The secret to on-time rent
Introducing PAID&CO for landlords
With regular bills, such as utility and mortgage payments, we expect to pay regularly via Direct Debit, so why do letting agents and landlords still collect their rent via standing order?
To quote Grace Hopper, the most dangerous phrase in the English language is, ‘we’ve always done it this way’.
We’ve known that arrears are an issue in the UK rental market, and as our Landlord Survey* showed, non-payment of rent was an issue for 67% of landlords who have experienced problems with a tenancy.
For landlords, we understand that late rent payments can mean serious cash flow problems, annoying admin or potentially even a costly eviction.
Interestingly, most tenants are in fact good money managers, and setting up a payment schedule that suits them - i.e. collecting rent just after payday rather than just before, and providing useful reminders - can make a big difference.
A new way for tenants to pay their rent by Direct Debit
Rent Collection from our sister company, PAID&CO, offers a modern, seamless and value driven service to improve the rent collection process for landlords, letting agents and tenants that boasts great benefits to the lettings industry.
Through a series of prompts and nudges, tenants are given reminders before the rent is due to be collected. This gives tenants time to move funds into the appropriate bank account and ensure that they are in control of their finances. The system even sends ‘thank you’ notifications on successful payments.
Our final nudge seeks to remind tenants of the three main consequences of late or non-payment of rent including: possible eviction, possible negative credit history and the possibility that their bank might charge them for a late payment.
More appeal for tenants
Earlier this year, a petition titled ‘Make paying rent enough proof that you are able meet mortgage repayments’ attracted just under 150 thousand signatures. The story here is very simple, mortgage payment history is routinely shared with the three main credit reference agencies and on-time payments contribute positively to credit ratings. As this process isn’t replicated when it comes to standing orders, some renters report that they find it hard to prove they are capable of meeting sizable repayments when applying for a mortgage.
By opting in to the rent payment reporting service†, tenants will have their payment history shared with credit referencing agencies to improve the accuracy of their credit rating.
Added to the appeal of being able to choose a payment date that better fits their schedule, such as just after payday, more responsible tenants are less likely to fall back on their rental payments to you.
Move into well controlled rent collection by Direct Debit:
- set any collection date, and update it later if circumstances change
- automatic text message reminders 3 days before rent’s due
- automatic attempt to collect the rent again if the tenant can’t pay on rent day
- …and then another try if that fails
- a ‘thank you’ sent to the tenant after a successful collection
- reports on the status of rent payments to credit reference agencies
To find out more about Rent Collection from PAID & CO, visit the PAID & CO website and register today.
* 2017 landlords survey is based on 3,726 responses from UK landlords
†PAID&CO are working with credit reference agencies to get this service up and running in the near future