Dealing with a faulty fridge, sorting out house insurance, buying a new sofa for a property – it’s not easy being a landlord.
With so much on your plate already, the last thing you want is a tenant not paying rent. Getting people to cough up their hard-earned cash is nobody’s dream job. And you also have your own finances to consider.
A late rent payment is a common problem faced by landlords, but dealing with a tenant in arrears doesn’t have to be the nightmare it initially seems to be. Non-payment of rent is a risk every landlord takes but it’s manageable if you understand your options and have a clear plan of action.
So, if you live in the UK and your tenant is behind on rent, what can you do? What rights do landlords have? What rights do tenants have? And how can you avoid having tenants that don’t pay rent in the first place?
Communicate
First up, talk to your tenant.
Don’t turn up announced. Don’t call them 30 times in a row. Don’t send them angry text messages. When you speak, make sure you do so in a calm and professional manner. Aggressive confrontations won’t help anyone.
You want to know exactly why the payment is late. Maybe they simply forgot to transfer the money. Or maybe they have a temporary problem with cash flow. Or there could be an issue between joint tenants in a flatshare.
Discuss whether changing the payment date or method would help. Why not schedule smaller payments on a more frequent basis? Or set up a Direct Debit so they don’t forget?
Offer suggestions. For example, your tenant might be eligible for government housing benefits. Encourage them to speak to the local council for advice on possible government allowances they might be able to claim.
Be accomodating and try to reach an agreement. They might even be able to pay a portion of it now and the rest later. Create a realistic repayment plan and get it confirmed in writing.
However, perhaps your tenant is behind on rent because they’ve lost their job, suffered a bereavement, or split from their partner. If the reason for non-payment of rent is more serious, you may have to find a compromise.
For example, you might consider reducing the rent for a short period to help – especially if they’ve been living in your property for a while and you have a good relationship. This is often preferable to the stress and hassle of finding new tenants. Just make sure any agreement you come to is confirmed in writing – with a clear date as to when the rent will return to its original amount.
Or it may be in your best interest to let them break their contract if they’re still within the fixed term period and are willing to do so. Then you can quickly find a new tenant and start making money again.
Follow Up
After making initial contact, send a follow-up letter about their failure to pay rent on time and to let them know the consequences of unpaid rent. This can serve as evidence that you’ve already raised the issue. It’s considerate to warn your tenants that the letter it is coming via post so they don’t feel threatened.
If it becomes impossible to contact your tenant, the next step is to reach out to their financial guarantor. This person may be able to pay the rent for them, contact them on your behalf, or help you contact them.
Keep accurate records of all payments and correspondence between you and your tenant. Written correspondence rather than phone calls leave a paper trail which is useful for legal proceedings.
Eviction
Worst-case scenario: your tenant refuses to leave or pay. How do you evict a tenant for non-payment of rent?
Firstly, be aware that eviction should only be a last resort. It’s expensive, exhausting, and takes an average of four months to do so.
Secondly, understand that there are certain things you cannot do. You cannot enter the property without permission. You cannot forcibly remove them or their property. And you cannot sign up new tenants until the old ones have left.
It’s only once the tenant falls two months in arrears that the process of eviction can begin.
In order to evict tenants, you’ll start by serving them with a notice that you are seeking possession of the property. You’ll give them a Section 21 notice if you want the property back after the fixed term contract ends and a Section 8 notice if they’ve broken the terms of the tenancy.
Hopefully your tenants will then either pay the rent or agree to vacate. If they agree to surrender the tenancy, you’ll need to decide whether the size of their debt is worth the time, effort and cost of getting them to pay it back. The vacation of the property can save you a lot of hassle and the security deposit will help cover some of your lost earnings.
If they refuse to leave, you’ll need to evict them. However, evicting tenants involves a strict set of legal procedures. We recommend you seek legal advice or contact professional services to make sure you’re following your legal obligations as a landlord.
Avoid this problem to begin with
Checking a tenant’s rental history allows you to see whether they’ve had problems with unpaid raid in the past and helps you vet potential tenants. Conduct a comprehensive screening and choose wisely.
Next, ensure you have a clear tenancy agreement that addresses issues of unpaid rent. Make sure your tenant is clear about exactly when rent is due and how much. Consider policies such as late rent penalty fees, although policies like this can create a bad relationship between tenants and landlords.
Finally, you might consider offering a discount for rent paid on time. This motivates tenants to pay rent promptly and you will spend less energy and effort chasing them.
Are you considering renting your house out? Or perhaps you want to rent a room out to students? Learn more about renting a property as a first-time landlord with Spotahome.