A Comprehensive Guide To Dealing With Rent Arrears

Dealing with a renter who’s behind on their rent can be a frustrating and stressful scenario. The Coronavirus pandemic pushed many tenants into rent arrears which, in turn has placed a strain on their landlord’s finances.

Let’s take a look at some practical steps landlords can take to obtain the money they’re owed. And, if the situation appears irreversible, landlords can terminate the tenancy. But first, what exactly does the word “rent arrears” mean?

What Is Rent Arrears?

Rent arrears refers to the monthly rent owed by a renter under the terms of their tenancy agreement. The agreement between the tenant and the landlord clearly defines the amount and frequency of payment to be made.

A tenant who is behind on their rent has effectively broken the terms of their rental agreement, which could have consequences for their tenancy if they are not remedied.

Tips to Avoid and Recover Rent Arrears

1. Keeping a Record

Keep track of when the rent is defaulted or not paid on time by the renter. Rent arrears experts recommend sending the receipts to the tenant after each payment is made and notify them of any shortfall.  If necessary, a schedule showing the accrual of any shortfalls over the full duration of the tenancy will help.  That way the accumulated arrears figure will firmly be in both parties minds and avoid arguments which may arise over a difference of opinion etc.

This approach also assists landlords in keeping track of the situation, with a view to ensuring it does not worsen.  It also reminds the tenant of their obligations under the lease terms of the agreement.

The primary goal should always be to get the tenancy back on track and avoid the need for the landlord to initiate formal recovery actions to terminate the tenancy.   After all, there are always bumps in the road.   A little latitude can go a long way to strengthening the relationship between landlord and tenant and promote the longevity of the tenancy.  This is beneficial to both the landlord and the tenant.

2. Maintain contact

In the first instance, the correspondence should be kept light but clear notifying the tenant them of the shortfall / accumulated shortfall and give them an opportunity to detail how they intend to address the arrears.  It is not essential to warn them that outstanding arrears could lead to legal action if not addressed but it does not harm you to mention that there may be consequences to the continuity of the tenancy and their credit file if the situation persists and/or worsens.

An application to the county court under whose jurisdiction the property is located should always be a last resort when all other forms of compromise have been exhausted.  It’s a serious and costly commitment to terminate a tenancy, and so it should not be a decision taken lightly.

When the tenant’s arrears have accumulated to more than two months’ rent, a landlord should consider formal recovery action.   If there’s a guarantor involved, notify them of the breach as well, perhaps even send them a copy of any notices served and inform them that there may be implications for them in parallel if the situation is not resolved.

It is quite often the case that a guarantor may intercede to help bring the tenancy back on track.  If the rent is not paid, the landlord has the right to take action and seek an order for possession of the property under the Housing Act 1988 (as amended). It is again stressed, that this should only be used as a last resort once all other avenues have been explored and failed to get the tenancy back on track.

a person signing an action letter for rent arrears

3. Send a Notice Under Section 8

A section 8 notice essentially warns the tenant that if they do not remedy the breach within a certain time frame, as set out in the notice, then their landlord may pursue formal recovery actions by way of the county court. The mandatory period between serving the notice and enforcement was markedly extended during the Coronavirus pandemic, but the time frame has returned to pre-pandemic levels.

There are many that would advocate serving a section 21 notice in parallel but the one is independent of the other and stress varying grounds on which possession proceedings may be brought.  The section 8 notice is a shortened time frame as it sets out a specific breach.  A section 21 notice is technically a non-fault notice seeking possession but is often used in circumstances where a tenant has breached the terms of the tenancy.

If you’re facing any payment issues with your tenants, Landlord Assist can help you out. Their enforcement team and rent arrears expert UK can help you recover rent arrears and handle tenancy disputes – from initial contact, to mediation, serving notices – right through to eviction proceedings and enforcement by way of a bailiff.

They can efficiently and effectively discern your circumstances and detail a plan of action to try and get the tenancy back on track or navigate you through the eviction procedure when all other avenues for remediation have been exhausted.

Get in touch with them today for free, impartial advice.

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