outside at least. While this approach provides tenants with a personal touch, it can prove difficult if a landlord has to deal with frequent late payments, and is also not always appreciated by busy tenants.
Others accepted payment by cheque. This could cause delays for cheques ‘in the post’ and landlords also had to spend time taking cheques to the bank and waiting for clearance. Both methods require careful record keeping and tracking to maintain revenue flow. A far more efficient approach is to offer tenants online payment facilities.
Online bill payment or paying rent online is increasingly popular with all age groups according to Money magazine. Millennials pay 61 percent of bills online, while older age groups use it for 42 percent of their bills.
How to pay rent online
The option to pay rent online is convenient for both landlord and tenant, and it has many important benefits. Tenants pay money into the account of their landlord or collection agency – directly or indirectly via an app, which protects bank details. Used in conjunction with software applications, paying rent online can provide landlords with valuable, up-to-date notifications and reports on payment status and income by individual tenants or all properties.
The software can also generate notifications and reminders to tenants when they’re due to pay rent online. That helps to overcome the number one landlord problem of late rental payments – either deliberate or through forgetfulness. Payment receipt is faster with no delays for cheque receipt and processing and rental funds can be available in a bank account within hours or sometimes instantly.Experience indicates that online payment also results in improved levels of recurring payment. In the United States, for example, the National Multifamily Housing Council reported that property management firms found 85 percent of people paying bills online continued to pay in successive months. The status reports provide a complete picture of rental transactions, which improves control and credit management and helps landlords take action against poor payers before the situation becomes a risk to the business. Some rent collection service programs are also available as part of a property management system — helping landlords assess the health and total cost of their properties.
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How to make it easier for tenants to pay rent
Whatever method you adopt, being consistent with how you accept rental payments as a private landlord makes tenants more likely to pay rent on time. If you constantly change how tenants should be paying, this can make them confused and lead to tenants making late payments.
If you have a solid method of rent collection, this can also give tenants the confidence that you’re a professional landlord. Dealing with late payments promptly can also help you receive rental payments quicker. If you leave a late rental payment for too long, it could become more challenging to deal with moving forward.
And for tenants who have made late rental payments, look at offering additional ways for them to pay. Using a reliable rent collection service can help you with this and even enhance your reputation as a landlord and make it easier for tenants to pay you rent.
Benefits of using a rent collection service
A letting agent - like Portico - who offers this service can manage landlords’ rent collection more effectively and efficiently. Using this service also allows landlords to avoid awkward conversations with their tenants about rent payments and rent-related disputes. We provide a rent collection service to landlords with rent chased, checked and paid as soon as it arrives. Once your tenants have moved in, we'll help collect the rent and remind your tenants to pay on time. After we receive each monthly payment, we check the amount and then transfer it to you within hours of receiving it. There's no holding period, so you get paid quickly and in a reliable and secure way. And if they're struggling to pay, we'll give them the option to pay by debit or credit card over the phone.
Despite not having to deal directly with your tenant, rent collection agencies often provide up to date rent statements, so you know if your tenant has paid rent or not. Rent collection agencies provide a more hands-off option to running your rental property and are often a more affordable option than paying for the full services of a letting agent.
Even if your tenants change, they can keep using the same account number and sort code, so you’ll still receive rent in a consistent manner. Having this account dedicated for your rental property also makes it easier to make reports for accounting and tax purposes and helps you keep up with your rental income.
After we receive each monthly rent payment, we check the amount and then transfer it to you within hours of receiving it. There’s no holding period, so you get paid quickly and in a reliable and secure way. If your tenant doesn’t pay their rent on time, we’ll chase them straight away. And if they’re struggling to pay, we’ll give them the option to pay by debit or credit card over the phone.
Tenant referencing and rent guarantee protection
Offering your tenant a convenient way to pay rent online certainly helps avoid late rent payments, but it’s important to do your due diligence on your prospective tenants too. If you would like us to undertake tenant referencing and credit checks to ensure your tenants can afford your property and you won’t end up in a sticky situation, we can carry out these out too. Get in touch to find out more about the different levels of service we can provide to landlords.