According to ONS, over £112 million of unpaid rent is lost by 22 million British landlords per year.
For large property management companies and hobby landlords alike, these figures are staggering.
Generating profit from rental properties is the founder mental reason everyone invests in property.
But the success of this depends on tenants paying rent on time. The margin for error—i.e., the number of days a rental payment is late—is lowest for those landlords with fewer than five rental properties.
Consider the immediate financial impact: solicitors are expensive (on average, +£190/hour); and eviction is very expensive (£1,265 on average).
In addition to cost, evictions can take months depending on the outcome and any defence. That means your tenant is living in your property for another month or more for free.
Because you chose to go to court and make the situation adversarial, your tenant is not likely to pay another penny with many steadfast that they “want their day in court”
Evictions are also messy. Removing people from their homes predictably invokes emotions.
In addition to affecting you on a human level, this also has a bottom-line impact. Evicted tenants make angry ex-tenants; angry ex-tenants leave bad reviews; and bad reviews affect the quality of future tenants, resulting in more issues down the road.
After all, 88% of people read reviews to determine the quality of a potential property.
You need to protect your reputation and evictions don’t help.
It’s pretty obvious that evicting bad tenants is the best option.
However, not all non-paying tenants are bad, and if eviction is your only lever to pull in the face of nonpayment of rent, you don’t have any choice but to pull it.
In a series of articles I will explore mediation as a new lever, one that uses modern technology and has the potential to change how landlords handle nonpayment issues with tenants, as well as many other problems that arise during the course of renting a property.
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