Check out any landlord forum and you’ll see the same question time after time: should rent be charged weekly or monthly?
If you’re a new landlord, or one who has been charging monthly rent payments and may be considering a change, it’s worth looking into what will work best for you and your tenants.
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Organising rent collections on a monthly basis is the industry standard; most landlords opt for this frequency for various practical reasons. In fact, many choose to stick with monthly payments and have no intention of changing.
Those who decide to charge tenants on a weekly basis may do so due to specific circumstances, but it’s certainly less commonplace.
Monthly vs weekly rent
The main advantage of a monthly schedule is the administrative ease, as this system is generally simpler for landlords to manage due to fewer payments to process and track. If you have a large portfolio, with multiple tenants on weekly payments, it can soon turn into an administrative nightmare, unless you have enough spare time to track them all.
Keeping up to speed with weekly rent payments creates much more work for landlords. If you have just one or two buy-to-let homes, it may be feasible, but generally, it’s easy to lose track if you have quite a lot in your portfolio.
In addition, most other service providers charge monthly such as utility bills, phone bills, council tax and more. This is because most people get paid monthly, so it’s more convenient for them to budget for essential expenditure all at the same time to coincide with pay day.
Another reason to avoid weekly payments is due to a little-known law, under Section 4 of the 1985 Landlord and Tenant Act, relating to the provision of a rent book. The law states that when a tenant occupies your property in England and Wales and pays rent weekly, you must provide them with a rent book and keep it up to date with each payment.
This legislation seems to be a hangover from a different era, when people tended to pay their rent in cash and required the landlord’s signature in a book as proof they were up to date. It involved turning up on their doorstep once a week, collecting the rent and filling in the relevant page to confirm it had been paid. In bygone times, most people, particularly factory workers and labourers, were paid in cash weekly every Friday, so they would pay their rent out of an envelope as soon as they arrived home.
In a modern era of bank transfers, direct debits and standing orders, landlords and tenants have all the proof they need that the rent is being paid and there’s absolutely no need to see each other once a week. It can turn into a huge inconvenience for both parties.
None of the home nations, including Scotland and Northern Ireland, have any legislation in place that specifies the frequency of rent payments. However, research shows monthly payments are most popular in all regions of the UK.
Is weekly rent ever better?
In some circumstances, weekly rent may be more convenient for tenants, especially for those on lower incomes, as it can make budgeting easier. Some landlords may also prefer to receive more frequent, smaller payments, as it can improve their overall cashflow. A landlord may choose to collect weekly rent if a tenant has been struggling with payments and is starting to fall into arrears. It can offer a certain degree of flexibility for both sides.
If a tenant specifically asks to pay weekly, it’s important to weigh up the pros and cons before agreeing. You’re under no legal obligation to collect the rent weekly and if it’s going to create more hassle, you may have to say no.
Calculating weekly payments can be more complex, as you need to divide the annual rent by 52, rather than the monthly rent by four, to allow for the fact some months are longer than others. This is the only way to calculate an accurate amount.
Does rent frequency impact tenant turnover?
One sector where the frequency of rent payments can impact turnover is in HMOs, or when a single room is being let. The turnover rate is usually higher in these circumstances and tenants may prefer weekly payments to suit their plans at the time. However, paying monthly is still more common even in HMOs, as tenants are usually obliged to give one month’s notice, so the frequency of rent payments wouldn’t be relevant regardless.
It can make sense to charge weekly if a landlord is prepared to accept notice from tenants of less than one month, which can happen with HMOs. However, this can have wider implications that may cause more hassle for the landlord. For example, if you have a portfolio of furnished properties and provide landlord furniture, having a high turnover of tenants on weekly rent, with a shorter notice period, can mean a need to refurbish more often between tenancies.
On the other side of the coin, however, furnishing short-term rentals with practical, stylish furniture can attract higher demand and may mean less periods when your properties are vacant and therefore not earning any income. For long-term rentals, it’s important to invest in durable and comfortable furnishings for your tenants: furniture packages are a convenient and cost-effective solution.
Whatever frequency of payments you decide on, the rent clause should be specified in the tenancy agreement so both the landlord and tenants know exactly what is due to be paid and when. This can avoid misunderstandings and issues further down the line.