Tips against late-paying tenants

Although my leases clearly state that rent must be paid by direct debit on the first day of the month, in practice, this is sometimes handled too laxly. Countless times I’ve pursued tenants who were late with their payments. I’ve had to listen to an endless series of arguments, reasons, and excuses.

Rent arrears can develop slowly. It often starts with missing part of the monthly rent, but as the next lease term approaches, the debt can quickly mount. Before you know it, the tenant can no longer pay anything at all, and this can escalate into a difficult and costly eviction procedure. This article focuses on the initial phase, when it’s still possible to collect the missed rent. For the sake of completeness: these tips are intended for landlords who manage their properties themselves, as I did in the early years. I’ve since hired a property manager to monitor rent payments. The best approach, of course, is to prevent a tenant from defaulting. Here are eight tips:

1. Be proactive when screening potential tenants: Prevention is better than cure. Spend plenty of time screening tenants before entering into a lease. Check their financial background, ask for references from previous landlords, and run a credit check. This can help you avoid tenants who might cause payment problems.
2. Consider collecting a security deposit: Charging a security deposit at the start of a lease can serve as a safety net for unpaid rent or property damage. Make sure the terms for returning the security deposit are clearly stated in the lease.
3. Automate rent payments: Use modern technology to streamline the payment process. Encourage tenants to set up direct debits so that rent is automatically debited on the agreed-upon date. This reduces the risk of missed payments.
4. Communicate payment terms clearly: Ensure tenants are clearly informed of the payment terms from the outset. This includes the rent amount, the due date, and any late fees. A clear understanding of expectations can prevent problems later on.
5. Keep detailed records: Document all communications with tenants regarding late payments. Save copies of letters, emails, messages, and notes of phone calls. This can be helpful if you ultimately need to take legal action.
6. Be flexible with payment plans: If a tenant is experiencing temporary financial difficulties, consider arranging a temporary payment plan. This can help retain the tenant and increase the likelihood of a good long-term relationship.
7. Know your local laws: Inform yourself about the laws and regulations regarding rent arrears and evictions in your area. It’s important to understand the rights and obligations of both tenants and landlords to avoid legal complications.
8. Be prepared for legal action: If all other attempts to obtain payment fail, be prepared to take legal action. Consult a lawyer to determine what steps you need to take to collect the outstanding rent.

Unfortunately, tenants do sometimes fail to pay. If this happens, here are seven tips for approaching the tenant:

1. Take immediate action in the first week of the month, without waiting for the first few days to fall behind on rent. Send a reminder via text, email, or letter and give the tenant three days to pay. If you don’t know how to write a payment reminder, there are numerous sample letters available online. With ChatGPT, you can quickly create a tailored reminder for your situation.
2. Maintain a friendly but firm tone. If there is no response to the payment reminder, contact the tenant again by phone, email, or text message and try to determine the reasons for the non-payment.
3. Do not visit the tenant in person. Tenants generally do not appreciate unannounced visits from landlords, and it is unlikely to result in immediate payment. Leave this to professionals such as bailiffs, who may be involved in the debt collection process later. If the tenant still doesn’t pay and hasn’t given any reasons for the arrears, send a message announcing that the debt collection will be outsourced if payment isn’t made immediately. Emphasize that this will incur additional costs for the tenant, such as extrajudicial costs, interest, and VAT. Explain that you want to maintain a good long-term relationship, but that prevention is better than cure.
4. If the tenant remains inflexible, it’s time for a more drastic approach: engaging a debt collection agency. Choose a bailiff with experience in rent arrears, preferably with “lawyers” in their name. Request registered emails with the same legal validity as registered letters.
5. The tenant may be reluctant to accept legal action and may agree to a payment plan. My plan included immediate payment and the remaining balance in six consecutive installments, along with the regular rent payments.
   Send payment plan reminders via payment requests (for example, via a “tikkie”). Don’t wait for the tenant to pay voluntarily, as payment requests are often processed more quickly. I only received this helpful advice after I hired a property manager, but it can definitely be useful.