How to Help Tenants Avoid Rent Arrears

Latest Landlord News by: Madalena Penny

Landlords are still not acting fast enough when it comes to unpaid rent, experts warned.  Landlord and lettings specialists, Legal 4 Landlords, advise that both private and social sector landlords respond quickly to rent arrears.

Rent arrears and lengthy court hearings have been cited as the main reason possession claims have been made against landlords on BTL properties by their lenders.  Out of the 35,000 landlord possession claims in Q3 of 2010, 23, 214 of these lead to orders for both social and private sector properties.  Landlords who wait until the 8-week rule to begin proceedings could face up to 6 months to regain possession of their property and an average of £4000 in unpaid rent excluding legal fees.

Sim Sekhon, spokesman for Legal 4 Landlords said:

“Landlords need to act fast when faced with rent arrears.  If left to accumulate up to 8 weeks without initial action by the landlord, tenants can spiral into a lot of debt making it harder for them to recover the loss.

“For tenants receiving direct housing benefit payments who have lapsed with their rent, there is always the temptation to keep rent allowance for themselves until they are evicted, unto which they can secure further rented accommodation elsewhere.  Recovering rent from such tenants becomes painstaking.”

Mr. Sekhon adds that keeping in communication with your tenant at the onset of arrears is the key to controlling the situation, as is a sensible approach to finding an agreed rate for tenants to pay off any arrears and deter further arrears accumulating.

Under the Housing Act 1988, section 8; a landlord cannot serve notice to evict a tenant until 8-weeks of unpaid rent has accrued, if the tenancy states that rent is to be paid monthly.  This notice informs the tenant that under section 8 of schedule 2 of the Housing Act 1988 you intend to seek a possession hearing from the courts.  If upon expiry of the notice the tenant has still not vacated the property, you can apply to the court for a possession order.  Again if the court is satisfied, an order will be granted.

The timescale on arrears relies on the frequency of rental payments agreed as per tenancy agreement.  If paid quarterly, 3 months must be owed before this notice is served.

Unfortunately for the landlord, even though a possession order informing the tenant that they must lawfully vacate the property, a landlord cannot enforce this without a warrant for eviction.  Again he/she must apply to the court, where court bailiffs will be appointed to attend the property to evict the tenant.

Under Mr. Sekhon’s guidance, a Fast-Track Eviction service can be obtained, but he advises that tenant mediation should be first sought, as prevention is far less costly than the cure.

Tips

• Ensure you have the tenant’s email address if possible and a telephone number and a stable contact address of a  family member or friend of the tenant’s for emergencies.  If you are not receiving a response from your tenant, the contact may have an alternative telephone number for the tenant, but remember you cannot discuss rent arrears with anyone other than the tenant or legal representative.  Be mindful that too much contact with a third party can be construed as harassment.
• Give a contact sheet to each tenant informing them of your policy on rent arrears with an email address and a telephone number explaining that they must get in touch immediately should they be experiencing financial problems in order to address any issue pertaining to rent arrears.  Tenants can be too nervous and embarrassed to speak to landlords about rent arrears, with an email address you are giving them a further option to communicate.  Do not contact them via social media; ie; Facebook.
• Ensure all rents are paid into your bank account on a given date.  You will know relatively quickly if a tenant has defaulted.
• Contact a tenant within 48 hours of default date,  explaining that if they are experiencing financial difficulties contact must be made to negotiate the issue.  Do not visit tenant without giving them 48 hours notice first.
• If you are using the services of a letting agent, ask the agent what their policy is regarding rent arrears and what strategies they employ should arrears arise.
• Don’t just rely on emails, write to them at their address.  This will show a court that you have given the tenant every chance and avenue to rectify the matter.