I need help; my tenant has rent arrears.
How you deal with rent arrears, does depend on the level of rent arrears you are nursing and possibly other factors too.
The worst case I have dealt with was a client with rent arrears for nine years straight, for a house in Bayswater, London. It was a bizarre, an extraordinary case, how we dealt with that case is different than your typical rent arrears case.
Let us assume we are dealing with a tenant who has rent arrears of 2 months and the rent is payable PCM.
The first thing to do is contact your tenant, ideally by telephone or by visiting the tenant and find out the reason for the rent arrears. Do not just turn up at the let property, make an appointment with the tenant and be courteous.
Due to Coronavirus, tenants are approaching their landlords to ask for assistance in mitigating their financial problems. Most are requesting rent holidays and or rent reductions.
Eviction for non-payment of rent even in respect of rent arrears which accrued before the relevant period, and regardless of whether such arrears result from the impact of COVID-19 cannot be enforced during the moratorium.
Mr Sasha Charles from Landlord Advice UK has published an excellent free booklet for landlords, homeowners, and renters, you can download it from the above link.
Most residential landlords will not waive the rent liability for the relevant period, and the rent arrears will have to be paid sooner or later.
My tenant is not responding to any of my telephone calls.
When tenants have rent arrears, they may be going through challenging times. If they do not have the money to pay the rent, sometimes, they do not know how to deal with the situation. The renter can confront the problem or hide. Those who do not know how to deal with the situation may choose to hide.
If you suspect the tenant is trying to avoid you, leave a note to say something like, “if you are struggling financially, please contact me, so we discuss the matter”.
What you want to convey to the tenant is, if you cannot pay, let us talk!
You can suggest your tenant seek help from CAP. The British Landlords Association supports CAP (Christian Against Poverty) who are brilliant in helping those who are struggling financially and cannot see a way out.
In rare cases, the tenant may have done a disappearing act and is no longer in possession of the property. Speak to the next-door neighbour, to find out if the tenant is still residing at the property.
No point suing a tenant who has no money
Before you litigate, one of the primary considerations must be, if the person you are thinking of suing is worth it. Consider this by removing your emotions and personal differences. If you do win and get a judgement, what good is that if the tenant does not have the means to pay. A hollow victory is useless to man or beast, other than one’s ego.
The worst cases I have dealt with are almost always between friends or family; its often no longer a case who is right or wrong; it becomes a matter of preserving one’s pride.
If your tenant cannot afford to pay the rent arrears, then you need to consider how to deal with the problem. If the tenant has been a good tenant and fallen on hard times, it might be worth considering writing off the debt.
Evicting the tenant, getting another tenant means further legal fees and a void which means rent loss. For that short period, you will likely have to pay council tax on the empty property too.
To write off the debt could be wise, and financially a better option.
Equally, you do not want a tenant who continues to default on the rent. Each situation is different; you are best placed to make that call.
The larger the rent arrears, the less likely it is to be paid
I have always been amazed at how some landlords allow the rent arrears to escalate before they take any action.
It is not unusual to see landlords with six months’ rent arrears before they act.
More serious the rent arrears, more likely the rent arrears are not going to be paid.
If my tenant cannot pay my rent arrears, shall I agree on a payment plan?
Payment plans are ok, but no point settling on a payment plan if the tenant is not able to keep to it.
Many cases, the tenant will be keen to agree to a plan, that does not mean they can necessarily afford it.
You should ask the tenant to complete a means form. This will set out the outgoings and the tenant’s income.
From the means form, both the landlord and tenant can see what the tenant can afford for a payment plan. The tenant is going to be desperate in keeping their home and may agree to a payment plan, which they may not be able to afford.
It is not in your interest to tie the tenant to an unrealistic payment plan.
Due to the Coronavirus landlords need to change the way they tackle tenant rent arrears. They will have to consider writing off rent arrears and will need to be more understanding.
My tenant wants to use the deposit towards the rent arrears.
When dealing with rent arrears, the deposit is often discussed as an option, usually by the tenant. When the tenant vacates, then you need to do an inventory, make any deductions for damage, or rent arrears. At this stage, you may need to call on the deposit money. Do not apply the deposit towards the rent arrears for a tenancy which is likely to be ongoing.
So, in a nutshell, you may need to call on the deposit in part or whole when the tenant vacates, so let the security remain for this purpose.
There are exceptions to this rule if the deposit was not protected, and the landlord failed to comply with the deposit legislation. If the tenant has rent arrears, then by written consent, the deposit money could be applied towards the rent account as opposed to protecting or returning the deposit. You need legal advice and tread carefully if this situation applies to you.
What is a Pre-Action protocol for rent arrears?
Private landlords currently do not need to comply with Pre-Action protocol; however, this may change in the next few months due to COVID-19.
Social landlords do have to comply with the Pre-Action Protocol. The cases I have dealt in court for social landlords, I have found the Pre-Action protocol aids all parties. It crystallises the issues between the landlord and tenant and saves time for the court too.
Will my tenant get a CCJ for the rent arrears?
Yes, if the claim is under section 8 and you are claiming rent arrears. Should you succeed in your case, the tenant will have a CCJ registered against their name.
If you are going to court under Section 8, and you know the tenant cannot afford to pay the rent arrears. If you do not want a money judgement, and just want your property back. Then under section 8, you have the right to ask the Learned judge to grant possession only, but not seek a money judgement.
If the tenant cannot afford to pay the rent and has fallen on hard times, no point making life even more difficult by registering a CCJ against their name.
The Learned Judge is very likely to understand your reason and commend you for your wisdom and grace.
I fully accept some nasty tenants have the means to pay, but simply do not want to pay. In cases like that, go for it, use all the tools in law.
Can the council help with the rent arrears?
Some councils, especially councils in London, are keen to keep the tenant where they are. London council are struggling to deal with homelessness as it is. The council may work with you and make payments toward the rent arrears. There is no harm you speaking to the council.
What should I do if my tenants’ housing benefit is delayed?
The local council should process the housing benefit claim within 14 days. The tenant should contact the housing benefit department if the rent has not paid in 14 days. To ensure the council have all they need to make a payment.
My tenant is on Universal Credit and cannot afford to pay the rent?
Whether your tenants Universal Credit payments have been delayed, or they are struggling to make rent payments, they should contact the Universal Credit helpline. They can advise on:
- Changing how they make payments to the tenant
- Pay the rent directly to the landlord
Universal Credit helpline (free calls)
- Telephone: 0800 328 5644
- Textphone: 0800 328 1344
- Telephone (Welsh language): 0800 012 1888
Keep a rent schedule
You need to keep a rent schedule of the payment due, payment made, the date the payment made, and the balance.
Over the years, I have seen some weird and wonderful rent schedules. You need a rent schedule that is simple, practical, that anyone can understand.
Some rent schedules I have seen, you would need to be an accountant to understand them. Not only that, the schedule usually came with an attachment, a road map to explain how to follow the rent schedule.
The court uses and expect your rent schedule to be simple and to the point. The BLA rent schedule is a lot like the one the court use.
Rent schedules are essential when serving a section 8 notice and are essential should the matter go to court.
I have a guarantor shall I contact the Guarantor?
If the tenant has fallen into arrears, you should contact the Guarantor as soon as possible. A tenant’s Guarantor is usually a parent, close family, or a friend. A guarantor knows their neck is on the line, should the tenant default. As soon as the Guarantor is aware, that debt is accruing the Guarantor is very likely to contact the tenant. The Guarantor will lean on the tenant to make sure the rent account is made good.
The Guarantor is saying the tenancy has expired and he does not have to pay
When a tenant rent account falls into arrears, if the tenant has no means to pay the rent arrears, the Guarantor may in some cases be aware of this. Which means the Guarantor will have to pay the rent arrears provided the guarantor agreement is watertight.
Nearly all guarantor agreements will expressly state the Guarantor shall be liable for the fixed term of the tenancy including a periodic tenancy.
However, if the Guarantor can see, the tenant has turned out to be bad. The Guarantor is on the hook for the rent arrears; some guarantors will seek to wriggle out of the agreement.
The usual initial response from the Guarantor not to pay are:
- I only stood as a guarantor the first year.
- The tenancy has expired, I am not liable.
- I don’t have any money; go away.
- I am not paying, do what you like
Serve a Section 8 notice.
Make sure you serve the new (COVID-19) prescribed section 8 notice. If you have a Guarantor, then serve a copy of the section 8 notice on the Guarantor too, with a covering letter. Should the matter go to court, you are likely to issue a claim against the tenant, and the Guarantor under one claim.
If you can, you should serve a section 21 notice as a backup. If at the time you go to court, you have a valid section 21 notice you have the option to consider pleading section 21 as an alternative ground within the same claim.
Your lawyers should and can also plead several other things in the claim which may avoid a headache and further costs for you later. A good housing lawyer will be aware of what they are. Hence, I do not intend to list them herein.
Issue a possession claim for your property
If you have exhausted all other options; then you need to consider court action. However, before you sue the tenant under section 8, you want to make sure, you have your backside covered.
Suing anyone is not always a one-way street. Under section 8, a tenant can make a counterclaim. You must pay for your legal fees; the tenant is likely to get legal aid and their costs paid.
Midway through your possession claim after a tenant has made a counterclaim, it is not easy to walk away and discontinue your possession claim.
If you discontinue your possession claim, the counterclaim stands on its own head, it continues. If you do discontinue your possession (without consent) claim in some cases, you are likely to be hit by the tenant’s legal fees.
Should you be unfortunate and face a counterclaim, your lawyer should immediately consider serving a part 36 offer.
For possession claims, do not attempt to do it yourself, instruct someone who knows what they are doing. You have about three companies that are good in housing law. In my opinion, the best must be Landlord Advice UK.
For the record, I am not employed, by Landlord Advice UK.
Do I need to instruct a bailiff to evict my tenant?
Provided the Coronavirus Act 2020 ban on eviction has been lifted and things are back to normal: You can only instruct a bailiff when you have a possession order, and that possession order has expired. A standard period the court will give the tenant to vacate and give up possession is 14 days. The court has the discretion to award up to 42 days.
Once the 14 days are up, you can instruct a county court bailiff. You can only use a county court bailiff. You can use a high court bailiff if you have leave to do so.
When preparing the possession claim, you can request leave under the act, to be granted permission to use high court enforcement officers. To apply for leave, later will cost you around £800+.
Seeking leave while making the initial possession claim will cost you nothing extra, and you will save £800.
What are the advantages of using a High Court Bailiff?
Before the Coronavirus, court bailiffs were taking on an average of 8 weeks to execute a warrant.
Post Coronavirus a flood of evictions are likely to overwhelm county court bailiffs. Landlords could easily envisage 2 to 4 months before an eviction can take place.
The advantage of using High Court Bailiffs is the time they take to carry out an eviction. High Court Bailiffs employed by Landlord Advice UK can carry out an eviction within days rather than months.
Time is money, especially if the property is of high rental value, using a high court bailiff is worth considering.I need help, my tenant has rent arrears Click To Tweet
Source: British Landlords Association
Author: Simon Hampton
Date: 8th of May 2020
The correct Notice periods for section 8 & 21, bailiffs and how courts function through the COVID-19 period are greatly affected, please seek legal advice before commencing with any legal procedure. BLA members helpline 01293 855700
other related articles you may wish to read: