Solicitor Tessa Shepperson answers landlords FAQ. This month: Is eviction the best way to deal with tenants who is not paying rent?
These are difficult times and many tenants who previously always paid on time, are now finding it very difficult. These tenants should be treated differently from the habitual non payers that we are all familiar with (and who should be evicted as soon as possible).
First steps
First of all you need to find out why the tenant has failed to pay. In many cases nowadays it will be because the tenant has lost his or her job. If this has only just happened have a talk with them about what their finances are and what they can afford. If they are eligible for housing benefit, an application should go in as soon as possible. The following options should then be considered.
Local authority re-housing
Some tenants will be eligible for re-housing by the Local Authority (LA). This may be the best solution for them, as LA/housing association accommodation is generally cheaper than accommodation in the private sector. The LA have a statutory duty to re-house in the following circumstances:
1. Where the person is threatened by homelessness (e.g. if the landlord has served a possession notice), and where
2. They are a person in ‘priority need’ (basically this means pregnant women and families, and ‘vulnerable’ tenants, e.g. by reason of age and/or disability), and provided
3. They have not voluntarily made themselves homeless.
Point three is very important. It means that the tenant must not move into different accommodation before being re-housed (for example go and stay with relatives on receipt of a section 21 notice). Tenants may also lose their right to be re-housed if the LA consider that they have used money available for rent (e.g. their housing benefit) to pay other debts.
If a tenant wants to be re-housed, it is best if they are evicted under the ‘no fault’ section 21 procedure, while still paying their rent. They will not then be at risk of the LA refusing to re-house them. Discuss this with your tenant. If the tenant is eligible for re-housing, and there is not long to go before the end of the fixed term, then maybe they could afford to pay the rent (or at least a proportion of the rent) for a limited period while applying for re-housing. You would probably have to go to court to obtain a possession order (as LAs often will be re-house until this is done), but this need not cost much, particularly if you use one of the www.landlordlaw.co.uk do-it-yourself kits.
If you can work with your tenant in this way you will both benefit. You will not be out of pocket (or at least not by very much) and your tenant will be helped to more affordable accommodation. You will avoid a situation where they fail to pay, you evict them on the basis of rent arrears, and they lose their right to be re-housed. Which helps no-one.
Reducing the rent
If your tenant has always been reliable in the past, particularly if they look after the property well, it may be worth considering reducing the rent, for example until they find a new job. Particularly if you would struggle to find a replacement tenant. It is better to have a known good tenant in the property paying a reduced rent, than have an empty property with no income to cover your own expenses. Hopefully also your tenant will be grateful to you and will make payment of your rent a top priority in future.
Other options
Work with your tenant to see what can be done to help them. For example will changing the rent payment date help them budget? Or perhaps paying on a weekly or fortnightly basis (although note that if they start to pay weekly you will need to give them a rent book). Can they provide any services for you, the value of which could be offset against the rent? Perhaps they would be willing to do some necessary repair or improvement work to the property, or maybe there is some other service they can provide? Talk to them and see what they can offer.
Conclusion
In these difficult times, many people are struggling to pay their rent. Often it is not their fault. It is important that you talk with them and let them know that you are willing to consider options to help them. Remember that it is often far better to have a known good tenant in a property paying a reduced rent, than having the property empty, no income to cover your expenses, and the cost and bother of finding new tenants.
© Tessa Shepperson 2009
Tessa Shepperson is a solicitor and author, and runs the popular Landlord-Law site at www.landlordlaw.co.uk. The following Landlord-Law services may be of assistance to landlords with non paying tenants:
The Do-it-Yourself kits : http://www.landlordlaw.co.uk/page.ihtml?id=239&catparid=6&step=2&page=shop
The eviction service: http://www.landlordlaw.co.uk/pagedetail.ihtml?id=1396&page=non
(Note that a version of this article appeared originally in the London Landlords Accreditation Scheme Newsletter).
