Tenants may run into difficulties paying their rent. What should you do? The RLA’s Landlord Advice Team (LAT) advises.
Consider for a moment the factors which may affect a tenant’s payment of rent. In no particular order:
- Changes to benefits – a situation which may only become worse
- Increases in fuel prices and cost of living
- Loss of employment
- Zero hours contracts.
It is therefore becoming more important than ever for landlords and agents to keep on top of overdue rent. The key to successful rent recovery is to follow up.
Keep up the pressure
It’s a fact of life that if a tenant is struggling financially, they will naturally pay the person who is putting most pressure on them to pay. Needless to say, if a landlord or agent neglects to follow up overdue rent, then they will not be paid.
The key to effective follow-up is to act as soon as possible.
To neglect an overdue monthly rent for a few weeks could mean that the amount owing is then so large the tenant has little or no chance of ever bringing the rent up to date.
Do remember, if the rent is due monthly, then by failing to follow up the first overdue rent for a few weeks, the second month’s will also quickly become overdue.
Avoid becoming a contributor to the situation by chasing up the first overdue rent at the earliest opportunity – ideally, within seven to ten days.
In an ideal world, a landlord or agent will hope that a tenant will contact them to explain their financial difficulties. Sadly, this rarely happens in reality.
However, with a tenant in occupation for some years, you may have been able to develop an effective ‘working relationship’ with them. In such a case, it might be easier for a landlord to approach the tenant and explain how he/she wants to help them through their current financial difficulties by arranging a payment plan with them.
In most cases, a landlord or agent should be telephoning or texting their tenant within two or three days of the rent due date if the rent has not been received. A landlord should make effective use of all the different means of communication available.
As a last resort, a visit to the tenancy address might prove useful. In order to help your tenant manage their debt problems, you could inform them of the free money advice available at www.moneyadviceservice.org.uk or by telephoning 0300 500 5000.
If such approaches prove unsuccessful, consider downloading one of the RLA’s standard letters after seven days and send this to the tenant. Follow the links from ‘Documents’ and then ‘Managing a tenancy’ and choose the most suitable template.
Action after three weeks
If there is no response or payment three weeks after the rent was due, then a more serious or less friendly standard letter should be sent.
The letter should remind the tenant of their obligations to pay rent and the inevitable consequence of failing to comply with the terms of their tenancy agreement. Continued failure to bring the rent up to date will leave a landlord with little option but to consider suing the tenant.
This is done by entering ‘Moneyclaim’ into an internet search engine such as Google. This takes you to the HM Courts & Tribunal Service website where you can sue for the recovery of money owed up to a maximum of £10,000.
Such an online Small Claim procedure is very quick and more cost-effective than using court forms.
Before embarking on this action, though, do consider whether the tenant actually has the financial ability to pay the money if sued. If not, there is clearly no point in a landlord paying out court fees when there is no prospect of recovering any money.
Can’t pay or won’t pay?
A clear distinction therefore needs to be drawn between the “can’t pay” and the “won’t pay” tenant. In the first instance, the old “getting blood out of a stone” adage sadly applies. In the latter, a landlord must weigh up what options, within the law, are available for recovering the overdue rent.
Use of guarantors
There are steps a landlord should take to avoid situations of rent arrears. These steps include doing a credit check, asking for references and a guarantor. Ideally, the guarantor should be a home owner in the UK. If needed, this guarantor can be called upon to pay overdue rent or the costs of damages just the same as a tenant.
If none of these actions are effective, the landlord must seriously consider serving a valid Notice to Quit on the tenant. Two such Notices are available, the Section 21 and the Section 8.
Do refer to the RLA’s website or ring their Landlord Advice Team (previously called the Helpdesk) for help before embarking on either course of action.
In addition to this, a landlord should consider attending one of the RLA’s training courses. Details of dates and venues can be found on the RLA website, but act soon, because these popular courses tend to fill up very quickly.