If your tenant can't pay the rent; don't panic

In the current economic climate, unemployment has become an unexpected reality for many. Hopefully it will never happen to one of your tenants but if it does and they can't pay the rent, what are your options as a landlord?

Maintain a good relationship with your tenant

If the worse does happen and your tenant loses their job, you need to know about it! If you're approachable then they're more likely to let you know what's happened. At the same time it makes sense to keep an eye on your tenant; make sure the rent is being paid on time and if isn't, ask why sooner rather than later. If they have been made unemployed then paying their rent may not be high up on their list of priorities when faced with credit card bills and other debts. Make sure they understand early on how important it is to pay the rent.

Look at taking out insurance cover

Insurance cover is available to guarantee your rental income and legal expenses. For a regular monthly premium, these policies can be taken out when signing up a new tenant.

Find out if Local Housing Allowance is an option

Your tenant may be eligible for Local Housing Allowance. Landlords should speak to their local council to see if it's an applicable option for the tenancy - and ensure they familiarise themselves with the additional responsibilities it may entail. This may seem like a lot of effort but it could mean you keep the tenant until the end of the tenancy agreement.

Allow your tenant to break their tenancy agreement

If the rent isn't being paid and your local letting market is fairly buoyant it may be worth allowing your tenant to leave so that you can let the property to a paying tenant. That might mean writing off any rental arrears but in the long run could mean you waste less time and money, and could avoid a costly legal bill.

Take legal action

Legal action can be expensive, time consuming and should always only be the last resort. However, you need to be prepared for all eventualities. As soon as your tenant goes into arrears (14 days after the due date) make sure you speak to your local landlords' association or seek specialist legal advice to explore all the options available.

They'll be able to explain the legal processes involved in recovering rental arrears and eventual eviction. But bear in mind that any costs you incur will be out of your own pocket and can't be recovered from the tenants.

For more information, visit younglondon.co.uk