Dealing with tenants that are in arrears is a task that few landlords relish. But it is a very real problem – and one with which you will probably have to contend at some point. So how can you deal with rent arrears quickly and efficiently – and how do you regain possession of your property if you need to?
From the outset, you should remember that many tenants fall behind with their rent for perfectly innocent reasons. They might change their bank account and forget to set up a new standing order, they might be confused about the day on which payment is due, or they may simply forget to make a bank transfer.
As a landlord you should be sensitive to these possibilities, and remember that mistakes do happen. Often, a polite reminder letter or phone call will be all that is needed to ensure that payment is made.
If your tenants cannot pay their rent because of financial difficulties, you should think about considering payment proposals. This is a problem with which an increasing number of landlords are likely to have to contend in the coming months, as public sector layoffs increase.
Many landlords are distrustful of tenants who offer to pay off their entire arrears on a single future date – for example next month. Often this payment never arrives, or simply gets put off again. Instead, you might wish to consider agreeing on a plan whereby arrears are settled in a series of smaller payments.
In the event that payment is still not made, it is generally best to act sooner rather than later. Many landlords prefer not to allow arrears to build up, but instead to strike while the iron is hot.
Send a formal letter reminding the tenant that they are in arrears, and that legal action will be taken in the event that payment is not made. If you took details of a guarantor at the beginning of the tenancy, consider contacting this individual to explain the situation. Reminder letters are often sent on the seventh, 14th and 21st days of arrears.
Many landlords visit properties for which tenants are in arrears. It is important to understand, however, that you may not be legally permitted to do so. If you wish to speak in person to the tenant, you should call in advance and arrange a time to visit. Make sure you give 24 or 48 hours’ notice before turning up. Alternatively, arrange to meet in another location.
You should remember that some landlords find themselves on the receiving end of harassment proceedings. Make sure that you stick to the terms of your contract – and that you leave the enforcement to the courts, rather than taking matters into your own hands.
The next step is to serve your tenants with a possession notice. You will likely use either a Section 8 or a Section 21 notice to quit – so called because they operate under the terms of section 8 or 21 of the Housing Act 1988, respectively.
There are two types of Section 21 notices. A Section 21(a) is used in the case of a periodic tenancy; a Section 21(b) is used to gain possession at the end of a fixed tenancy. Both of these notices require the landlord to give at least two months’ notice – even if they are served on the final day of a tenancy.
If you wish to regain possession during the fixed term of a tenancy, you should use a Section 8 notice. Perhaps the two most common grounds for issuing this type of notice are that the tenant has repeatedly failed to pay their rent on time, or that there is rent unpaid when the notice is served. In the second circumstance, one of the following must apply:
Possession notices should be served via recorded delivery, and all tenants should be named in the notice. To be safe, you may wish to serve an individual notice to each tenant.
In the event that you choose to regain possession of your property through the courts system, you should understand that there are two procedures for doing so.
The first is the Accelerated Possession Procedure. This is designed to provide a quick solution for landlords who wish to regain possession of their property without the need for a court hearing. In order to begin this procedure you need to complete Form N5B, which you can find on the Courts Service website. If you are successful you will gain an order for possession, and the tenant will be instructed to pay the costs of the case. You should remember, though, that you cannot claim for outstanding rent under the Accelerated Possession Procedure. In addition, this procedure can only be used in the following circumstances:
Alternatively, you may wish to seek possession under the ‘fixed date’ procedures – which involve a court hearing. This type of procedure is generally used when the total arrears are equal to at least two months’ rent.
In order to begin fixed date proceedings you must have already served a Section 8 notice, and the notice period must already have expired. You will then need to complete Forms N5 and N119, which are again available on the Courts Service website.
Dealing with arrears can be a difficult and time-consuming business. But it is one with which the vast majority of landlords will have to deal at some point during their career.
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