As a landlord, dealing with rent arrears can be a frustrating and stressful experience. Unfortunately, the latest data suggests that rent arrears are on the rise, leaving many landlords wondering how to cope with this growing issue.
According to the Preliminary data from the upcoming PayProp Rental Index for Q1 2024, the percentage of tenants in arrears -jumped to 18.3% from 17% after dropping two successive quarters. What’s scary and worth highlighting is the fact that, on average, tenants in arrears, now owe 77.5% of one month’s rent; this is more than at any time in the past year and NO!COVID had nothing to do with this.
In this article, we’ll explore the reasons behind the increase in rent arrears and provide practical tips on how landlords can mitigate the risk and manage arrears effectively. Additionally, we’ll highlight the benefits of partnering with a specialist property management company like Propertyzz.com to minimize the impact of rent arrears.
Why are rent arrears increasing?
Several factors contribute to the rise in rent arrears. Some of the most common reasons include:
- Economic uncertainty: Economic instability and rising living costs can make it difficult for tenants to pay their rent on time.
- Mounting Financial pressures from recent interest rate increases and higher bracket of inflation in the country in general.
- Increased rent prices: Landlords offsetting inflation often pass the same costs onto tenants. Rising rent prices can put pressure on tenants, leading to arrears.
- Tenant financial struggles: Tenants may experience financial difficulties, such as job loss or medical emergencies, making it hard to pay rent.
How can landlords cope with rent arrears?
- Communicate with tenants: Open and honest communication is key. If tenants are struggling, work with them to find a solution.
- Deal with arrears quickly: Don’t let arrears build up – address them as soon as possible.
- Plan with tenants: Set up a repayment plan to help tenants get back on track.
- Keep records: Detailed records of communication and agreements are crucial.
- Vet tenants: Thoroughly screen tenants before accepting them.
- Offer flexible payment options: Provide alternative payment methods for tenants.
- Seek legal advice: If arrears persist, seek legal guidance on eviction procedures.
The Benefits of Partnering with a Specialist Property Management Company
By outsourcing the management of your rental properties to a specialist company like Propertyzz.com, you can:
- Reduce the risk of rent arrears by 20% through expert tenant screening and selection. Rental specialists have more tools and data available to them, to comb through a tenant’s information in more detail than a Landlord may.
- Benefit from regular rent collection and arrears management. By placing lower-risk applicants and responding speedily to late payments, Propertyzz.com is best placed to help protect your cash flow as a Landlord and our agencies’ management fees (which we tie to actual rent collected on).
- Access comprehensive record keeping and reporting, ensuring you stay informed and up-to-date
- Tap into a network of trusted contractors for maintenance and repairs, reducing costs by benefiting from optimum negotiations based on the scale of assets under management.
- Receive eviction assistance and legal guidance, minimizing the risk of costly legal battles
- Enjoy ongoing support and advice from experienced property managers, providing peace of mind and reducing stress
- Lastly, the fees paid towards Propertyzz.com are classified by SARS as an expense incurred in the production of rental income and are thus tax deductible. How fast can you say “CA$HING”?
In conclusion, rent arrears are a growing concern for landlords, but by understanding the reasons behind this issue and implementing effective strategies, you can mitigate the risk and manage arrears effectively. Additionally, partnering with a specialist property management company like Propertyzz.com can provide additional benefits and support to help you navigate the complex world of rental property management.
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