5 Practical Tips To Help The Recovery Of Rent Arrears
Rent arrears are, unfortunately, inevitable. Every accommodation provider has them, whether large or small. We all try to do everything we can to minimise them, but at the end of each academic year, all providers will have at least something staring back at them from the arrears columns of their spreadsheets. It is at that point, once the dust has settled, the vomit has been cleaned and the students have moved out, that the work to recover those arrears must start.
Here are 5 things which can be done during the course of a tenancy agreement to make the recovery of rent at the end of the academic year that little bit easier:-
1. Mitigating The “But I didn’t actually turn up” Defence.
The advent of online tenancy agreements being signed electronically seems to have led to an increase in people signing up but not turning up. The electronic signature seems to have less gravitas than the signature in pen on the paper document and so it seems as though students are more willing to sign online, change their minds at a later date and then not turn up. Many of them get a nasty shock when they are reminded that their online signature entered them into a legally binding contract to pay the rent owing under the tenancy and claim that they should not have to pay because they didn’t actually use the room.
Steps can be taken to re-sell rooms if students advise ahead of time that they do not actually intend to use the premises. However, to try to minimise these no-shows and the problems associated with them, online portals should highlight and emphasise the fact that the electronic signature really is a point of no-return and that once they have signed, they will be liable for the rent. Large font, flashing text, tick boxes to confirm that they understand that particular contractual term are all effective techniques. The goal is to put off those students who sign up without any real intention to attend.
2. Identification For Guarantors
When pursuing guarantors as well as students for unpaid rent, providers are often faced with phone calls or emails from bemused parents/guardians who had no idea that they had been nominated as a guarantor for the tenancy agreement and who cannot/will not make payment. In many cases we have come across, students will give their parents’ names/addresses and sign them up as guarantors without seeking their permission or even mentioning it to them.
Whilst the risk of this can never be totally mitigated against, guarantors should always be required to upload some form of photo I.D and should also be asked to add an electronic signature to the tenancy agreement, confirming that they understand their obligations. Whilst a number of students might be willing to give their parents name without telling them, not many would be brave enough to pinch their parents’ driving license or passport and upload a copy of it, so this approach should reduce the problem considerably.
3. Electronic Tenancy Only
A common complaint when students are pursued for rent at the end of an academic year is that they do not have/did not receive a copy of their tenancy agreement.
In the majority of cases, a full, hard copy tenancy agreement will not be sent to students. Everything will be done electronically, online. In these circumstances, it should be made abundantly clear to students that a hard copy will not be provided and that if students want to retain a copy of the tenancy for their records, they should print a copy off from their portal/online tenancy area. This is a point which can be reiterated throughout the year, when reminder emails for upcoming rent are sent etc, to ensure that students cannot claim that they were not made aware of this at a later date.
4. Protect That Deposit
This is such an important issue. The consequences of not properly protecting a deposit and not serving the prescribed information are so grave (being prevented from serving a s.21 notice and being potentially liable for compensation of up to three times the value of the deposit) that the vast majority of providers have strict internal procedures in place to ensure that deposits are protected swiftly.
Nonetheless, it is a point worth making. Quite aside from the consequences outlined above, the non-protection of a deposit can make the recovery of rent arrears very problematic, with students/guarantors having the ability to claim a set off to the value of any compensation to which they may be entitled.
5. Information Is King
Once tenants have left the accommodation at the end of the year, it can be difficult to maintain contact with them, particularly if they return home or move somewhere else for work. The key to a successful debt recovery action is the information which you hold for your debtors. As such, it is hugely beneficial to maintain a database of information for each tenant & guarantor. Full names (including middle names), contact numbers, home addresses, email addresses, places of work and whether or not home addresses are owned (the last two are more important for guarantors) are all valuable pieces of information and can help the rent recovery process further down the line, particularly if court proceedings are necessary.
Similarly, building up some kind of case file for each tenant/guarantor is helpful. Each time a telephone call or email is received, log it in the case file. This way, a provider can build up a picture of the tenant/guarantor and may be able to garner further useful pieces of information which may prove important at a later date.
If you require any further assistance with the recovery of rent arrears or with any other legal issue, please do not hesitate to contact our Head of Property Litigation, Michael Adamson – email@example.com.