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What to do if a tenant is not paying rent

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Last editedFeb 20234 min read

Whether renting out your home or managing multiple properties, late payments can really take a toll on your bottom line. If a tenant is not paying rent, you’ll need to act quickly to try and turn the situation around. Drastic measures like eviction can be avoided in most cases with a combination of great communication and a convenient payment system. Using an automated payment solution like GoCardless helps reduce late payments so you can prevent the situation of a tenant not paying rent.

Common reasons for late rent payments

Every tenant is an individual. There are many reasons behind a tenant not paying and not responding, both intentional and unintentional. Here’s a quick look at a few of the main reasons why you might not have received your rental payment this month:

1. The tenant simply forgot.

Before making any assumptions regarding your missing payment, consider the fact that tenants are only human. During busy periods, they might forget to pay the rent on time. While this is a frustrating situation, it’s also the easiest to fix with simple communication. It’s also easiest to prevent by setting up automated rent collection.

2.  There’s been a banking error.

A simple typo can cause an arranged payment to be declined by the bank. Missing payments could also be due to expired payment details. For example, if the tenant has recently moved and forgotten to update their address on file, this can lead to a payment delay.

3. The tenant is having financial difficulties.

If the tenant is having cash flow issues or lost their job, they may be unsure about what to do. This is another situation where it’s best to open the lines of communication to work on a potential payment plan.

4. The tenant is having personal issues.

When there are difficulties in a tenant’s personal life, they might neglect their responsibilities – including paying rent. This can be a trickier situation to address and requires some sensitivity from the landlord.

5. The tenant has a dispute about the property.

If the tenant’s unhappy about the condition of their property, they might withhold rent until the problem’s fixed. You’ll need to come to an agreement regarding what’s reasonable according to the terms and conditions of the lease.

Can I evict a tenant for not paying rent?

If you’re wondering how to get rid of a tenant not paying rent, eviction is one solution. Eviction laws vary by state. You can’t lock out the tenant or turn off utilities. Landlords must also follow all required steps giving the tenant time to pay. Most require the landlord to send a formal letter called a “notice to pay or quit” first. This lets the tenant know that rent is past due, detailing how many days they have left to pay before eviction proceedings start. This gives the tenant a grace period to find the money required to stay in the property.

Of course, eviction should always be a last resort. It’s time consuming and costly for both landlord and tenant, involving court fees, local authorities, and a great deal of stress. You can often resolve these issues before it gets to this stage by offering a new payment plan.

Ways to avoid tenants not paying rent

No one wants to deal with serving an eviction notice. The best way to prevent it from getting to this point is by avoiding late rental payments altogether. Help your tenants out by choosing the most convenient methods of payment for rent.

1. Double check the details.

Effective property management is all about the details. This starts with performing adequate background checks on your tenants before signing any lease. Check their payment histories, call references, and make sure their credit ratings are high. Attention to detail then extends to rent collection. If a tenant is not paying rent, don’t rush in to accuse them of anything before you have verified whether it’s due to a banking error.

2. Keep open lines of communication with tenants.

It’s worth maintaining regular contact with your tenants to form a good working relationship. This will make them more comfortable raising any issues related to personal or financial difficulties, rather than simply not paying rent. If a single rent payment is missed, a friendly email reminder is usually all it takes to resolve the issue.

3. Keep updated records of rent payments.

Accurate recordkeeping is a vital component of rental property management. Property management software can help you keep the details organized. You should have a system in place to store tenancy agreements, rent payment receipts, and any other communications. Keep a paper trail of any conversations with tenants to ensure everyone’s on the same page.

4. Hire a property manager.

It’s one thing to manage a single property as a landlord, but as your portfolio grows management issues become more complex. At this stage, hiring a property manager can be quite useful in preventing late payments. They’ll have automated systems in place to collect rent payments and undertake required maintenance and repairs. Property management firms also serve as a neutral third party to assist with disputes. Dealing with a commercial tenant who stops paying rent can be stressful for landlords, which is why it’s sometimes beneficial to hire a professional.

5. Use methods of payment for rent that work for both parties.

Finally, don’t underestimate the importance of a good payment system. There are many ways to collect rental payments online, from payment gateways to rent management software. Automating your payment collection helps cut down on late and missing payments, eliminating stress for both tenant and landlord. Just be sure that you’ve found a payment method that you both find convenient.

How can GoCardless help with tenants not paying rent?

Prevention is the best cure for tenants not paying rent. You need an automated, organized system to keep track of your incoming rent payments. GoCardless offers a solution for one-off and recurring payments, preferred by property management companies like Re-Leased and more. Landlords can set up a direct debit mandate with tenants at the start of the lease. Payments are then collected on the agreed date for the duration of the tenancy, so you can reduce time to get paid by tenants. Using the Automated Clearing House system for direct bank payments, rent is paid on time, every time.

In case a payment does fail the first time around, intelligent feature Success+ automatically retries it on the next best day. That means no more failed payments, and no need for eviction notices.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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