Merryn's Blog

Rent arrears: one more thing for buy-to-let investors to worry about

New rules mean it’s about to get a lot more expensive to get tenants in arrears to pay up, says Merryn Somerset Webb.

150928-buy-to-let

One more thing for buy-to-let investors to worry about arrears. The House & Home section of the FT ran a story this weekend noting that it is "about to get harder" to get tenants behind on their rent to pay up.

One of the most effective ways to get them to do so at the moment is to threaten them with bankruptcy proceedings, something you can do as soon as they owe you £750 and something most people react to pretty quickly.

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However, from October that number is going to jump to £5,000 a good six months' rent for many of the UK's landlords. If you are owed less than that you have to start County Court proceedings instead of bankruptcy proceedings, and that "means incurring costs."

The first step is a threatening "letter before action" (typical cost £500) and the next an application to the court (£200). Add on legal fees for pursuing and enforcing your claim and "the whole thing starts to look disproportionately expensive."

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