Rent arrears – guidance for landlords

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The month’s theme is on rent and benefit, but the main problem for landlords is when they don’t get it.

This can be very serious for a landlord. Unlike the popular perception of ‘rich landlords’ many are actually on a very tight budget.

The rent is usually needed to pay their own mortgage on the property and some landlords (for example most pensioner landlords) rely on the rent for their main income.

Non receipt of rent can therefore cause major problems for them. What is the best course of action to take?

Deal with it immediately

It is important that you know when exactly the rent is due and check to see whether it has been paid or not.

Your best chance of getting the rent paid in an arrears situation is if you contact the tenant immediately and query why it has not been paid.

Occasionally it may not be their fault and they will thank you for letting them know. Otherwise the smaller the arrears figure is, the better the chance of getting it paid.

When rent arrears figures go into many thousands of pounds many tenants will just give up and wait to be evicted.

Try to reach agreement

In most cases there will be a very good reason why tenants are not paying rent – usually it is connected with either job loss, being unable to work through illness, or one of the tenants moving out, leaving the remaining tenant unable to pay the full rent.

It’s best to try to help the tenants if you can. Some suggestions are:
1.Move the rent payment day to the day after the tenant gets paid. Then they will be less likely to spend the money on something else
2.If there is a spare bedroom, allow them to take in a lodger to get a bit more income. You have to be careful here to make sure that you are not creating an HMO, but this will not happen, for example, if one half of a couple have moved out, as the number of people in the property will remain the same.
3.With a very good tenant, you could consider reducing the rent for a period. However you should only consider this for long terms tenants who have proved themselves and who you would be sorry to leave.

So far as taking in a lodger is concerned, landlords often worry about the nightmare situations that can arise sometimes with subletting. However (for example) allowing an honest tenant whose partner has moved out to take in one lodger will normally be OK. She will not suddenly go mad and partition the sitting room so she can taken in 14 illegal immigrants!

Note that if the tenant refuses to speak to you or is evasive, this is generally very bad news. Normally it means they have been told (eg by the Council homelessness dept) to stay in the property until you evict them.

Serve notice

Even if you are able to reach agreement with your tenant, it is best to protect your position by serving the relevant possession notice or notices – normally a section 8 notice based on rent arrears and a section 21 notice (if your circumstances permit).

You can say to the tenant that this is just a precaution and provided the rent arrears are cleared, you will not be using it.

Eviction

It is never nice to think of evicting your tenant and most landlords will want to avoid doing this if possible. However you need to bear in mind, that if you do not take steps to remove a non-paying tenant – they are effectively living in your property rent free.

Many (probably the majority) of tenants who are evicted for rent arrears, never pay the money that they owe. You may feel sorry for them and want to help, but this should not be at the expense of your own finances and family security. You are an ordinary person, not a housing charity.

It is also important that you do not delay starting the long process simply because the tenant makes promises to pay. I have known landlords end up with massive rent arrears bills through believing tenants.

Indeed in many cases ‘promising to pay’ is effectively negotiating an additional rent free period of time living in your property.

If the tenant is upset that you are serving notice and issuing proceedings tell them there is an easy way for them to prevent eviction – pay you your rent!

Solicitors or DIY?

If you want to deal with the eviction work yourself, or cannot afford solicitors, there is an easy solution – I have a detailed DIY guide on my Landlord Law site which you can read about here.

If you decide to use solicitors, you need to be careful to choose a firm which has experience in this type of work. The solicitor who did your conveyancing or divorce will NOT normally be suitable.

Be careful also to choose a firm which charges a fixed fee. Otherwise you run the risk that they are charging you for their time in looking up how to do it (believe me – this happens).

We generally recommend Landlord Action, or for complex cases, Anthony Gold.