What To Do If A Tenant Stops Paying Rent
Being faced with a tenant who refuses to pay rent is a landlord’s worst nightmare. Dealing with unpaid rent can be time-consuming, stressful, and may cause you to miss monthly mortgage payments. This guide explains what landlords should do if a tenant stops paying rent.
Unpaid rent is just one of the many difficulties landlords face on a day-to-day basis. Dealing with tenants who are refusing to pay their monthly rent can be incredibly frustrating and can have a detrimental impact on not only landlords’ finances, but also their mental health.
It is important for landlords to know where they stand in relation to the law when it comes to unpaid rent. There are certain legal rights afforded to landlords, but there are also certain things they cannot do. If you follow the correct legal procedures you will have the best possible chance of collecting any unpaid rent, which means it is vitally important to understand the laws that apply in this area.
Below, we provide the best practices to follow when a tenant stops paying rent and detail each step you should take. If you have any questions we have not answered, our specialist landlord solicitors are happy to speak to you regarding your landlord query. You can contact us by completing the enquiry form below or by calling 0151 666 9090.
1. Keep A Record Of Payments
Firstly, we recommend that all landlords keep a record of when payments are due and when they are paid by the tenant. This will help you to keep track of any unpaid rent and can be useful if you need to inform the tenant of a missed payment.
It is also beneficial to send receipts of payment to your tenants. A six-month statement is usually the most efficient way to achieve this. It should contain the date each payment was made, the time period it covers, the amount paid, and any amount that is outstanding.
If you decide to start legal proceedings against a tenant who is not paying rent, you will be required to provide a copy of all payment transactions.
2. Contact Your Tenant
Getting in touch with your tenant should be your first step if you notice a missed payment. A phone call, a text message, or an email will initially suffice, though we recommend keeping a record of all written correspondence.
This first contact should be polite and considerate. It is often the case the tenant has simply forgotten to transfer payment and needs a reminder. Getting angry or sending unprofessional messages will not be conducive to collecting any unpaid rent.
If your emails and messages are ignored, you should send a formal written letter explaining to your tenant that they have missed a rental payment.
3. Suggest A Compromise
Many tenants often intend to pay, but are simply short on income when their payment date falls due. They may have recently lost a job or broken up with a cohabiting partner, and these kinds of life circumstances can affect both their ability to afford the rent, and the mindset that helps them to pay on time.
You may be able to reach a temporary agreement with your tenant that allows them to catch up with rental payments over the space of a few months. This is beneficial, as it means you won’t have to go through the complicated process of eviction and finding a new tenant, and usually ensures you are paid back the rent you are owed.
Anything you agree with your tenants needs to be documented so everyone understands exactly what the terms of the compromise are. Send a letter to your tenant with the details and obtain a written confirmation from them that they understand and have agreed to the arrangement.
4. Contact The Guarantor
The tenant may have a guarantor listed on the signed tenancy agreement. If you have not received the rent after 14 days, send another letter to the tenant detailing your next steps, including the potential to seek possession of the property. After this, you should contact the guarantor and request that the overdue rent is paid.
If the tenant fails to meet their obligation of paying rent on time, a guarantor is equally liable for the money. Landlords are able to take guarantors to court if they refuse to pay.
5. Contact Your Landlord Insurance Provider Or Tenancy Deposit Scheme
The majority of landlord insurance policies will cover unpaid rent, to ensure that your income is initially covered. This can help with any mortgage repayments and insurance costs that may arise while your tenant is in arrears.
In addition to this, if the tenancy ends with unpaid rent, you can contact the tenancy deposit scheme with which the deposit is registered and request a deduction to withdraw any unpaid rent from the initial deposit.
6. Start Eviction Proceedings
If the tenant falls into two months of rent arrears and is still being unresponsive and unreasonable, you can begin eviction proceedings. These proceedings will have the goal of seeking possession of your property so you can replace the uncooperative tenant with a new tenant.
Under the Housing Act 1988, there are two options landlords can exercise for evicting tenants with assured shorthold tenancies – a Section 8 or a Section 21 notice.
Section 8 Notice
If the tenant has broken the terms of the tenancy agreement, landlords can file a Section 8 notice. Landlords must specify which term the tenant has broken which, in this case, is the failure to pay rent on time.
A Section 8 notice can be served at any time during the tenancy. It will inform your tenant that you intend to take them to court if they do not pay their rent within a set period. To serve your tenant a Section 8 notice, you must:
- Complete a “Notice seeking possession of a property let on an assured tenancy or an assured agricultural occupancy” form
- Specify on the notice which mandatory or discretionary terms of the tenancy have been broken
- Give the tenant between two weeks’ and two months’ notice to move out
If the tenant does not vacate the property before the date specified on the Section 8 notice, you can issue standard possession proceedings. When making their decision, the court may take into account your behaviour throughout the process. This is why it is vitally important that you follow the correct procedures throughout.
If the court determines that your application is reasonable, they will grant you a possession order which will permit you to get your property back.
Section 21 Notice
A Section 21 notice may be of more use if the assured shorthold tenancy is coming to an end. This type of notice is not fault-based, so you do not need to specify why you want to reclaim the property, and the tenant does not need to have breached any terms of the agreement.
This notice offers a simpler process than the Section 8 notice, which is why many landlords wait for the fixed period tenancy to near its end rather than progressing with the Section 8 option. Once a Section 21 has been served, your tenant will have two months to leave the property. If the tenant does not vacate before the date specified on the Section 21 notice, the landlord can issue accelerated possession proceedings.
Having said this, if you decide to use a Section 21 notice, you cannot reclaim any unpaid rent that may be owed to you.
You cannot serve a Section 21 notice if:
- It will expire before the tenancy’s fixed term ends
- It will expire before a break clause
- Your tenant is in the first four months of their tenancy
- You have not protected the tenant’s deposit
- You have not served your tenant with the government’s How to Rent booklet
- You do not have annual gas safety certificates
- You do not have an Energy Performance Certificate for the property
Deciding which notice to serve can be complicated. We would suggest obtaining expert legal advice before you serve your tenants with either notice to ensure the best possible outcome.
7. Rent Arrears And Court Action
The court can order a tenant to leave the property by a certain date and can also demand that the tenant pays a specified amount to cover arrears and legal fees.
Landlords are also able to ask for a money judgement. This is an ordinary county court judgement (CCJ). If you are granted a CCJ, you are able to take further legal action against the tenant, including sending bailiffs to the property.
A suspended possession order may also be handed down, meaning that a tenant is allowed to stay in the property as long as they adhere to an agreed payment plan to clear the arrears.
Things Landlords Cannot Do If Their Tenant Stops Paying Rent
There are a few legal rights afforded to private tenants, even if they refuse to pay their monthly rent. This is why it is vitally important that landlords follow the correct legal processes in order to get the best possible result for them and their property.
Common mistakes that landlords make when a tenant does not pay rent include:
- Entering the property without permission
- Forcibly removing the tenant from the property
- Changing the locks
- Signing up new tenants before the old ones leave
- Intimidating tenants with violence
- Cutting off electricity and gas
None of the above is permitted. If a landlord is found to have carried out any of these practices it will negatively affect the outcome of a court decision.
How Can Percy Hughes & Roberts Help?
Attempting to get rent from a nightmare tenant can be daunting. Landlords often have a mortgage and bills to pay, and losing rental income can cause significant stress. It is important that landlords understand their legal rights and follow the right procedures in order to either receive any unpaid rent or legally evict a tenant.
Our specialist landlord team, based in Birkenhead, has been delivering the highest quality legal services for clients across the Wirral, Merseyside and the North West for more than 100 years. We understand that dealing with a tenant who is refusing to pay can be worrying and time-consuming. We can provide expert legal advice and instruct you on your next steps, and in cases where the tenant does not dispute the claim, we can offer a standard fee, no-frills possession claim service.
Our landlord solicitors can help you with a range of issues relating to landlords and tenants and have successfully represented numerous residential landlords. For more information on our landlord services, do not hesitate to get in touch with our expert solicitors today. Call us on 0151 666 9090, or send us your query by email by filling in our online contact form.