There are few things more stressful for landlords than dealing with tenants who fall into rent arrears. It's a bad situation for all concerned.
As a landlord, if you have a good relationship with your tenant then it can be easier to take a sympathetic approach should they fail to pay the rent on time.
But equally, they are in breach of your tenancy agreement and a firm yet fair stance is often the way to get the situation resolved as quickly and smoothly as possible.
Here are Whitegates' top-six pieces of advice for landlords in the sticky situation of tenant rent arrears...
1. A MEASURED APPROACH
The vast majority of tenants failing to pay rent do so for perfectly innocent reasons. They may have switched their current account to a new bank and forgotten to set up a new standing order, or perhaps have simply forgotten to make a bank transfer.
While you should be clear that non-payment of rent is unacceptable, you should be sensitive to the possibly that the failure to pay was simply a slip-up. Don't go in all guns blazing from the off as it will affect your relationship with your tenant further down the line.
Start with a polite reminder either on the phone or by writing a brief letter, outlining that the rent must be paid on time and in full.
2. FIND A SOLUTION
If your tenant is in financial difficulty, and this is the reason for them falling to rent arrears, again take a sympathetic approach initially.
Be mindful of uncertain times in industry. Your tenant may have lost their job or be facing redundancy.
However, handing your tenant a further month to come up with the money, thus paying two months of rent in the same month, can often be a mistake. It can heap more pressure on the tenant and sour your relationship with them further should the money not arrive.
Consider offering them the option to pay the arrears in instalments. While this means waiting for your outstanding rent for a longer period of time, it provides your tenant with a suitable chance to pay off the debt and sympathy now can work in your favour should the issue not be resolved quickly.
3. A FINAL DEMAND
If payment is still not made, either in full or via a package of instalments, it is best to act quickly with a final demand to avoid arrears building up.
Compile a formal letter reminding your tenant they are in arrears and outline the legal action available to you.
If your tenant has a guarantor, contact them to explain the situation and see if options are available for them to clear the arrears.
4. KNOW YOUR LEGAL RIGHTS
In situations such as a tenant in rent arrears, it can be tempting as a landlord to visit the property and explain your rights in person.
This can be a mistake - you may not be legally permitted to visit the property without sufficient notice. Call them first and arrange a time to sit down and discuss the issue. Give 24 hours or even 48 hours notice prior to visiting.
A defensive tenant can often be tempted to counter attack with harassment claims against their landlord so make sure you are complying with the terms of the tenancy agreement from your side.
If legal action is require, allow the courts to do their job rather than taking matters into your own hands.
5. SERVICE NOTICE
If all other options to avoid legal action have been exhausted, it can be the only route to go down for landlords.
Seek legal advice before issuing a Section 8 or Section 21 notice under the Housing Act 1988. If you wish to take possession of your property during a fixed term tenancy agreement, you will need to issue a Section 8 notice.
In order to do this, at least two months' rent must be owed by the tenant and the notice should be sent by recorded delivery.
In the case of a joint tenancy, issue a notice for each tenant.
6. GAINING POSSESSION
If you choose to go through the courts system to evict a tenant in rent arrears, there are two procedures to ponder before doing so.
An Accelerated Possession Procedure does what it says on the tin and puts speed at the forefront of its aim.
If you wish to regain possession of your property without a court hearing, an Accelerated Possession Procedure could be a good option.
If the court finds in your favour as a landlord, the tenant will be instructed to cover the costs of the case and an order for possession will be granted. Be aware, though - you cannot claim the outstanding rent under this procedure and it can only be used if:
* The tenancy is an Assured Shorthold Tenancy
* It is valid and in written form
* You have already served a Section 21 notice with two months' notice having expired
Alternatively, you can seek possession with a 'fixed date' procedure, which does involve a day in court.
To start these proceedings, you must have issued a Section 8 notice with the notice period having expired.
Dealing with tenants in rent arrears is time-consuming and stressful, not to mention potentially costly.
Always try to find a resolution without taking a legal path, but be aware of the options available should you need to get the courts involved.
The vast majority of landlords will find themselves in this situation at some point so knowing your options can ensure a smoother road to resolution.
And remember... your local Whitegates branch is always on hand to help should you need us.