One of the main concerns of apartment owners when renting is not receiving the rent or experiencing delays in payment. However, delinquent tenants can be avoided. In this article, we discuss several measures you can take to prevent tenants from not paying the rent or being late.
Measures to Avoid Delinquent Tenants ⬇️
If you intend to buy an apartment in Spain and rent it out, you can avoid delinquent tenants by following the following advice:
1️⃣ Analyze Tenant Solvency
Analyzing tenant solvency will help you understand their ability to pay and prevent delinquent or late-paying tenants. You can request various documents, such as:
Payrolls for the last three months to verify the income.
Employment contract to determine if it’s a temporary or permanent contract and when it was signed.
Income tax returns and VAT declarations for self-employed workers.
2️⃣ Set a Rental Price Based on the Market
The rental price you set will also influence tenant payments. If it’s significantly higher than the market rate, tenants may struggle to pay. Research market prices, any changes, and adjust the price accordingly.
3️⃣ Request References from Previous Landlords
If the tenant had a good relationship with previous landlords, ask for a recommendation. This ensures they are likely to be a reliable, on-time paying tenant.
4️⃣ Request Additional Guarantees
In residential lease contracts, tenants are required to provide one month’s rent as a security deposit. To avoid delinquent tenants, you can request additional guarantees, such as:
Security deposit: The tenant provides a sum of money to the landlord as a guarantee for rent payment.
Bank guarantee: The tenant obtains a bank guarantee from their bank and provides it to the landlord as a guarantee for fulfilling the lease agreement obligations.
Personal guarantee: Another option is to request a personal guarantee, where a third party signs the contract as a guarantor, ensuring rent payment in case of tenant default.
Rent insurance: Consider getting rent insurance that covers rent defaults by the tenant. In this case, the insurance company would pay the rent in case the tenant defaults. The insurance company assesses the tenant’s solvency when you take out the policy.
5️⃣ Check the Delinquent Tenant Registry
The Delinquent Tenant Registry (FIM) includes information from real estate professionals, individual property owners, and court judgments. It can be consulted by both companies and individuals.
6️⃣ Properly Regulate Contractual Conditions
To avoid delinquent tenants, it’s crucial to properly regulate all contractual conditions that relate to the tenant’s obligations, especially rent payment: rent amount and associated expenses and taxes, payment term, method of payment, and consequences of non-payment. You can also include a clause stating that in case of delinquency, the tenant will be registered in the Delinquent Tenant Registry.
In summary, exercising caution and taking all possible measures to avoid non-payment are essential. You can combine several of the measures outlined for increased security. In the event of a tenant failing to pay rent, it’s vital to act promptly and seek a solution to prevent the debt from accumulating. Check the debt amount, communicate amicably with the tenant to agree on a payment date, and if they fail to comply, send a formal payment demand via registered letter.
If you need assistance in dealing with delinquent tenants, feel free to contact us 😊, and we’ll help you.