This has got to be every landlord’s biggest fear – rent arrears. Fortunately, this is an extremely rare scenario and far less common that a new landlord might first fear. However, at some stage every landlord, and every letting agent will come across a “rogue tenant” or one who falls in to financial difficulty. This situation is even more relevant at present with the coronavirus pandemic still very much affecting everyone across the world. What should you do if your tenant stops paying their rent?
Communication is key
Having open, honest conversations is my first piece of advice. Try and have a proper conversation with your tenant, find out what their issues are, they may have genuinely fallen in to difficulty and have every intention of paying their rent but physically can’t. There may be financial help available to them such as Universal Credit, and it would be far better to set up a payment plan with them to pay back the arrears than have no rent at all and let the situation escalate. A genuine tenant with real financial problems will be appreciative of the help and be more willing to work with you than against you.
Not all tenants are as genuine of course, and sometimes a tenant simply chooses not to pay their rent. Sometimes it is harder to have an open and honest conversation, and they may simply not respond to you. The important thing is to keep a record of all correspondence, and if you have a phone conversation with your tenant, send an email after to them summarising the conversation. Record keeping is crucial.
Send rent arrears letters
It’s important that you demonstrate that you’ve attempted communication with your tenant, and it’s good practice to have written evidence of your rent demands. If a tenant misses a rent payment, of course try to communicate by phone and by email to find out the issue, but it’s a good idea to send a formal letter after 2 working days of the rent being overdue. If the rent remains overdue then I would send another formal letter after 14 days – of course, still attempting to have a proper conversation by phone or email in the meantime. Keep copies of these letters and consider perhaps posting one and hand delivering the other, that way you can prove you’ve done your best to ensure they receive your correspondence. Before issuing your tenant with formal notice, warn your tenants of your intention to take legal action as a final opportunity to pay.
Contact the guarantor
If at this stage, your tenant is still not “playing ball” then I would contact their guarantor (if they provided one of course). Write to them formally and advise of the rent arrears. If the rent still remains unpaid, then you should write to the guarantor formally after another 7-14 days, advising them of your intention to take legal action.
Issuing notice
At the time of writing this article, we’re currently experiencing an eviction ban in the UK. I will set out the process for issuing notice based on the situation pre-covid, as we imagine things will return to “normal” at some stage. Once your tenant owes two rent payments or more, you are then able to go down the route of issuing them with a Section 8 notice. Depending on whether they are mid-tenancy or on a periodic tenancy, you may be advised to issue a Section 21 notice in addition, but we’ll assume your tenant is within a fixed term agreement for the benefit of this article.
In order to issue your tenant with a Section 8 notice, first go to the gov.uk website and find the most up to date version of the notice. It’s important you issue your notice in the correct manner to prevent it being invalidated, which could prove expensive. Form 3 is the current form to use for Section 8, and most of it is fairly self-explanatory to complete. An important part to get right is in including the grounds for which you wish to seek possession. Generally for rent arrears you would cite grounds 8, 10 and 11. Ensure you copy the correct wording from the legislation (housing act 1988).
I advise sending one copy by first class post, hand delivering one copy, and always scan your notice and email it to the tenant as well. You can obtain proof of postage if you go in to the Post Office, and I would advise keeping a copy of this as evidence. This way, your tenant can’t argue they haven’t received it! You should also complete a “certificate of service”, also available on the gov.uk website.
Hopefully you can avoid going down this route, and be able to come up with a payment plan with your tenant as this is, of course, the best solution. However, your tenant may not be willing to work with you, may not be communicating with you or may have previous history of accruing rent arrears, in which case this may be your only option. If in any doubt, I would recommend seeking legal advice and there are many good lettings litigators out there.
If you have any further questions, please don’t hesitate to get in touch. I am not a qualified solicitor, so if I feel you need further assistance, I can provide details of someone else that can help. My number is 01279 940840 and email is angela@thepersonalpropertyshop.co.uk.