If there is one thing that brings peace of mind during a tenancy from a landlord’s perspective, it would be knowing that rent will be paid on time. Usually landlords work from an understanding of trust and agreement that rent will be paid as expected – on time and in full, however I’m sure you’ve felt the frustration when rent is a few days late, potentially sending all your other outgoings off course, especially mortgage repayments.
What is a Standing Order Mandate?
Most landlords expect their tenants to set up a standing order mandate at the start of their tenancy, to date this is the most common payment method used between landlords and tenants. A standing order mandate is set up from the sender’s account (tenant) to automatically transfer funds with recurring frequency to avoid monthly manual payments to the recipient’s account (landlord). Even though this method is certainly a step up from tenants relying on calendar reminders or landlords receiving ad hoc payments due to an often-unintended oversight, the onus lies entirely with the tenant, with little to zero visibility of knowing whether it’s still active, giving the tenant full control to cancel the mandate at will.
The most common pitfall is the assumption that because the process is automated, funds will transfer. And even though there is much technology out there to help with managing personal funds and expenses, it is understood that 1 out of 3 people do not regularly check their accounts. Consumers are 200% more likely to check their accounts on payday but only 3% will check knowing they have little cash available and rarely plan at which rate they go through their finances.
What is Direct Debit?
Collection of funds via Direct Debit has traditionally been reserved for large organisations; think of your mobile phone contract or the utilities you pay. Direct Debit technology allows for the same automated payment but will give advanced notice of the amounts, dates of collection and if any change or failure were to happen, both parties get notified. In addition, should the collection of funds fail upon the first instruction, Direct Debit will automatically make multiple attempts to recover the funds.
At Upad we asked ourselves why landlords were not afforded the same level of security to protect their business interests. Logically rent should be one of the first payments from a tenant’s account before other expenses are made. Which is why we are the first in the online letting space to have worked with Direct Debit to offer our landlords the same assurances with our Rent Manager solution.
Setting up Direct Debit with Upad will inform both landlord and tenant via SMS and email three days prior to transaction that funds are to be collected on the agreed due date. Landlords are then notified whether the transaction has been successfully completed. By adding this layer of automated communication, both landlord and tenant remain informed reducing the risk of rent arrears.
Is Direct Debit different from any other rent collection scheme?
Honestly, yes – any organisation making the Direct Debit scheme available to their customers must pass a careful vetting process and are closely monitored by the banking industry. Which is why we don’t recommend you trusting other forms of rent collection (aside from standing order).
Rent collection is few of the single most important things to a landlord so why not protect your income?
You can sign up to the Landlord Club to enjoy Rent Manager for up to 3 tenancies for only £149 per year.