Increasing numbers of residential landlords are losing money because they are not acting quickly enough when things start to go wrong, according to a leading property litigation executive.
“In the current economic climate where unemployment is rising and households are struggling with their finances, more tenants are falling behind with their rent,” said Susan Prince, a property litigation specialist at Black Country law firm George Green LLP. “However, many landlords wait too long to take action when tenants do not pay and then get the eviction process wrong.”
According to Ms Prince, landlords who just have one or two rental properties often do not even notice when tenants first stop paying the rent. She says: “They might be too busy with their job and family to ensure that payments are made on time. Sometimes they do not realise a payment has been missed or if the tenant’s cheque bounces.
“When one payment has been missed, most people are too ready to forgive and give the tenant the chance to make amends and make the next payment on time, and most do not know what steps they can legally take to ensure they do get their rent,” she said.
“Now more than ever before, landlords must monitor their bank account regularly to see if rent payments have been made on time. These days this can be done by using the internet or telephone banking rather then waiting for monthly bank statements to arrive. If a tenant defaults, swift action must be taken.
“Often the threat of eviction is sufficient to ensure payment, but if the threat does not work, it is essential that the landlord uses the correct eviction notice and follows the correct procedures, which depends on the type of tenancy.
“If the timetable and notice period provided are wrong, then this can invalidate the landlord’s claim for eviction and result in them having to start the whole process again. In the meantime, the rent arrears will continue to accrue, so it is essential that the landlord seeks legal advice before taking any action.
“If the tenant refuses to move despite the eviction notice, then the landlord should take court action to regain possession of the property. Getting a court order and executing warrants for eviction also requires close legal guidance.
“The court process to evict a tenant can take some time and in some cases landlords will not be able to recover the rent arrears from the tenant. Where court action is inevitable, it is essential that this process is started as soon as possible so that the property can be re-let and the landlord’s losses minimised.”
According to Ms Prince, evicting tenants can be a time consuming and expensive process which landlords can do much to avoid by screening them thoroughly before letting their property.
She said: “Done properly letting residential property can still bring landlords a good return on their investment. Getting a signed, legally binding tenancy agreement, taking up references and receiving a minimum of two months deposit, before allowing any tenant to move in will help to minimise the risk of letting any property.”