How to deal with non-paying tenants

February 3, 2017

Dealing with non-paying tenants can be both stressful and costly for many landlords. As a rough calculation landlords are advised to budget for the equivalent of one month’s rent per annum in rental arrears. This may sound excessive but recent data* reveals that almost 10% of all tenants in the UK fell behind with their rent payments in August 2016, whilst more than 34,000 landlords issued possession claims between July to September 2016.

Mandy Chandler, Head of Northwood Legal Services, explains how important it is to follow the correct procedures and paperwork when it comes to dealing with tenants that stop paying the rent.

As regulations change so frequently, if you don’t follow the updated process or use the correct paperwork, your section 21, for example, could be invalid. This could mean the court fee is unnecessarily wasted and the eviction process will take longer.

Mandy also provides some helpful advice on how to try and get rental arrears back under control quickly before court proceedings need to be instigated:

Tips for dealing with non-paying tenants

Get it right from the start – make sure your tenancy agreement is drawn up properly so that there is a clear understanding of what happens if the rent is not paid.

Get in touch immediately   – text, talk, email, write. Communicating with the tenant as soon as possible will help to reinforce that getting the rent in a timely manner is essential. If you let things drift the rent arrears are far more likely to get so large that you will be unlikely to recover it all.

Keep a record – ensure that you have records of all rental payments and when they were made. Unbelievably some landlords are unaware of previous payments not being made and have had unpaid rent that has run into the thousands over a number of years

Try to reach an agreement – court action should always be a last resort particularly if they are otherwise a good tenant. There may be certain temporary circumstances why they can’t pay so if you can reach an agreement on how & when the rent will be repaid it may prove to be effective in getting payments back on track. Make sure that any agreement is in writing, that it specifies when the agreement will end & what the consequences will be if the tenant fails to comply.

Don’t keep giving second chances – you are a landlord not a housing charity. It doesn’t matter how good your relationship is with the tenant you still have bills to pay and they have an obligation to pay the rent.

Serve relevant notices – even if you do reach an agreement you should serve the appropriate notices. When arrears surpass two months this means that as a landlord you can then serve formal notice on your tenant under the ‘mandatory’ rent arrears ground for possession. It’s important to do this so that the tenant takes the situation seriously. At this point having the support and experience of professionals such as the Northwood Legal team can be invaluable.

 

With Northwood’s Guaranteed Rent scheme landlords don’t need to worry about rental arrears at all as Northwood are effectively the tenant. This means that if there is ever a need to evict the tenant in the property, Northwood has total responsibility for managing the process, attending court, paying the related court fees and taking the hit in terms of lost rent. In the interim the landlord can relax in the knowledge that they will continue to receive the rent each and every month regardless.

 

If you self-manage your property or have a property with a tenant that is rent arrears that your letting agent cannot deal with and need to go down the eviction route get in touch with the Northwood Legal Services for more information . Alternatively, contact our Legal Helpline on 01329 820420 or  email legal@northwooduk.com and  we will be happy to help and answer any queries.

 

*Upad claim 19th November 2016 https://www.landlordtoday.co.uk/breaking-news/2016/11/tenant-arrears-set-to-soar

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