As the cost of living gradually gets worse, it is increasingly likely that more and more tenants will find themselves unable to pay their rent.
Although this is a disaster for the tenants, it is also a big problem for landlords, who still have to carry on paying their expenses, such as
- Mortgage payments
- Any repair costs or other maintenance expenses
- The cost of gas safety and electrical inspections,
- Letting agent fees (if an agent instructed), and
- Perhaps utility costs if the rent is an all-inclusive rent
So it behoves landlords to deal with this promptly (which can also help tenants too). Here is a quick guide.
1. Be careful in your selection of tenants in the first place
Some problems are unavoidable and are no-ones fault, such as when a tenant with a previously well paying job is made redundant.
However, you can do a lot to avoid problems by careful checking when choosing a tenant.
This is a job which landlords often employ letting agents to do for them, even if they manage the properties themselves later. If so, make sure that your agents are indeed doing proper checks and insist on seeing all the reference material obtained yourself before agreeing to any tenants. Any discrepancies, however minor, should be followed up.
If tenants are lying in the information they give to you, it is often the peripheral matters which will allow you to pick this up, so watch out for things which don’t ‘fit’ with the rest of their story.
2. Keep track of rent payments
The best time to resolve issues of non-payment with tenants is right at the start, when they have defaulted on their first payment.
3. Try to help tenants to pay
For example, this could include
- Helping them to check they are receiving full benefits, and
- Checking to see if any grant aid is available
The website Turn2us can help here. See also our Helping Tenants in Arrears Kit. There is a surprising amount that can be done – see the videos on this page, which give examples of seemingly hopeless cases where tenants were helped to pay and stay in their homes.
If at all possible, try to help tenants to pay. It is the best solution financially for all parties.
4. Serve Eviction Notices
If the situation does not improve (for example, if tenants fail to engage or if there is no help available for them), consider serving possession notices -which is the first stage of the eviction process.
Landlord Law can help with this. For example, see our free Which Possession Proceedings Guide.
5. Issue Eviction Proceedings
If your tenant clearly is never going to be able to pay the rent, then there is probably nothing else you can do.
It will also make it easier for your tenant to claim Council Housing (if they are eligible) as they will be facing homelessness which is one of the criteria for Council help.
We have detailed guidance to help landlords with standard eviction claims, so if you are considering doing this yourself to save costs, you may want to consider our service.
6. Seek recovery post eviction
In most cases, after your tenants have been evicted, you will be left with massive losses. There are three possible ways you can seek to recover this.
Obtaining a County Cout Judgement (CCJ) against your tenants.
If your eviction was based on the rent arrears ground, you would normally have obtained a CCJ as part of the eviction order. Otherwise, for example, in section 21 claims, you will need to bring a separate claim.
There is really only any point in doing this if you tenants have assets you can enforce against. You cannot get blood from a stone.
However, bear in mind that you get six years to enforce a CCJ (and can even enforce after that with leave of the court), so it may be worth keeping track of tenants and taking action later. For example, obtaining an attachment of earnings order after they have got a job.
If you want a firm to handle this work for you, Landlord Action have a good debt recovery service.
Consider bringing a claim against your letting agent
In most cases, this will not be possible as your letting agent cannot be held responsible, for example, if your tenant loses his job.
However, in a few cases, you may be able to show that the tenant was unsuitable and should never have been allowed to rent the property in the first place and that this was due to the letting agent’s negligence.
This was the situation in the case of Hale v. Blue Sky Property Group, where the landlord recovered over £8,000 through the courts.
Consider bringing a complaint against the Council.
One of the big complaints landlords have against Local Authorities is that, even if the tenant is eligible for rehousing, they advise tenants to stay in the property. Which means that landlords are put to the expense of bringing possession proceedings.
In this case, after unsuccessful complaints to the Council concerned, the landlord took his complaint to the Local Government and Social Care Ombudsman.
This was a case where the Council had refused to rehouse the tenants after the landlord had obtained a possession order and had also failed to contact the landlord about the case.
The Ombudsman found that the Council was in breach of the Homelessness Code of Guidance for Local Authorities. The landlord was able to obtain payment for unpaid rent and costs incurred after the possession order had been made, along with an apology from the relevant Council.
So if you, too, are forced to use the bailiffs when your tenant is eligible for rehousing, this may be an option for you.
Probably the two most important tips in this article are
- To take care when choosing tenants in the first place, and
- To try to help tenants to pay by helping with benefits issues and obtaining grant aid.
If at all possible, you should try to avoid eviction as it inevitably results in higher losses (as tenants being evicted usually stop paying).
Eviction is also a very stressful and unpleasant process which drags on for many months. So it should only be used as a last resort.
Find out more about the Landlord Law service and whether it can help you here.