It seems that out of all the issues landlords and property owners face, rent arrears are the most common and most concerning. Sometimes when rent arrears occur, it can be quickly resolved, yet sometimes this is not the case.
Regularly missed rental payments from a tenant can affect a landlord's regular cash flow. If tenants purposely miss payments or even fight against an eviction notice, things can become financially frustrating for a landlord. If you have rent arrear issues with a tenant or issues sorting out an eviction, it is essential to follow the correct legal proceedings and minimise financial strain during these notices.
Why do tenants fall behind on rent payments?
There may or may not be several valid reasons why your tenant may fall behind on monthly rental payments – but as every situation is different, most tend to be fixable, and therefore do not need to result in eviction.
Common reasons tend to be small financial blips, where a tenant's regular cash flow is temporarily interrupted. This could result from unexpected unemployment or a financial emergency, which takes priority over the rent. Temporary personal issues, such as physical or mental illness, can even lead to a one-off failure to pay rent on time.
Alternative payment plans and methods can be set up or arranged between the tenant and the landlord to prevent issues such as these from occurring. If a tenant struggles to maintain a cash reserve for rent throughout the month, it can sometimes pay off to agree to split the rent into more minor weekly or bimonthly payments. These smaller instalments can keep tenants struggling with money management more aware of the need to reserve and put aside rent money. Speaking to these tenants and correcting rent arrears may be the best option before jumping to conclusions and pushing to court claims and evictions.
Discussing with your tenants why they failed to provide rent on time may reveal misconceptions brought on through a lack of efficient communication on both sides. Some tenants believe that they can legally withhold rental payments if they are unhappy with the condition of the property they are renting or are waiting for specific repairs to be made. By having a solid line of communication open between you and your tenant, you can avoid these errors that may impact your receiving rent from your tenants.
If the tenant was unable to pay at all and did not withhold payment on purpose, but due to financial struggles, talking to them can help you reach several conclusions:
- Discussing the most efficient way to pay back the rent missed while maintain next month’s rent.
- In the event of unemployment, making a clear and easy to manage contractual agreement to be paid the rent back.
- Discussing with your tenant the most efficient way to pay rent on time for them.
- Discussing opportunities to set up direct debit payments via the bank.
- Discussing options to pay in smaller instalments to ease financial pressure in the household on a week by week or bi-monthly basis.
- Re-establishing rent payment processes and reminding tenants that rules will be upheld while living on the property.
By talking to your tenants, you can also avoid evicting long-term tenants that have been with you for a long time. You can make it clear to your tenants that while you need to collect rent, you are also there to support them if they need it, and therefore make it easier for them to contact you and avoid conflicts that can negatively impact your reputation, your finances, and potentially your other tenants.
What should you do if a tenant hasn't paid rent on time?
Sometimes talking will not resolve the situation, and you may need to send out notices and maybe even go to court in extreme cases. Before you even start to provide notifications, make sure all your bases are covered to ensure a smooth process pressing tenants for any rental payments missed.
Firstly, ensure you have kept a record of all payments from all tenants at all times. Maybe this has been off issues with the same tenant in the past, and perhaps there hasn't – providing records of the entire tenancy in court legally helps you get the money you are owed back.
If there is an outstanding balance, make a note of this. Make not of all the related details like date payment was meant; if there is still a remaining unpaid balance; if they have left a deposit; if they have pre-aid several months' rent at a time and the duration the rent covers; when payments are due and if they have been pushed into smaller or larger instalments in agreement with the tenant.
Ensure your tenants are aware of all payment dates and that should rent be missed, it will not go ignored and, in extreme cases, will be taken to the legal court.
How to deal with non-paying tenants
Make sure you always take a professional standpoint at all times when dealing with tenants that refuse to pay off missed rent or provide new rent payments.
When is rent is missed, immediately reach out to the tenant(s) in question to grasp the situation and why it happened. In this stage, you will quickly define if this was intentional, a social issue, due to a disagreement or temporary financial struggles. Email them and call them – cover all forms of communication even if you have verbally spoken to them face to face. It is essential to get a record of all communication should any issues occur. If they avoid contact, send them a formal demand by first class mail requesting that the outstanding arrears be paid immediately.
After 14 days, you should contact your tenant rent guarantor and send a letter stating your tenant still hasn't paid back their outstanding balance. Send a second letter to your tenant and let them know that it is within your right to take legal matters and seek possession of your property if they do not pay their outstanding balance immediately.
After 21 days, send a final letter to both your tenant and tenant guarantor. State that the tenant has still not paid off their outstanding balance and that you will be taking legal action.
After 8 weeks, you have the legal right to take forceful possession of your property under the housing act 1988.
We recommend keeping a record of all interactions of all members/groups involved with the tenancy issue regarding rent arrears and eviction to ensure a smooth legal process.
Dealing with eviction & taking legal action
If legal action is achieved, you will need to serve a section 8 notice to your tenant. This notice will inform the tenant that you are taking them to court if they do not pay their outstanding balance within 14 days.
To be legal, you must do this in the legal form stated for validation. You will specifically need to fill out a notice "seeking possession of a property let on an assured tenancy or assured agriculture occupancy."
The tenant is then given between two weeks and two months' notice to move out depending on what tenancy terms have been broken. If they do not move within the allocated timeframe, you need to apply to the court for possession of the property order.
Once this has been granted, you can legally evict the tenant.