What can landlords do to support their tenants?
Whether your tenant is renting by choice or out of necessity, they are part of a growing demographic in the UK who rent their home. According to a recent global study, renters are on the increase in 21 of 30 countries, with the UK’s share of the population that rents up by 22% in just 5 years. ‘Generation Rent’ is now a part of our everyday vernacular. Up to a third of young people face living in private rented accommodation all their lives, a new report by the Resolution Foundation has found. The think tank, which aims to improve the standard of living of low and middle-income families, said 40% of “millennials” – those born between 1980 and 1996 – were living in rented housing by the age of 30. That, according to the Daily Telegraph, was twice as many as “generation X” – those born between 1965 and 1980.
While the sales market in the UK remains broadly flat, not only are more people renting, but rental prices have been on the rise as well. A recent RICS study blamed the rise in rents on a shortage of rental housing due to landlords exiting the market.
RICS chief economist Simon Rubinsohn cautions that a reduced pipeline of supply of rental properties will gradually feed through into higher rents. He expresses concern for renters for whom owner occupation is either out of reach financially or is not a suitable tenure. To read more on the study click here.
Given the financial demands on today’s renter, astute financial management by your tenant is now more important than ever to ensure that they keep a roof over their head and that you receive your rent on time. But what can you as a landlord do to ensure that your tenants manage their rent payments?
Top tips for tenants: how tenants can manage their rent payments
Whatever their reasons for renting, your tenants may need support with setting up their rent payments or budgeting. There are many ways in which you can help your tenant manage their money effectively.
- Clear communication is vitally important as a landlord, and particularly when it comes to ensuring timely rent payments. Make sure you are clear about the amount of rent your tenant is expected to pay and when it is due. In addition, your tenant should be advised to contact you immediately in the event that there is a delay in the payment of their rent. When creating a new tenancy agreement, ensure that every person initials and dates every page of the lease. This will provide evidence that they have read and understood everything on the lease. You should also be sure to provide everyone with a copy of the signed lease.
- In the event that your tenant has not payed the rent on time, talk to them. Is it that they don’t have enough money to pay the rent or that they’ve simply forgotten when the rent is due? Discuss whether changing the payment date or method would help. For instance, some tenants may prefer to make smaller payments on a more frequent basis. Asking your tenants to set up a Direct Debit or standing order will reduce the chances of them forgetting to make a payment. Try to schedule payments to suit the tenant.
- However, research shows that a significant number of people don’t use Direct Debits to pay their bills. Their reasons include fear of loss of control over money leaving their account and bank charges they’ve incurred in the past because of refused Direct Debits. If you have tenants with similar concerns, The Money Advice Service has two short videos that will help reassure them here.
- If your tenant doesn’t have a bank account, they can find advice on getting a bank account and choosing the right bank account from The Money Advice Service here.
- Charge a late fee – Charging tenants a late fee for payments may help to motivate them to pay their rent on time but you will need to make sure that any late payment fees are clearly stated in the lease. And don’t forget point number two – talk to your tenant about why they are late in paying their rent before the situation escalates.
- Offer a discount for prompt payment – It is worth offering your tenants a small discount for paying their rent on time as this can provide motivation for them to pay by generating good will. This also benefits you if you don’t have to spend time chasing payments. You could, for example, offer a discount for payments made by Direct Debit or standing order.
Help for tenants on managing finances
As part of our commitment to supporting tenants, mydeposits has partnered with Barclays Bank to bring you and your tenants an exclusive financial guidance hub called mydeposits MoneyWorks that contains advice on saving for tenants, be it for a first home, pension advice or to help manage their spending.
The work we’re doing with Barclays Bank and the MoneyWorks scheme means you and your tenants, at no cost, can have access to expert financial information to help you save for your future.
What is MoneyWorks?
MoneyWorks is an extensive resource hub which is packed full of guides, videos and tools to help you and your tenants to manage their finances. Access MoneyWorks here.