What’s The Best Way To Collect Rent?

Over the years of being a landlord I’ve had tenants pay me rent in various ways. In most cases, the method of payment was based on their personal financial circumstances.

Various ways I have received payment

  • Cash
  • Standing Order/Direct Debit
  • Housing Benefit
  • Cheque

I’m not entirely sure if there are other ways of receiving rent, but I think I listed the most common methods. Then again, I’m sure there is a network of seedy landlords accepting payment in forms other than money. Maybe when I get a little older, a bit wrinklier, and a lot less attractive, I’ll be jumping on the bandwagon.

I’m sure each landlord has thier own personal favourite for different reasons. While I can guess which is the most desired method, I’m sure some landlords have their own unique circumstances which will sway from the obvious choice.

My analysis of each payment method

Housing Benefit
I really don’t like the housing benefit system is setup.

I used to receive a cheque every 30 days on behalf of my DSS tenant. However, it wasn’t the entire amount, it was only the amount the tenant was illegible to receive. The shortfall was then covered by the tenant. So I was receiving 2 payments every month. It made everything incredibly difficult to track, especially because the council paid every 30 days, and not PCM (Per Calender Month), which is how most landlords calculate their rates.

Cheques are kinda’ irritating and extremely old school, that’s why they’re becoming extinct. But you still get those die hard fans that just won’t let go.

The problem with cheques is that they need to be posted in the mail. Once we receive it, we need to deposit it into a bank, not to mention the 3-5 working day clearance time. The entire process is just long, and that’s why this is my least preferred method.

Needless to say, this method opens up a huge window of opportunities for tenants to lie through their teeth. It’s just inviting them to say, “The cheque must have got lost in the post. I sent it, I swear” Yeah, right, asshole!

Standing Order
My favourite method because they’re easy to setup and reliable. Also, electric transactions leave behind a foot-print, so it’s incredibly easy to track/prove what has been paid and when.

Standing orders payments in general are typically used to make rent payments or payments to charities (quite the contrast!). This is when a tenant tells their bank or building society to make regular payments to a particular bank (i.e. the landlords bank). They’re incredibly easy to setup these days- most banks allow you to it online.

Standing Orders are often confused with Direct Debits, but there are distinct differences, but in most cases, tenants should be setting up a Standing Order to pay the landlord. The main difference between the two is that with a direct debit you tell your bank or building society to let an organisation take money from your account, so for example a monthly gas bill (which is likely to change every month, depending on usage). A Standing Order is fixed, you set them up to pay exactly the amount you choose, not the amount you owe to an organisation.

Direct Debit
I’ve personally never received rent by Direct Debit, they’re usually used by organisations, not individuals. In fact, it’s very unlikely that a private landlord will setup a DD.

Lettings agents my require tenants to pay them by direct debit (assuming an agent is managing the rent) or a landlord that has multiple properties and operates under a limited company.

Companies prefer DD’s because it’s cheaper for them.

For landlords to setup a DD (if they’re able to) they need to contact their bank and find out the appropriate steps.

I’ve had some tenants pay directly by cash before. I have no idea why, but I didn’t ask any questions (it’s always best not to).

It’s not the most ideal method, but I didn’t mind too much. The catch here is that I had to collect it every month (they didn’t want to deposit the money into my account), but he didn’t live too far, so it was cool. The added bonus here was that it gave me an opportunity to see what condition the property is in. So I was effectively doing a monthly inspection. However, one of the major drawbacks with cash payments is that unlike electric transactions, it doesn’t create a foot-print (maybe that’s what you want though… but that’s your business!), so you should create a receipt, which can be relied upon if there are any disputes,


For me, there’s only one clear winner, to accept rent by Standing Order. It’s easy, reliable and secure!

Landlords, how do you currently collect rent, and which method do you most prefer?

Tenants, how do you pay rent?

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21 Comments- Join The Conversation...

Guest Avatar
Dan Harrison 22nd May, 2009 @ 10:24

My tenant set up a standing order into my account for rent. However, that's not much different to sending a cheque really (unless the sending bank is part of the fast BACS transfer scheme).


Guest Avatar
Jools 24th May, 2009 @ 20:48

What about the big F*** off dog and the mac 10? Surely a more reliable way of achieving yield?


Guest Avatar
Michelle Green 4th June, 2009 @ 07:06

I am thinking about accepting Paypal as a means of collecting rent. Yeah there will be fees, but no more than a property management company would charge I suspect.

Guest Avatar
Steve 1st July, 2009 @ 15:30

Sounds like you've got some tenants on government assistance like I do. For me this has been a blessing and pain all at the same time. I've intentionally priced my rents higher than the maximum living allowance ($620/month where I live) so I can attract better quality tenants. However, I'm often left with a shortfall even though the tenant only needs to come up with less than $100.

Worse yet most of these tenants don't seem to have bank accounts (I didn't even think this was possible!). So this means I can collect cheques direct from the tenants (If they bank), get a direct payment from social assistance, then make up the shortfall from the tenant, or collect cash.

While I've often had to deal with bounced cheques, I find cash to be incredibly inconvenient. While grabbing rent once a month shouldn't take more than 30 minutes on paper, it's next to impossible to coordinate schedules for all of my tenants and me. I end up making multiple trips and it can sometimes take days to coordinate times. Which leaves me with the issues of getting my money in the bank before mortgages are due.

I like cheques. If I have post-dated cheques from everyone I make one trip to the bank on the first and all is done. Easy.

Guest Avatar
Tariq 28th July, 2009 @ 19:54

I am pretty new to all this and have previosley received rent in cash however, i am now considering standing order with a new dss tenant.

Are there any tax implications with receivng rent by standing order?

Many Thanks

The Landlord Avatar
The Landlord 29th July, 2009 @ 07:29

Hi Tariq,
You should pay the same amount of tax regardless of which method you choose to collect rental.

Kind regards

Guest Avatar
John 30th July, 2009 @ 11:19

Do you need to set up as a company to arrange rent collection via direct debit?

The Landlord Avatar
The Landlord 30th July, 2009 @ 11:29

Nope, you don't, John.
Just give your tenant your account number and sortcode, and that should be fine.


Guest Avatar
NewLandlord 20th September, 2009 @ 20:32

I have student tenants so I either take three cheques a year (just after student loans are paid) or standing order.

Are you sure you are talking about direct debit? I asked my bank about them and they cost £2000- £3000 to start up because the vank guarentees your payment and puts the onus on the tenant (hence the large setup fees). I think what you are describing is the standing order.

Guest Avatar
Sherrie 28th October, 2009 @ 01:19

I have a potential tenant who has a history of late rent payment, I want to set up a method to collect directly from the tenant's credit card. Does anyone know how this can be done?


Guest Avatar
Victoria Whitlock 22nd October, 2010 @ 12:15

I try to avoid taking cheques - if they bounce, you get charged by the bank. Plus there's all the hassle of cashing them and I worry they'll get muddled up with tissues in my handbag or I'll end up using them as scrap paper for shopping lists or something by mistake. Too fiddly.

Standing orders or direct debits are far easier. Insist the tenant sets up the payment to ensure it arrives on the due date, so avoiding delays with bank holiday/weekend closures etc.

Or take cash. I love cash. Cash is King.

Guest Avatar
Jay 13th October, 2011 @ 09:31

Hi, I have just recently become a landlord and so am very new to this. I had a third party collect the rent on my behalf (10% managment fee) but have decided to manage it myself as I see to all the repairs etc, the tenant has asked to pay cash, but would direct debit if i prefered, but I'm not sure of the implications and legalities of cash payments. for example, do I have to declare this to the tax man? Would very much appreciate advise from the more experienced of you all, cheers.

Guest Avatar
Cardifflandlord 13th October, 2011 @ 15:13

@Jay: Sorry Jay, is that a serious question about whether you have to declare cash payments to the tax man? Surely it's not April 1st and I have been catapulted into some parallel universe?

If you don't know the answer to that then I'm afraid you have no hope at all of becoming a Landlord with all the legal requirements and responsibilities that go along with it.

Keep paying the 10% because you are seriously going to be be so far out of your depth in this industry and whilst I am prepared to help people with genuine issues - if you can't be bothered finding out yourself what your statutory obligations relating to tax and no doubt EPC's, Public Liability Insurance, Gas Safety, Fire Safety and Electrical Safety not to mention your responsibilities to your Tenants and theirs to you then I'm afraid you are on your own.

Go and speak to an accountant who will help you - oh and yes, you have to pay for their services.

F*** me backwards - and I thought nothing would cheer me up today!

Guest Avatar
Jay 13th October, 2011 @ 21:49

thanks for the advise cardifflandlord, the tax question was a bit of sarcastic fun but I was serious about advise from someone with experience to someone (like myself) who is new to the buisness, as for EPC's and everything else you have mentioned it is all in order and has been before I allowed any tenant to use my property, I was simply asking what is prefered by experienced landlords. Thanks anyway, I have also been cheered up today because your not going to beleive this.... my sister is an accountant and no, I dont have to pay.

Guest Avatar
Leanne 2nd November, 2011 @ 21:32

If there are landlords on here struggling to collect rent, my new payment service may be of interest. Email me for further info!

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Direct Debit Collect 2nd September, 2013 @ 06:58

Being financial services provider my opinion will be surely to go with Direct Debit Collection which is applicable for any kind of monthly collection whether is house rent, if somebody has given his car for rent in monthly basis in that case also he or she can receive rent through this

Guest Avatar
nancy 10th March, 2014 @ 04:31


I am a new landlord, and I have just evicted my !st tenant. I asked her to leave as a family member requires the unit. The problem is my tenant is also a co-worker, and she left owing me last month's rent. I did not ask her for 1st and last, because she is a co-worker. Do you have any suggestions?

Guest Avatar
Gary 13th April, 2014 @ 23:45

Great advice on various rent payment methods. I wanted to offer my tenants the most ways to pay to ensure I get paid on time and every time. I stumbled on great site @ www.rentxchange.ca. It offers all the payment options you talked about. Tenants can pay using cash, check, credit card, online or even set up automatic payments and I get all payments directly deposited in my bank account. Thanks for this article or I would have never found this site!

Guest Avatar
Lindsay 12th August, 2014 @ 12:30

Do I set up a Standing Order or a Direct Debit with my tenant for rent collection? Is there a standard template form available to download?

ALSO: Do I collect rent up front (for the month we're entering) or in arrears? I suspect up front but does that mean I collect the deposit AND 1 months rent before the tenant moves in? Do I take it on the day they move in, or in advance?

Any advice is appreciated!

Thanks :-)

Guest Avatar
John Raftery 29th September, 2014 @ 15:54

You can't just set up a DD with anyone. You will need have to have a business turning over about £100k a year. DDs are for organisations only. You could always use a rent collection agency. I use rentcollection.co.uk they collect by DD for you and maintain all your rent statements for about a tenner a month. They also chase bad payers for that.

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Amukoto Prince R 11th April, 2016 @ 11:23

i think this site is the best.....it will help me out alot for my assessment...thankx.


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