What to do if your tenants don't pay
February is a tough time on everyone’s wallet, as it’s when the
financial excesses of Christmas come back to haunt us. It’s also
often the time when tenants struggle to make their rent
payments.
Being faced with non-paying tenants is a situation in which no
landlord wants to find themselves. In fact, it’s probably the most
stressful part of a landlord’s job. However, if you take the right
steps it doesn’t have to turn into a nightmare.
Here is a step-by-step guide on what to do if your tenants don’t
pay.
Talk to your tenant
The first thing a landlord should do when having any problem with
their tenants is talk to them, calmly and fairly. Their failure to
pay might only be a temporary issue – especially at this time of
year. Hopefully you can come to some arrangement about when you can
expect to be paid or at least get some money towards the rent and
organise when the rest is coming. It’s always best to find out
sooner than later if there is going to be a problem so you can both
work around it. And remember to always stay professional in your
dealings with your tenants. If you conduct yourself reasonably from
the very beginning it’s going to stand you in good stead should you
have to take further measures.
Consider reducing the rent
If you have a good relationship with your tenant, it could be that
reducing the rent for a short period could be a good option. It
will help your tenant out and could save you the headaches and
costs involved in finding a replacement. If you do this, you might
want to make it clear in writing that the reduction is for a set
period only, and give a date by which the rent will return to its
previous amount.
Find out if local housing allowances could be an
option
If your tenant is unable to pay because they have lost their job or
perhaps their partner has left them, they might now be eligible for
allowances from the government. Tell them to get in touch with
their local council to see what benefits they might be able to
claim to help them with their rent.
Let them leave
If they simply can’t pay, it may be your best option is to simply
let them break their contract (if you’re still within the fixed
term period) and leave your property. Then you can get a new tenant
in and not waste any more time.
What to do if they are unresponsive
Hopefully, a simple conversation with your tenant will be all
that’s needed to solve the issue. However, there may be times when
your tenant refuses to pay and also refuses to respond to your
attempts to contact them either in person or in writing. If so, you
may be able to get in touch with their contacts. If you’re having
no luck contacting your tenant, the next thing you should do is to
contact their financial guarantor if they named one in their
references. This person may be able to pay the rent for your
tenant, or at least get in touch with them on your behalf. You
could also contact one of their referees to see if you can get
additional contact details for them. However, be sure to handle
this with sensitivity and care and don’t mention the rent arrears.
Hopefully this is a temporary hiccup for your tenant, and you don’t
want to damage future relationships by embarrassing them.
What to do if they won’t leave
A tenant who refuses to leave is every landlord’s nightmare. If
all reasonable attempts have failed, you may have to go through the
process of legally possessing your house, starting with serving
notice that you are seeking possession. Following the Housing act
of 1988 & 1996 you have two options depending on where you are
within the fixed period of your tenancy agreement.
Section 8 Notice
If you’re still within the fixed term of your contract (normally
within the first 6 months) you’ll need to issue your tenant with a
Section 8 Notice. With this you will need to detail the exact
grounds on which you are seeking possession. Some of these grounds
are mandatory – i.e. the court must give possession to the landlord
if they are met – others are up to the court’s discretion. The
court may also take into account your behaviour throughout the
process, which is why it’s so important to have been calm and
professional from the start. If the court decides that your
application is justified they will grant you a possession order
which will allow you to get your property back.
Section 21 Notice
Section 21 Notice applies when the fixed tenancy period has come to
an end. It is not fault based, so you don’t need to specify grounds
on why you want to reclaim your property. And the tenant does not
need to be in any breach of terms. It is the simplest process and
many landlords choose to wait the fixed period out rather than
progress with a Section 8. Once you’ve issued a Section 21 Notice,
which must be in writing, your tenants then have two months to
leave your property. It is worth noting, however, that if you go
with the Section 21 you forgo any chance of reclaiming unpaid rent
that might be due to you. But sometimes the best thing to do is
just cut your losses.
Reclaiming lost rent
This is where the deposit will come into play. It may not cover
all of your lost rent, but it should go some way towards recouping
your losses. However, as your deposit must legally be placed in a
deposit protection scheme, you will need to provide the scheme with
proof that you are owed the deposit and your tenant failed to
pay.
Landlord's insurance
If it looks like you are going to have issues with your tenants,
one of the first things you may want to do is check that your
Landlord’s
insurance covers you for problems that may arise. You might
want to think about extending your existing policy to include cover
for loss of rent. And if you’re going through the possession
process, there’s a chance that your tenants won’t be taking the
best care of your property, so check that you’re covered for damage
to your property by your tenant. If in doubt, talk to a specialist
Landlord's
insurance company like Towergate.
So that’s what you can do if your tenants are unable to pay. But
here’s a quick checklist of the things you can’t do;
- Enter the property without permission
- Forcibly remove them or any of their property
- Change the locks
- Sign up new tenants until the old ones have left
