Even though it's rare, unpaid rent remains a risk against which it is important to protect yourself. Indeed, this situation can quickly weaken the profitability of your investment. Fortunately, there are several solutions to prevent it.
Choosing the right tenant: a first solution for protection
The rigorous selection of the tenant is the first step to follow to protect your investment. Through their application file, you will have to judge their seriousness to occupy the housing "as a good father," meaning to pay rent and charges and keep the housing decent without damaging it.
To select the right candidate, you must ensure their seriousness and income level through their file. It contains several mandatory documents such as a photocopy of their ID, employment contract, last 3 pay slips, etc. Regarding a tenant's solvency, it is estimated that the rent should not exceed between 25% and 33% of their income.
However, a candidate with a high income will not necessarily be a good payer. In addition to their salary slips, you should also examine other documents in the file, including the last rent receipts from the previously occupied housing. If the candidate is serious, their previous landlord may have written a recommendation letter attached to the file.
Note that as a landlord, you are formally prohibited from requesting certain documents from your future tenant, considered as "intrusive to privacy." You cannot in any case require them to show you a copy of their bank statement, an extract from their criminal record, or their social security card.
Subscribe to an Unpaid Rent Guarantee (GLI)
The unpaid rent insurance or Unpaid Rent Guarantee (GLI) is a sure way to receive rent payment every month, even in the event of the tenant's insolvency. Some contracts also cover legal fees and damages to the housing.
Offers vary significantly from one company to another in terms of waiting periods, deductibles, as well as the duration and ceiling of compensation. Note that to guarantee coverage in case of a problem, it is crucial to follow the conditions imposed by the contract. So, take the time to study all offers.
Guarantor & security deposit
To prevent potential tenant default, you can ask for the support of a guarantor. Often a relative, this person commits to paying the rent and charges instead of the tenant if they are unable to. If the candidate does not have a guarantor, the Action Logement organization offers various guarantee schemes. It is a public and free service, provided that the tenant meets the required conditions.
As a landlord, you can demand a security deposit to cover any potential failures on the part of the tenant: repairs, unpaid charges or rents, ... Its amount, payment, and restitution are regulated by law.
What about choosing co-living?
Besides better profitability, co-living offers better protection against unpaid rents. Indeed, in a co-living situation, the solidarity clause requires tenants to be jointly responsible in case of payment default by one of the occupants.
This implies a high responsibility of the roommates on rent payment, but also they will be very involved in quickly finding a new roommate in case of departure.
From the first unpaid rent, take the lead
Proactivity is key: first, contact your tenant to discuss with them. It may indeed be a simple oversight or an unfortunate set of circumstances that can easily be resolved through discussion. In case of temporary financial problems, you can agree on an amicable settlement, spread over the next installments, for example.
If there is no response, you may consider sending a reminder via registered letter with acknowledgment of receipt. You can then turn to the guarantor(s) and inform your insurer of your situation.
Is a management mandate a solution to protect myself from unpaid rents?
Managing a property requires time and specific knowledge, which can quickly become heavy to handle daily. Entrusting the management of your property to a professional is the assurance of complying with the legal framework while selecting the right tenant.
Just like the transaction, we manage your property with competence, ethics, and pragmatism.