What to do when your tenants stop paying their rent

Tenants falling behind on their rent is a huge concern for landlords and one of the most common reasons why landlords evict tenants in the private rental sector. However, there are certain procedures landlords must legally follow if they wish to evict a tenant who has not paid their rent. In this blog, we’ll explain the steps landlords need to take to evict a tenant on the grounds of rent arrears. 

Steps you should take as soon as and before the tenancy starts 

First and foremost, we advise you, if you are a landlord, to keep a record of everything to do with your tenancy from the very beginning of the tenancy – this way, you have evidence that may be needed in the event something does go wrong during the course of the tenancy. 

This includes keeping an inventory and photographic evidence of the property condition prior to the tenancy and any communication you have with the tenants or any actions you have, for example, visiting the property to carry out repairs etc. 

We also recommend you keep a record of all rent payments and what is particularly important if you have multiple tenants in one property, who has made the payments. It can also be beneficial to send dated receipts each month so both parties have a record of payment history. This is because evidence of all rental payments will be required if you choose to start eviction proceedings on the grounds of rent arrears – and the more evidence you have, the stronger your case will be. 

It would also be worth considering taking out landlord insurance, which can in some policies, cover you for loss of rent and legal costs to evict a tenant – this is particularly beneficial for landlords who would find themselves falling into debt if the tenant went into arrears, for example, if you rely on your tenants rent to make mortgage payments. 

The first steps to take as soon as your tenant falls behind on their rent

We always advise, if your tenant is late paying their rent, if possible to start a conversation straight away to find out the reasons behind them not paying their rent on time as it could just be as simple as they one time forgot to make the payment and need a reminder or it may be that they have found themselves in a situation where they have a short-term issue with finances. 

It’s important to remain professional and considerate in your initial communication to find out what the problem is and to see if a solution can be found to avoid damaging your relationship with your tenant and leaving yourself open to potential harassment claims.

In some situations, if they have previously been an ideal tenant, it may be worth offering some flexibility or pointing your tenant in the right direction of applying for housing benefits or debt advice from organisations such as Citizens Advice, Stepchange, MoneyHelper or Shelter. This could mean the rent arrears will get paid off and the tenancy agreement can continue without further issue. 

However, if your tenants speak to you regarding a change in their financial situation which means they are no longer able to afford their rent, which, sadly, during the current cost of living crisis, many tenants have faced. It may be in your interests and the tenants, if the tenant is willing to vacate the property of their own will, to let them end the tenancy early. Although this would be breaking their contract with you, ending a tenancy like this in good faith may mean you can find new tenants much quicker than if you were to go through a formal eviction process, whilst tenants continue to build up rent arrears. 

What to do if a solution hasn’t been found through speaking to your tenants 

If you’ve tried to open a conversation about why your tenant has not paid their rent and they have not been willing to speak to you, work out a repayment plan or other solution to repay their rent arrears – then the next step would be to send a formal, written demand letter to request the rent arrears to be paid in full immediately and state that future rent must be paid on the due date in full every month. 

You must be clear in your letter as to exactly what rent arrears are outstanding, the date they must be paid by and the date future rental payments are due. 

You must also clearly state that failure to pay their rent could result in court action and eviction. However, it’s important to remember to remain professional and act reasonably again, to avoid any counterclaim for harassment. We would recommend seeking legal advice or assistance at this stage, to ensure your letter is written appropriately. 

If tenants do not pay the rent after 14 days and remain in the property. You can then send a further letter showing your intention to repossess the property should they not pay you. You can then follow up again after 21 days with another letter. If you still have no repayment after 14 days of the rent being due and your tenant has a guarantor, you should also write to the guarantor at this stage and again when you write a follow-up letter after 21 days.  

Although it is frustrating as a landlord to be in this situation and it may be tempting to enter the property, remove their belongings or change the locks, it is vital that you do not do so as you would be breaking the law to do so without your tenant’s permission, even though they are in arrears. 

Beginning possession proceedings if rent arrears have not been paid 

Once your tenant is formally in two months of rent arrears, which means they are a month overdue from the due date on your formal letter and have missed another rent payment for the current month, you can begin legal proceedings to repossess your property. There are currently two routes to evict tenants, as discussed below. 

Commonly, landlords eligible to do so after seeking legal advice, have opted to serve a Section 21 Notice on tenants to give notice of their intention to repossess the property either at the end of a fixed-term tenancy or at any time during a periodic tenancy with no fixed end date – although they cannot be used within the first four months of a tenancy or if you as a landlord have failed to meet your legal obligations as a landlord. These notices don’t need to provide any reason for repossession so are commonly used to avoid having to go through a longer repossession process. However, the government plans to abolish Section 21 Notices in the near future, which is something landlords need to be aware of. 

The other option for beginning repossession proceedings is by service of a Section 8 Notice on your tenants. Landlords are able to service Section 8 Notices on tenants at any point during a tenancy. The downside to these notices, however, is that your tenants may dispute the eviction – which means you will have to go to court and provide evidence of unpaid rent and show that you have followed the appropriate process of trying to reasonably resolve the issue through reaching out to your tenant and formal written letters. With Section 21 Notices expected to be abolished in the near future, it may well be that Section 8 Notices and possibly further court proceedings are the only way to legally evict a tenant unless the Government announces any further legislation to replace the Section 21 Notices – which there is no sign of just yet.

It is important at this stage to seek legal advice and assistance, to decide on the most appropriate route in your situation and to ensure you are following the correct legal processes. 

What happens if your eviction proceedings go to court 

If your tenants dispute your Section 8 Notice and refuse to repay their rent and/or vacate the property – then you would have to go through formal court proceedings. 

It is vital that evidence of all communication and rental payment history is provided at this stage for a Judge to rule in your favour. 

At this point, it is up to the Judge to assess the particulars of the case and evidence and use their discretion to reach a decision on what happens moving forward. 

In some cases, a Judge may order that the tenant may stay living in the property as long as they repay their arrears and, from now on, do not break their tenancy agreement in any way. A Judge may also, decide to officially give you permission to re-enter the property to evict the tenant they can also, in some cases, add in a monetary judgement to order the tenant to pay for not only their rent arrears but for all the court fees and your legal costs. 

Seek specialist legal advice

If you’re a landlord and are unsure of your legal obligations, or need advice or assistance in handling a rent arrears case, we highly recommend seeking specialist legal advice from a property law specialist, who can assess your case to guide you on the most appropriate course of action. 

Speak to our specialist team today if you are a landlord or tenant requiring advice on eviction or any other matter related to your tenancy. Call us on 0161 427 0084 (Marple Bridge) 01484 442 700 (Holmfirth) or email info@bridgelawsolicitors.co.uk.

Written by Jonathan Cass