Although you may feel you adequately vet your tenants before renting your property to them, sometimes instances occur when payments can't be made for varying reasons and consequently arrears form.
If you rely on this rental income to pay your mortgage or other bills, then this loss of payment can have a huge influence on your cashflow. Luckily for you, in many cases there are protections in place to ensure this doesn't happen, financial checks and guarantors for example.
However, if things do go further, you have three main options:
1. Take the Financial Hit
Before deciding on taking action, it's important to weigh up the costs and whether chasing the amount owed is worth your time and effort. However, unless the amount owed is minimal, it's unlikely you will want to take a financial hit if it can be avoided. So, let's skip ahead.
2. Pursue Payment of Arrears
If you are owed a considerable amount, the first step is to try dealing with the dispute outside of court. Mediation is often a great option to help resolve any disputes and to come to an agreement regarding a repayment schedule.
Sadly, this doesn't always work and you may be forced into seeking a county court judgement (CCJ) - also known as a 'money judgement'. This essentially forces a debtor to repay any money they owe to a creditor i.e. you the landlord.
Once you have this, the next step would be to enforce this judgement once it has been confirmed. Many people choose to use a high court bailiff service to do this. A writ of control can be arranged and the high court bailiff will then have 12 months to collect the debt - the cost of which is paid by the tenant.
3. Claim On Your Insurance Policy
Taking out the correct landlord insurance policy can help protect you should something like this happen. Not only can a landlord insurance policy protect the buildings and contents, and provide you with property owners liability, but it can offer protection against loss of rent, theft or malicious damage by tenants, as well as cover over legal expenses.
So, whether you own a single residential property or multiple commercial buildings, stay insured. You never know when you're going to need to make a claim.
We tailor make cover and help find deals at a competitive price, get in touch today to compare landlord insurance quotes.
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