One of the biggest problems faced by landlords historically is dealing with tenants with rent in arrears. If you have come across this particular situation, then it pays to know your options, your rights and your occupational hazards as a landlord. This blog post will point you in the direction of avoiding unnecessary problems with tenants whilst pursuing rental arrears. It is advisable to remember that the tenant often has a good reason for not paying rent, so the landlord should move carefully and professionally towards a judicious solution.
1) Deduce the problem
- Contact the tenant – Try to do this as soon as possible after the payment has been due with an open and cooperative attitude, so as not to appear threatening in your approach.
- Deduce the problem – the tenant may have a valid reason for a late payment, for example an illness or sudden unemployment
- Housing benefits – if the tenant is eligible for housing benefits, this should be discussed, and if necessary, help them complete the application or deduce if it is a pending application. It is also possible to apply to the Council to pay the landlord directly.
- Remember to respect the boundaries – if the tenant is not willing to discuss the reasons for the rental arrears, or you contact them too frequently for their liking, then this could be classed as harassment under the Protection from Harassment Act 1997.
2) Keep everything on record
- Copy all contact – every time there has been contact, the discussion should be properly documented to avoid any misunderstandings. This can include emails, phone calls, texts, letters or visits to the property. It is advised that all correspondence is copied, as this could be crucial if the situation is more complex than originally anticipated.
- Leave no detail out – if the situation requires the law to be enforced, the Court’s forms need an explanation of what steps the landlord or agent has taken prior to the hearing.
- Address all tenants – tenants are jointly liable for the rent, and in case one tenant is concealing their position from the other, it is advised that all correspondence is addressed to each of them separately to avoid any misunderstandings.
- How to contact – the landlord should consider how to contact the tenant, and usually this information would be included in the tenancy agreement, as tenants may feel threatened if the landlord shows up unannounced. If the agreement does not mention the acceptable notice period, then it is advised to provide 48 hours notice before the visit. If access to the property is refused, then the dates and times of refusal should be noted, with circumstances, if available.
3) Be aware of the tenant’s financial status
- Forms are readily available – it is standard practice to have access to income and expenditure forms for the tenant, so don’t feel it is unreasonable to broach the subject.
- For the avoidance of doubt – the tenant may have reservations about providing the incomings and outgoings, but it can be beneficial as it helps the landlord decipher if the rental arrears are a long-term problem or only short-term. If the problem is long-term, it is worth the tenant and the landlord discussing if the tenant is able to keep up the rent. This could eradicate rental problems in the future.
- Work together for a solution – if it is possible, discuss with the tenant about making up for missed payments by providing an additional sum each month to the usual rent, as it is likely that they will be also feeling concerned about the missed payment. Ensure that all decisions are properly recorded once again to ascertain that no misunderstandings occur.
4) Make sure the tenant is kept in the loop
- Accounts of rental payments – provide the tenant with quarterly rental statements documenting the payments made and missed. If the payment was made in cash, make sure that both the tenant and the landlord sign the receipt.
5) The appropriate time to take legal action
- The correct approach – if all the previous steps have been carried out and the tenant is still in arrears, then it is advised to seek legal advice for serving a notice to the tenant.
- Forms of notice – the two most common are Section 8 and Section 21 of the Housing Act 1998, and which one you serve will depend on the circumstances of the case. If you choose to serve a notice, then be aware that some forms found online are invalid and will only elongate the process. In addition, it is advised that the landlord does not try to issue their own notice, as these can also turn out to be ineffective. Over the past 12 months, there have been many changes to the area of serving notices, so speak to the legal experts before proceeding.
- Guarantors – if possible, speak to the guarantor to remind them of their legal obligations. Similar steps can be taken with the guarantor to agree a payment plan. The harassment issues are the same, so be careful in how many times you contact the guarantor.
If you do come across problems with tenants, then please do not hesitate to contact Taylor Clarke Estate Agents for advice on dealing with problem tenants, and we will do our best to help.