Landlords and letting agencies collect payment in various ways, including cash, cheque, standing orders and Direct Debit. However, over the last few months, we’ve seen an increasing number of landlords and letting agencies of all sizes make the switch to collecting rent by Direct Debit.
If you’re collecting rental payments, now is the perfect time to review your payments process to ensure you’re making the most of your time and money and that you are catering for your tenants' needs. Direct Debit can help you in three ways:
Reducing late payments
Increasing rent easily
1. Direct Debit helps you to reduce late payments
According to the Money Advice Trust, the number of tenants falling behind with rent payments has more than doubled over the past six years. In December 2012, a total of £326m of rent was either late or unpaid, according to LSL Property Services' buy-to-let index, up from £241m in November.
As a result, more and more landlords and letting agents are turning to Direct Debit to take control of when they’re paid. With Direct Debit, once you have authorisation from your tenant, you can collect rent payments whenever they’re due without your tenant needing to do anything else. This means you don’t need to worry about chasing payments or threatening eviction and tenants don’t need to worry about remembering to send you cash or a cheque or setting up a standing order.
2. Direct Debit lets you increase rent when you need to
As a landlord or letting agency you may, from time to time, need to increase the rent or charge additional fees. If you take payment by standing order, this can be difficult as you’ll need to cancel existing standing orders and ask your tenant to set up a new one.
With Direct Debit, however, your tenant won’t need to do anything: you have full control over how much you take from them, and when.
3. Direct Debit reduces your admin
Taking payments by cheque, cash and standing order can be a huge administrative burden. You need to cash cheques, check your bank every day to see what has cleared and chase any non-payers.
In contrast, Direct Debit payments can be completely automated. Rental payments can be set up and then forgotten about as they’ll be taken automatically each month and you’ll always know exactly what has and hasn’t been paid without checking your bank statement. What’s more, you’ll know as soon as a tenant has cancelled their Direct Debit so you can contact them straight away.
How do your tenants currently pay their rent, and which method do you prefer? Do you think Direct Debit could help you? Share your story and continue the conversation on Twitter.
If you’d like to find out more, check out our guide to Direct Debit to find out if it could be the option for you.