You’ve found the perfect tenants, they’ve moved in without issue, and you’re expecting smooth sailing with the tenancy. But then you check your bank account and find that rent hasn’t been paid that month. If your tenant won't pay rent - What do you do? There are a number of different options available. Guild Members share their expert advice to help in this tricky situation.
Always remember: There is a huge difference between a tenant that can't pay rent and a tenant that won't pay rent.
So what should your plan of action be?
“When a tenant doesn’t pay, the first thing is a call, email or text to the tenant (the initial check) to ask why,” suggests Joe Gervin, in-house solicitor and Director of LPS in Liverpool.
“Keeping a record of all initial communications is key in case it is required as evidence in court. We would normally recommend a grace period of seven days from due date to allow for banking logistics. If the initial message or call doesn’t work then a formal letter requiring payment forthwith (usually in 7-14 days) is required. Keeping a copy of this letter is imperative. If rent is still not received, then attendance at the property is required. Give 24 hours’ notice that you will be attending to inspect the property to discuss arrears.”
All of our agents agree that communication is key to keep track of payments and to resolve an issue with tenants.
First of all, as a landlord, it is important to check to see if rent is due on time, rather than realising later in the month. Once you've put together a plan on how you're going to communicate with your tenant, it's time to have a conversation!
“Check your bank statement the day after the rent is due,” advises Louise Cawley from Newland Rennie. “Your tenant has a responsibility to pay rent the same day every month as per the tenancy agreement, as if he/she were paying a mortgage, the rent should never be late. If the rent has not come in there may be a simple explanation, a telephone call to the tenant may sort the matter out very quickly.”
“When a tenant defaults with their rent, the first steps are to contact them,” said Suzanne Bellamey of Jackson Green & Preston. “Non-payment of rent does not always mean you have a bad tenant. Sometimes their personal circumstances may change throughout the tenancy, such as losing their job or suffering from ill health and relying on sickness benefits.”
If a miscommunication has happened in the past, now is the time to fix it.
Sarah Green from Mundys says: “Communication is key with tenants to enable the right course of action to be taken in the event that a tenancy is not running as planned. You need to ensure that all the correct information and guidance is provided to the tenant at the commencement of the tenancy so that the tenant is clear on what, when and how payments can be made.”
Contact their guarantor
Does your tenant have a guarantor to pay their rent if they are unable to? Now is the time to find their contact details.
Sarah Driscoll from M&M Estate & Letting Agents says: “Remind the guarantor of their agreement to pay the rent should the tenant not be able to. As with the tenants, keep any conversations and emails professional.”
Emma Foreman from Complete Property agrees that talking to the guarantor could solve the problem.
“If you have a guarantor for the tenancy, speak to them immediately as it is likely that they are unaware of any rent issues and may be in the position to pay the rent over directly themselves,” she says.
Landlord insurance is always a good idea to have in case of situations like rent not being paid.
“If you have any form of landlord insurance now is the time to review the terms,” says Sarah Driscoll from M&M Estate & Letting Agents. “Should you need to make a claim, you want to make sure you have adhered to the T&Cs of the policy. Depending on your insurance, you may find they take things out of your hands.”
Suzanne Bellamey from Jackson Green & Preston has further advice on landlord protection. “I recommend that all landlords take out a ‘Rent Guarantee’ cover offering legal cover, rent arrears and offers financial help for part of the empty period of the property once possession has been obtained through the courts, whilst the property is either being re-advertised or brought back to a satisfactory standard, paying part of the monthly rent.”
Steve Thompson from Thomas Morris says: "A good policy will protect against lost rent when a tenant stops paying but does not vacate a property and will also cover the legal costs involved in recovering possession of the property. This is something we would strongly recommend to any Landlord, though it is important to check and understand the full details of any policy and the cover it provides."
If you are able to resolve the problem and the rent is paid, it is worth looking at solutions to make sure the tenant can pay on time in future.
“If you understand the reason for a late or non-payment of rent, you are able to look at simple solutions. For example, an alteration to the rent payment date so it coincides with the timing of work incomes, or a payment plan if the tenant is struggling to make a single larger payment per month. This will prevent the situation from escalating.”
There may be a good reason why your tenant keeps missing their payments. They may be struggling with personal issues, such as caring for a family member - which is impacting them financially. If you feel like you have a good relationship with your tenant, consider reducing their rent for a couple of months. You can agree upon a length of time and state when the regular rent payments will return.
Your tenant may find paying rent a struggle due to work or relationship issues. They may have been let go from their job or have recently split from their partner. If this is the case, they may be entitled to housing benefits. Tell your tenant to get in touch with the local council to see what they may be eligible for. It may help to pay their rent.
A tenant that is totally unresponsive or outright refuses to leave is every landlord's worst nightmare. You maywant to consider stronger alternatives.
If communicating clearly and giving the tenant time to pay hasn't solved the issue, it is time to consider legal action.
Sarah Green from Mundys says: “If a landlord is experiencing difficulties with a tenant, speak to the letting agent who will provide guidance on how the matter can be handled. A Legal Adviser and Landlord Bodies such as National Landlord Association can also provide useful advice and guidance for members."
The Housing Act of 1988 and 1996 gives landlords two options when it comes to taking legal action against a tenant. This will depend if you are still within the fixed period of your tenancy agreement.
“In the event that the tenant is not keeping up to date with their payments and the landlord is unhappy, it is important to serve the correct section notice at the correct time. A Section 21 notice provides the tenant with a minimum of two months’ notice, coinciding with the fixed term of the tenancy, of the Landlords intention to regain possession. A Section 8 notice can be served where a tenant is two months in arrears and provides a shorter two-week notice of the landlord’s intention to regain possession. Serving the appropriate notice promptly can stop the issue escalating.”
Jenny Owen, Sawyer & Co agrees, though recommends leniency if the tenancy has been successful up to that point. “If the tenant has always paid on time in the past it, depending on the situation you may decide that giving them a small period of breathing space to catch up is fine, otherwise depending on how long they’ve been in the property, you have the option of contacting your solicitor and serving notice under Section 21.”
The Guild recommends seeking the help of a qualified advisor, such as a solicitor, to get the best advice before serving a legal notice.
Be sure to keep clear records of all communications and decisions while you are trying to get rent from the tenant. It may be needed if you go to court, though hopefully, the dispute won’t reach that stage.
Sarah Green from Mundys said: “You should ensure that you keep a record of contact with the tenants, a clear statement of account and copies of letters or notices served to a tenant.”
Change the locks - not under any circumstances. Changing the locks will mean the tenant can take you to court for an unlawful conviction.
Remove their property - another big no. The law that covers this is the Torts (Inteference with Goods) Act 1977.
Enter the property without their permission - as a landlord, you can only enter the property if the tenant has given you persmission, or you have permission from the courts.
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