Bounced payments and failed direct debits

Why it matters

Rent that appears in your account and then reverses can quietly leave you a month behind without any obvious warning.

Legal requirements

• A failed payment fee cannot be charged unless it is a permitted payment under the tenancy.
• Bank charges you incur cannot automatically be passed to the tenant.
• The rent remains due on the contractual day regardless of a payment failure.
• Reversed payments must be shown accurately on the rent statement.

Common mistakes

• Assuming a credit is final without checking it has cleared.
• Charging an administration fee for a bounced payment.
• Sending a formal arrears warning before checking whether it was a bank error.
• Failing to correct the rent account so the balance is wrong for months.

Practical guidance

• Check your account against expected rent within two days of each due date.
• Send a short, factual message asking the tenant to check their bank.
• Ask the tenant to reinstate the standing order rather than making a one off transfer.
• Amend the ledger the same day so the balance stays accurate.

Common causes worth ruling out

Standing orders fail when an account is switched, when a card driven account has insufficient funds on the day, when a bank flags a new payee, or when the tenant changed the amount after a rent increase and set it wrongly. Each of those is fixed in a phone call. Only a small share of failures are genuine inability to pay, so do not lead with an arrears letter.

When failures repeat

Two failures in three months is a pattern. Move the due day to the day after the tenant is paid, confirm the new arrangement in writing, and note it on the file. If failures continue, treat it as persistent delay in paying rent and start keeping the dated record you would need to rely on later.