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.
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.
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."
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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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Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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