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How should landlords deal with rent arrears?

by | Apr 6, 2023

Home $ Rent a Property – 7 Reasons Why It Is The Right Choice $ How should landlords deal with rent arrears?

Are you a landlord struggling with tenants who are falling behind on their rent payments? Do you want to know the consequences of rent arrears and what actions you can take to deal with this issue? If so, then you’ve come to the right place. 

Rent arrears when renting a property can lead to legal action, eviction, and damage to a tenant’s credit report in the extreme end but they don’t always have to end up this way and you can resolve the situation. 

Having said this, there are certainly situations where you need to evict a tenant and you need to be able to effectively deal with this issue. 

We’ll cover everything from contacting the tenant and offering a repayment plan to legal action as a last resort.

rent arrears

What do rent arrears mean?

Being in arrears means that the tenant has failed to pay their rent on time and is now indebted to the landlord, whether for the entire month or just a portion of it, it doesn’t matter. A rent arrear is a rent arrear and it is vital that tenants pay exactly what they owe.

What are the cons of having rent in arrears?

There are a multitude of reasons why you would want to avoid having rent arrears. For instance, there is the fact that your landlord will most likely take legal action against you which may be a long, complicated process and cost you money in court fees too.

Click here to learn more about having a rent guarantor which can prevent situations like this. Especially during short term rents where there is a higher likelihood that a tenant is renting with higher risk such as with bad credit.

As well as this, you may not be able to live in the home you are in for much longer as you face eviction which will most likely happen through a court procedure. The landlord will seek possession of the property and force you to leave.

Furthermore, court action could result in you ruining your image and prospects as a tenant in the future as some landlords will report rent arrears to credit agencies which could mean this will be a fault on your credit report for up to six years.

As well as this, this rent arrear could mean the landlord gives you a poor reference which landlords in the future will look at and base their decision on whether to bring you in as a tenant on.

Can you evict a tenant for not paying rent?

When a tenant fails to pay their rent, landlords may face difficulties but they certainly can evict a tenant if they follow the right procedure and fortunately, there are several options to consider. 

If you have hired an agent to manage your property, they can assist you in contacting the tenant to retrieve the payment on your behalf.

After how much time can you evict a tenant in arrears?

At least two months must go on for no rental payments before a landlord is able to legally take any action on a tenant and have a court send bailiffs to legally remove them.

However, there are a series of options below that go over how you can attempt to settle rent arrears before this time period is met.

How to settle rent arrears as a landlord

From simply contacting the tenant to going to court, there are a range of methods that you can use to settle rent arrears and they should all be used at different times. Below, these methods are listed alongside how to go about executing them effectively.

Contacting the tenant

Don’t be alarmed if your tenant falls behind on rent payments as you can take steps to try to solve the problem like contacting your tenant to see if there was a genuine mistake or a technical issue that caused the payment delay.

Not all property management and accounting software is high tech enough to never make a mistake but for a reliable software on the market that can do a lot more than just manage rental payments, check out lofti.

tenants looking at their rent arrears

Consider offering a repayment plan

Repayment plans are too something to consider as it may be the case that there is a good tenant in the property but they simply have run into a bad financial situation or are going through a period where they forgot to pay rent for whatever reason.

In situations like this, it may actually be beneficial to offer a payment plan and try not to evict a tenant even though for the landlord, having a tenant who has rent arrears may seem like a good reason to get rid of them.

Contact your insurance provider

If your tenant owes you money for rent, your landlord insurance policy may cover you for late or missed payments. Check with your insurance provider to find out how much is covered and how to file a claim. If this doesn’t work, another option is to recover the remaining funds from your tenant’s deposit.

This will be more or less depending on whether the property is in the private rented sector or not and if the property being rented is a furnished property.

Contact the tenant twice

Rent payments must be made on time, and if your tenant is consistently late, you could send another letter after 14 days to remind them that the rent is past due and that if it is not paid soon, you may have to take legal action to regain possession of the property.

Having said this, the process may be slightly different if you are reading this as a tenant who lives in social housing as the eviction process for social housing is different.

Contact a guarantor

If the tenant has a guarantor, send them a letter informing them of the situation and informing them that they may be responsible for covering the rent if the tenant fails to pay.

Take the tenant to court

If your tenant refuses to pay rent or disputes the eviction notice, you have the right to take legal action to reclaim your property as a landlord. If your tenant owes rent, you can petition the court for a judgement against them for the unpaid amount as well as reasonable expenses incurred.

However, if you have not followed the proper procedures or there is no justification for the eviction, the court will dismiss your case and you will have to attempt to evict a tenant in another way.

How to recover rent from ex tenants in the UK

If you’re a landlord thinking about evicting a tenant, you might be wondering if you can recover rent arrears from ex-tenants and the good news is that you can, for up to six years after it was due.

Once the tenant has vacated the premises, the landlord may attend a small claims court to obtain a County Court Judgement (CCJ) for the outstanding rent and if the ex-tenant continues to refuse to pay, there are other options. 

For example, a bailiff can be paid to seize some of their belongings and sell anything valuable in order to recover the owed rent or there could be a court order allowing the landlord to receive a portion of the ex tenant’s salary each month until the rent arrears are paid in full. 

Wrapping things up

This text discusses the meaning and consequences of rent arrears, and outlines the actions that landlords can take to deal with the issue as the topic requires you to know a fair bit of information about the law and regulations.

It is recommended that landlords take steps to retrieve the payment, such as contacting the tenant, offering a repayment plan, and involving the insurer or the guarantor as soon as possible. 

And, as a last resort they should initiate legal action by serving a Section 8 notice of eviction or go to court. Overall, it is essential to follow legal procedures and to communicate with the tenant to resolve the situation effectively.

right to rent document

What if a tenancy is disqualified?

It can be stressful for everyone involved if the Home Office sends a notice to your landlord that someone at the property is not allowed to rent due to their immigration status.

However, landlords are required by law to take action to resolve the problem as they must either serve an eviction notice or take reasonable steps to terminate the tenancy and give the tenant at least 28 days’ notice.

If the property has both legal and disqualified tenants, the landlord must give the disqualified tenants notice to leave within 28 days and the remaining legal tenants can then assign their tenancy to one or more adult occupants with the legal Right to Rent. 

Landlords can ensure compliance with the law and protect their rental property by following these steps and it is important to understand that this is just part of being a landlord as dismissing tenants is a common thing. Sometimes because of poor credit but in this case, because they do not have the right to rent.

How do Right to Rent checks affect subletting?

If you sublet a property, it is critical to understand that you are responsible for conducting a Right to Rent check on any occupier before they move in and this is no longer the landlord’s responsibility if you are subletting as a tenant. 

This check must be performed, and proof of it must be kept in the same way a landlord would have to do it otherwise, you may face enforcement action or fines as a tenant and if you haven’t made this clear to a tenant, the landlord may be responsible too. 

What are the exemptions from right to rent checks?

If you are concerned about the right to rent, there may be some exemptions. First of all, if you live in exempt property such as student halls, educational institution-owned housing, or charitable housing that you have been nominated to occupy.

Secondly, if you’re under the age of 18 when you sign the tenancy agreement; you’ll be exempt until the landlord’s next set of checks is due, even if you turn 18 during that time.

Also, exemptions apply if you are not using the property as your primary or sole residence in the United Kingdom or the landlord is a member of your immediate family, such as a parent.

Finally, if you are a guest in the property, it is not your primary or only residence, the property is vacation lodging and you will only be staying for a short time. Then you are also exempt.

To conclude

It is important to remember the legality of the Right to Rent check as there are fines and punishments for anyone who doesn’t abide by the rules. 

So, read the article again clearly if anything doesn’t make sense and also be sure if you are exempt before you waste your time.

Also, the private rented sector is a complicated topic in general so it is vital you ask the right questions including how to deal with things like rent arrears.

It could be the case that if you are a landlord and find the management of the tenant is exactly what you want to do and you could make more money elsewhere by taking over other people’s property such as doing rent to rent.

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Donnell Bailey

Property expert

Donnell is a property expert focusing on the property market, he looks at a combination of legislation, information from property managers, letting agents and market trends to produce information to help landlords.