What to do if your tenant has stopped paying rent?

There are lots of reasons why it’s great to be a landlord. But it’s not always plain-sailing.

When tenants don’t pay their rent, for example, things can get tricky. It could be argued that when it comes to managing rental properties, frustration is par for the course. But the impact can be as financially draining as it is emotionally.

With overheads and financial commitments to consider, the costs involved in trying to fix the problem of a non-paying tenant can be damaging.

It’s easy to let a situation like that get to you, but if you act reasonably and decisively, you’re more likely to find a resolution that will last. If you’re going to get things done you need to stick to the letter of the law and follow a strict process. It also helps to have specialist landlord insurance in place.

Of course, prevention is always better than a cure, so choosing good tenants for your property is the first step to ensuring the rent gets paid. This means having a thorough screening process and making sure you vet each tenant properly.

However, things don’t always go according to plan, and despite your best efforts, you may find yourself with tenants who are not paying rent or time (or seemingly not planning to pay it at all).
 

Here are nine steps you need to take if your tenant has stopped paying rent

1 Find out why

The first thing to do is to establish the reason why your tenant has stopped paying their rent.

If you’re lucky, it could be as simple as forgetfulness or an error in setting up the standing order.

Get in contact with your tenant and start the conversation – politely. Try to reach them by phone or, failing that, WhatsApp. Discuss the issue calmly and be as sympathetic as you can.
 

2 Plan a way forward

Once you have established the reasons why your tenant is struggling to pay rent, you need to suggest a way forward.

This might be a payment plan that allows your tenant to pay their debt over a period of time. An alternative arrangement could involve your tenant appointing a guarantor if they don’t already have one.

It’s important that you are very clear about what you would like your tenant to do – and what you plan to do. Your tenant needs to know that further action could be taken against them if they continue to miss payments.

3 Write a letter (or letters) to your tenant

If you are struggling to get hold of your tenant, you’ll need to write them a letter – send either First Class or hand delivered. Be very clear that they are in arrears, the amount they owe, and that the amount is payable immediately.

If, after 14 days, you still have not heard from your tenant and no payment has appeared, you need to write a second letter – both to the tenant and their guarantor if they have one. Set out the situation again and let them know the Housing Act 1988 allows you to take legal action to regain possession if payment is not made.

If you’ve still not heard after 21 days, it’s time to write your third and final letter confirming you are taking legal action.
 

4 Start eviction procedures

To avoid problems down the line, it’s important to follow official eviction procedures to a tee.

Serving a Section 8 notice on your tenant lets them know they have 14 days to pay their outstanding rent or face being taken to court.

You need to specify which term of the tenancy agreement they have broken (in this case, failing to pay rent) and give them a notice period to vacate the property.

5 If your tenant doesn’t leave…

If your tenant refuses to leave in the allocated time period, you’ll have to apply to the court for a possession order.

If you are claiming for rent owed, you will need to use a standard possession order procedure.

However, if you are not looking to make a claim on rent arrears, you may be able to use an accelerated possession order.
 

6 Go to court

If your tenant doesn’t respond to your demands for rent, you are entitled to take legal action. You are within your rights to ask the court to make a judgement against your tenant for the arrears and costs incurred.

But be warned, if you haven’t followed the correct process, the judge may dismiss your case.

The court can take the following actions. They can order the tenant to:

·         Leave the property by a specific date
·         Allow the tenant to stay providing they pay the outstanding amount
·         Pay you a specified amount
·         Leave the property and pay a specified amount to cover rent arrears, court fees and legal costs
 

7 Warrant for possession

If your tenant doesn’t leave the property by the date set in the possession order, you can ask the court for a warrant of possession.

This means a bailiff can evict the tenant if they do not leave by the date specified in the warrant.
 

8 Act within the law

As already mentioned, it is really important to follow all legal procedures.

As well as following the steps above, that includes not harassing your tenant and not stopping any services to the property such as gas or electricity. You must never use aggressive tactics to get your point across, evict the tenant or claim the money owed in rent arrears.

You should also give the correct notice periods when starting eviction proceedings.

9 Get cover for unpaid rent with landlord insurance

As a landlord, it is impossible to predict whether a tenant may stop paying rent or when they have the money to start paying it again. However, you can get cover for rental income as a landlord to make sure you’re not out of pocket.

At Insurance Choice, we can help you find the landlord insurance cover you need to protect you, your property and your tenants. It can include cover for the loss of rent for times when your tenants aren’t living in the property.

Get in touch with the team at Insurance Choice to find out how we can help you.