Dealing with tenants who default on rent – by Tessa Shepperson
Tenants failing to pay rent is a common problem but one which can have serious consequences for landlords, who will normally still have to pay outgoings on their properties. Below is a suggested procedure for you to use:
1. Deal with things promptly
If your tenant fails to pay, you should contact him within a few days asking why payment was not made and asking for him to contact you to discuss. If the non payment was a genuine oversight, this will probably result in immediate payment. If there is a more serious problem, for example if the tenant has lost his job, then contacting him promptly pointing out the consequences of non payment of rent may result in him giving payment of rent greater priority among his limited resources.
Many landlords will initially make contact personally, either by a visit or by telephone. However you should always follow this up by a letter. If no response is received, a second letter should be send a few weeks later.
If your tenant is in financial difficulties it may be necessary for you to reach some sort of agreement with him regarding his rent and repayment of the arrears. Again this should be done as soon as possible - the smaller the arrears figure the easier it will be for the tenant to pay it off. Any agreement should be confirmed in writing.
2. Serve formal notice when rent arrears reach two months/eight weeks worth
If your tenant has ignored your letters and has failed to pay for a second month, you need to be seriously thinking about eviction. This sounds harsh, but it takes several months to obtain vacant possession via the courts, and if the tenant is not paying rent this can result in a significant loss for you. To minimise the loss you need to start the process as soon as possible.
The fact that you have served a formal notice may also wake the tenant up to the fact that he is likely to lose his home, and make him more likely to do something about it.
The significance of the rent being in arrears of two months/eight weeks or more is that when rent arrears reach this level you can take advantage of the mandatory rent arrears ground for possession. This provides that if at two significant times, (1) when the possession notice is served and (2) at the date of the court hearing, the tenant is in arrears of rent of two months/eight weeks or more (and you are able to prove this) then the Judge will not be able to refuse you an order for possession. Note that the notice must be in the proper form and contain certain prescribed wording or it will be invalid.
3. For housing benefit tenants - contact the benefit office
If your tenant is in receipt of Housing Benefit or Local Housing Allowance (LHA), note that the benefit office will normally pay any benefit to you direct after the rent arrears reach this level. This is particularly useful for LHA cases where the benefit normally goes to the tenant, even if both parties would prefer it paid direct to the landlord. You should therefore contact the benefit office promptly and inform them of the tenants arrears. It is a good idea to send them a copy of the possession notice you have just served on them. Hopefully they will then start paying to you direct, which will at least minimise the loss to you.
4. Consider court action.
The rent arrears notice has a notice period of not less than two weeks. If the tenant has not done anything at the end of this time, you should seriously be considering bringing proceedings for possession. If the tenant has stopped the arrears increasing by making payments but is not clearing the arrears, you can also consider bringing a court action for a County Court Judgement.
Finally, the above article is an abbreviated version of a new Rent Arrears Action Plan which is available to annual members of Landlord-Law. This provides not only guidance but also letters you can download and send to your tenants, the possession notices with guidance on how to complete them, and checklists for you to use. For more information visit www.landlordlaw.co.uk. There is a direct link to the action plan from the home page. If you then need to issue proceedings for possession, annual members of Landlord-Law can also consider buying one of our do-it-yourself kits.
© Tessa Shepperson 2008
Tessa Shepperson is a solicitor and author, and runs the popular Landlord-Law site at www.landlordlaw.co.uk.
