A tenant failing to pay rent on time and falling into arrears can be most landlord’s worst nightmare
Rent arrears can be a significant concern for landlords as they impact cash flow and may require legal action to recover the amounts owed. For this reason, it’s essential for landlords to set the tenancy up correctly from the start and also understand their rights and responsibilities regarding rent payments to prevent and manage arrears effectively. Fortunately, the chance of a tenant falling into arrears is low when the tenant has been referenced by a credit referencing agency before the tenancy begins.
In this article, we offer an overview of what it means when a tenant fails to pay their rent, and what actions landlords can take. We’d like to emphasise the importance of talking to your letting agent and, more importantly, seeking legal advice should this situation ever arise.
What are rent arrears?
Rent arrears refer to the times when a tenant fails to pay their rent on time and results in landlord being owed rent. A tenant can fall into rent arrears as soon as they miss one rental payment.
Why do tenants fall into rent arrears?
Tenants can experience financial hardship for all manner of reasons, as tenant’s circumstances can suddenly change – from lack of employment to an inability to work. In most cases, you will find that maintaining rental payments will usually be a tenant’s main priority. Therefore, arrears of more than one month can be a sign of considerable hardship.
Can rent arrears be avoided?
Landlords and agents are encouraged to maintain an open dialogue during the tenancy and, especially, if a tenant falls into arrears. If the tenant falls into arrears, it’s important to understand the nature of their difficulty. Temporary arrangements can sometimes be agreed to ease the pressure on their finances and avoid the commencement if legal proceedings. Tenants can also be directed to the usual agencies designed to help those in need of financial help and advice.
What are the most important aspects of managing rent arrears?
Record keeping is important in terms of being able to demonstrate that you, as a landlord, or your agent, has been systematically chasing overdue rent. This can be by way of copies of emails, letters, or notes of telephone conversations. The chasing of overdue rent must be appropriate, as anything deemed to be harassment can have serious consequences.
Depending on the circumstances your tenant finds themselves in, and your own financial position, you can negotiate a payment plan in which you agree how to manage any missed payments, as well as any future payments.
What if the tenant can’t keep paying the rent?
If your tenant is in genuine hardship and sees no realistic prospect of that changing in the foreseeable future, then agreeing the ending of the tenancy under mutually acceptable terms is preferable, but not always possible, particularly where a tenant needs help with alternative accommodation from the local authority. Where early release from the tenancy is in not possible, then once the tenant is at least two months in arrears (for most tenancies) landlords can seek possession through the courts. Alternatively, where permitted under the terms of the tenancy, landlords may be able to serve notice to bring it to an end in a few months-time.
When possession is sought through the courts, and whilst your agent will be able to give you an overview of your options and provide general assistance, it is always advisable to seek legal advice regarding both the process and the correct drawing up and service of the required legal notices.
How can I protect myself from rent arrears?
Landlords can insulate themselves from the risk of rental arrears and the costs associated with gaining possession by purchasing a rent and legal protection insurance policy.
If you have any other queries about your let or need assistance finding suitable tenants, our local lettings team can assist you
