How Landlords Should Deal With Tenant Rent Arrears

As many UK landlords already know, there are always some issues that can arise during the course of a tenancy. These can vary from essential repairs to rent arrears and with the UK still slowly recovering from a double dip recession, money is tight all around.

With this in mind Legal 4 Landlords offer landlords some sound advice on dealing with tenants in rent arrears before being forced to take legal action for the eviction of the defaulting tenant.

Some tenants are still struggling financially and many are increasingly finding it hard to keep up with their monthly rental payments as well as dealing with the increasing cost of living. Many tenants experience problems due to changes in personal circumstances, such as redundancy or pay cuts, rather than intentionally refusing to pay rent.

Having to pay the mortgage on rental property and not receiving the rent is stressful for all landlords without Rent Guarantee Insurance, but when a tenant is having difficulty paying the rent, there are still a number of options open to landlords before having to resort to eviction.

• Try to resolve arrears with the tenant to avoid time consuming and often costly court proceedings, especially if they have generally paid in full and on time.
• Discuss a realistic payment plan with your tenant and encourage them to pay what they can each month to keep down their arrears, confirming everything you agree upon in writing
• Seek a money order via the Small Claims Court which will order the tenant to pay back the money they owe. This can happen at any time during the tenancy and you do not need to ask your tenant to leave. If the money order isn’t settled within 14 days then your tenant will have a County Court Judgement (CCJ) entered against their name and the order can be enforced via the courts. (Remember that if your tenant is genuinely not in a position to pay then this may be slightly unfair as you will only be worsening their position).

If the tenant still refuses to pay up or insists that they can longer afford the rent, then landlords must follow the legal process for eviction of the tenant in order to recover possession of their rental property.

Serve Notice To Quit

The benefit of an Assured Short-Hold Tenancy (AST) is that the provisions make it much easier to evict a tenant than other tenancy agreements.

Briefly, there are two ways of serving notice to quit when your tenant has fallen into arrears.

1. Section 21 – end of tenancy possession

Section 21 enables a landlord to gain possession at the end of a tenancy without providing reason. There are two types of Section 21 notices: the Section 21(a) notice for possession of a periodic tenancy (that is, when the fixed term of the lease has expired and not been renewed); and the Section 21(b) notice for possession of a fixed term tenancy.

With the Section 21(a) notice for a periodic tenancy, you must provide notice of two months’ or the amount of time between rent payments (e.g. 3 months for quarterly payments), whichever is greater.

If you want to serve notice at any point during the fixed term of the tenancy, you must serve a Section 21(b) notice. As with Section 21(a) you must provide at least two months’ notice, however the earliest date on which the tenant must vacate the property cannot be earlier than the last day of the fixed term of the lease.

Note: you must have secured the tenants deposit in one of the 3 government approved tenancy deposit protection schemes otherwise the Section 21 notice could be invalid.

2. Section 8 – fault based possession

Unlike Section 21, the Section 8 notice can be served at any point during the tenancy. However, it is a lengthier process so it is advisable only to use this route if you have more than 3 months left of the fixed term.

There are 17 grounds on which you can claim fault based possession, 8 of which are mandatory i.e. if the landlord can prove these then the court must give possession. Rent arrears falls under the mandatory ground 8 as well as discretionary grounds 10 and 11, all requiring two weeks’ notice.

If the tenant refuses to vacate and/or hasn’t paid their arrears after the notice period has elapsed, you will need to apply to the court for a possession order and/or a money order.

Legal 4 Landlords can handle all aspects of debt/rent recovery and are the UK’s leading specialists in tenant evictions.

Under a possession order, the court sets a date for the tenant to vacate the property after which they can be forcibly removed by bailiffs.

UK Landlords are warned not attempt to evict tenants themselves or they could face legal action for unlawful eviction and landlords should always use the professional services of an eviction specialist.