What to Do if Your Tenant Stops Paying Rent

Being faced with tenants who won't pay their rent is a situation no landlord wants to find themselves in. It’s possibly 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 our guide on what to do if your tenants don’t pay.

What's in this article?

What can you do if your tenant doesn't pay rent?
What to do if your tenants are unresponsive
What to do if your tenants won't leave
Section 8 Notice
Section 21 Notice
Deposit collection schemes
Things you cannot do, even if your tenants don't pay
Landlord insurance from Towergate
About the author
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What can you do if your tenant doesn't pay rent?

If your tenant doesn't pay their rent, there are several options you can consider depending on the circumstances. It's important to remember there is a difference between a tenant who can't pay their rent and a tenant who won't pay their rent. You can:

1. 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.

2. 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.

3. Explore housing benefits for private tenants

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.

4. When your tenant still can't pay...

Let them leave, if they simply can't pay it may be your best option. 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 your tenants 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 your tenants 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 and 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.

Download the Section 8 Notice Template

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.

Download the Section 21 Notice Template

Deposit collection schemes

This is where the deposit will come into play and aid the recovery of some of the rent you haven't received. It may not cover all of your lost rent, but it should go some way towards recouping your losses. 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.

Things you cannot do, even if your tenants don't pay

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

Landlord insurance from Towergate

Landlord insurance provides cover specifically for renting properties, including loss of rent cover and property portfolios. For more information visit our dedicated landlord insurance page or call us on 0344 892 1664.

About the author

Mike Stephens is a respected senior industry professional and Fellow of the Chartered Insurance Institute (CII) with well over 40 years’ varied experience in the commercial insurance sector as a director, underwriter, and operational improvement manager.

This is a marketing article by Towergate Insurance.