Private landlords are being urged to only instruct letting agents that adopt a modern approach to rent payments so that they are protected in the event that a tenant stops paying the rent.
While many letting agents in the UK have adopted formal arrears management processes, many others have not, and a leading PropTech firm warns that manual reconciliation and reactive, ad hoc arrears management could be costing agents and landlords significant amounts of money in unpaid rent each year.
Research by the Residential Landlords Association suggests that 28% of landlords have experienced rent arrears in the last 12 months, while a spate study by Your Move earlier this year found that around 9% of tenants across England and Wales were in arrears, and yet the traditional process of reconciling payments with a highlighter - still used by many agents - is labour intensive and open to human error.
PayProp, which offers an automated rental payments platform, is advising agents to review their rent collection procedures, employing automation to proactively remind tenants that their rent is due and when they have missed a payment.
A more modern approach to arrears management is needed to better protect the rental income that landlords receive, according to Neil Cobbold, chief operating officer of PayProp in the UK.
Cobbold believes that only a “modern approach to arrears management” is sufficient to satisfy landlords and that includes having the means to show landlords the “live status of their portfolio”, including key information like which tenants are in arrears right now.
He commented: “Sending letters to chase unpaid rent is an outdated and largely ineffective process.
“It’s easy for tenants to ignore letters and it’s also a waste of paper - particularly if this approach garners few results.”
By contrast, SMS reminders are a much more efficient and successful way of chasing rent arrears, according to Cobbold.
He points out that research shows that over 90% of text messages are read within three minutes of receipt.
Cobbold continued: “When it comes to payments we're of the viewpoint that many agents' current method of collection and reconciliation is outdated and inefficient.
“We passionately believe that an automated rental payments process can save agents money and time, while also helping them to generate more revenue and grow their lettings book.”