Tenants Not Paying the Rent

What you can do if your tenant has stopped paying the rent?

Firstly, do not panic... this is an increasingly common problem, and whilst it is inconvenient (and no doubt giving the landlords some serious cash flow concerns), it is a problem which can be dealt without too much fuss.

Secondly, we need to remind you not to harass your tenants, as you could be fined up to £10,000, and you certainly should not illegally evict your tenants as this could result in a prison sentence.

These are not our rules, we fully understand how frustrating it is having to sit on your hands whilst your tenants live rent free in a property you pay the mortgage on – but we need to take you through the correct legal process - we are by no means a soft touch when it comes to dealing with non-paying tenants.

What landlords can do to start with

Find out as much information about the apparent problem with regards to the non-payment of the rent. However keep an open mind with regards to whether the tenant is being truthful, especially if you suspect they are buying time in order to do a ‘moonlight flit’.
In our experience, a good gauge will be to ask the tenant to pay a reasonably small amount off the rental arrears that day - for example £100, depending on how much they owe. This could highlight to you whether they have any serious intention to pay the arrears or not. Obviously if they maintain they cannot pay (any amount), without any believable reason, then you are right to be suspicious.

If the tenant is prepared to pay towards the rental arrears, treat this as a positive sign and try to put a realistic payment plan in place to pay the remainder or the arrears.

Check you are up to date with your property inspections and if you are not, arrange one with the tenant as soon as possible and check that the property is being lived in by your tenant and that there are no subletting issues.

Depending on your financial situation, you may what to speak to your mortgage lender.

If you have a rent guarantee in place, now would be the best time to make contact with the insurance provider to report the issues you are having. Most rent guarantee providers allow up to 28 days after the rent was due for you to file the claim.

When to approach the guarantor with regards to rent arrears

When it comes to tenants not paying the rent, the best advice we can give you is to prevent the situation in the first place, and the best way you can do that is by taking out a full tenant reference, and if you are in any doubt to request a guarantor and essentially complete a full reference on the guarantor also.

A guarantor is liable to the rental payments as the tenant is, which means if the tenant fails to pay, then the guarantor can be asked to pay. There are no set guidelines for when to ask the guarantor to pay the tenants rent, however as the guarantor is required to pay at the same terms as the tenant then they could be asked to pay when the rent is 1 day late – However, it might be best if this is the first offense, then it might be better to wait somewhere between 7 and 14 days before you approach the guarantor.

When non-payment of rent causes cash flow concerns

Non payment of rent is one of the most common problems experienced by landlords and more often than not a very costly one - particularly if the landlord has a mortgage on the property which requires repaying regardless of whether the tenant pays the rent or not!
A tenant not paying the rent on a mortgaged property means the landlord has to meet the mortgage payments using their own savings or other income, which often results in the landlord themselves being faced with financial difficulties. If you are in this situation it is essential you speak to your mortgage lender as soon as possible to discuss the situation and the possibility of temporarily reducing your repayments.

Reasons behind the tenants unpaid rent

If a tenant has missed payments, but has now resumed payments without catching up on their missed rental payments, we call these missed payments the "rental arrears" and they ought to be recovered as soon as possible, statistics show that the longer it is left unpaid, the less likely you are of recovering it.

However, if the tenant is now paying the rent reliable then it might be possible to arrange a repayment plan. Although in the majority of the cases the tenant stops paying altogether and makes no attempt to meet the rental payments.

As soon as a rental payment is missed you should try to find out the reason for non-payment - Do they seem genuine? Could there have been a change in the tenant’s personal circumstances such as change of job, or unemployment? The landlord should try and find out as much as possible about the situation.

If you let the scenario drag on for months, hoping that the tenant will pay, the rent arrears might ultimately spiral out of control, towards the point where the tenant will never have the ability to pay them. You should contact us as soon as possible to find out how long before the eviction process can be started. Moreover, if they know you’ll be on to them rapidly, they are much more likely to give their rent payments priority.

Repaying the rent arrears

If a tenant offers to repay the rental arrears to avoid court action, the most important thing to make sure is that the tenant starts repaying the debt straight away. Unfortunately there are many serial rent avoiders who know all too well how to make convincing promises to repay all the debt “next month”, when they have received their bonus, their bank corrects a banking error, an inheritance is paid, a tax refund is received, (insert excuses here!) – and 9 times out of 10, the next month comes along with just another excuse, and no sign of the cash, we have all been there!

What is much more effective is if the tenant is encouraged to make small, but regular payments towards the arrears, this goes someway to displaying a higher level of commitment to dealing with the arrears. If your tenant is unwilling to make any payments towards the arrears then it is a strong sign that they do not intend to deal with the problem at all. If this is the case we strongly recommend that you speak to us immediately.

What if your tenant is suffering real hardship

If you are concerned your tenant is suffering genuine hardship you could suggest that they get in contact with their local Social Services Department who will be able to give them advise on housing and benefit payments. (Unfortunately there is a growing trend of private tenants deliberately withholding rent to prompt eviction action which ultimately makes them a high priority for the council to re-house on their social housing schemes. If you believe this to be the reason for your tenant not paying the rent you should speak to us as soon as possible.)

How to minimise your losses

When tenants stop paying the rent, particularly where there has been a significant change in their financial circumstances, landlords need to be realistic about the chance their tenant will be able to meet the ongoing rental payments. It is unlikely that landlords will ever recover all outstanding losses. In many rent arrears cases the best solution is often repossession and for a landlord to re-let quickly to minimise their loss. Therefore it is essential that tenant eviction proceedings are started promptly. On average Evictions South East can save a landlord in the region of 6 to 8 weeks worth of rent. Landlords concerned about incorrectly registered deposits should read this.

QUICK CONTACT

Evictions SouthEast has a dedicated team of legal personnel ready to help you with your tenancy problems. We offer a free initial case review to give you some helpful information on how best to proceed with the case and what the likely outcome will be. Should you wish to proceed we will take on your case immediately with our transparent 3 step eviction process all based on a fixed fee pricing structure.

Evictions South East have a 100% success rate to date.