Help! My tenant has stopped paying rent – what do I do?

This is the seventh in a series of 10 articles written by specialist landlord & tenant solicitor Tessa Shepperson, founder of the online Landlord Law Service.

Help! My tenant has stopped paying rent – what do I do?

Rent is the big problem that worries landlords.  You will probably have expenses to pay such as mortgage repayments, which will fall due whether or not the tenant is paying their rent.

The most important thing is to choose your tenants wisely so this does not happen; I covered this in my third post in this series.  However, that is no help if you are faced with a non paying tenant.   Here are some tips for you (note that this article is written for landlords of assured shorthold tenancies only):

1. Keep checking.  Make sure you keep on top of things and check regularly to make sure that your tenant is paying.  For example if tenants pay by standing order or bank transfer, check your bank account  every day to make sure that payments are coming in as they should.
2. Contact them immediately if a payment is late.  If a tenant stops paying it is very important that you contact them as soon as they default.  Do not wait.  For example, it may not be their fault but may be due to a bank error, in which case they will be grateful to you for pointing it out so they can take the matter up with their bank. Also if they know that you are on the ball and will action non payment promptly it is a disincentive for them to do this.  They will pay if they can to avoid the hassle and cut back on other expenses. If you contact them in person, note that you should also send a letter pointing out that they have not paid rent and asking when it will be paid.  If they fail to answer this, send another, slightly stronger letter, after two weeks.
3. Try to reach agreement.  It is when the tenants first fall into arrears that is the best time to do this.  The debt will be small and it may be that you can agree something with them. For example, if they are good tenants who you would be reluctant to lose, and the wage earner has lost his job, you may be prepared to reduce the rent temporarily to tide them over.  They will be grateful to you and will probably make payment of rent their top priority.  Better a good tenant in situ paying promptly and looking after the property, than a void.
4. Document any agreement carefully.  This is important.  Send a letter setting out exactly what has been agreed.  For example, if you have agreed a rent reduction for six months, point out that this is for six months ONLY and that you will expect payment of the full rent after that time.  Also say that any agreement is dependent on them making the agreed payments and that if they fail to pay, you will be at liberty to exercise your legal rights (e.g. eviction). Needless to say you should monitor the situation carefully.
5. If the tenant is unresponsive.  For example, if they refuse to speak to you.  This is bad news.  If the tenancy fixed term has two months or less to run, or if it is a periodic tenancy, I suggest you serve a section 21 notice now.   Prepare yourself for having to bring eviction proceedings – it may be the only way to deal with this tenant.  Unless you are prepared to let them live in the property indefinitely rent free.
6. Serve a possession notice after two months.  Once the tenant is in arrears of rent of two months or more then this brings into play the mandatory ground for possession based on rent arrears.  You can use this ground to evict a tenant even if their fixed term has a long time to run.
7. After your notices have expired consider proceedings for possession.  This is only a short article and I cannot give details here other than to say that if at all possible I advise basing your claim for possession on a section 21 notice.  The reason for this is that a tenant can defend a claim for possession based on rent arrears, for example, by saying that the property is in disrepair and that they are entitled to compensation which will go to reduce the arrears.  This sort of thing does not happen often, but when it does you can get caught up in a long and expensive case.  There is no defence to a properly brought claim under section 21.

The Rent Arrears Action Plan.
This article is based on a section of my Landlord Law membership site called the Rent Arrears Action Plan, which I wrote to help landlords in this situation.  The plan sets out the matters discussed in this article in more detail, plus there are letters you can download and use and checklists you can print off and put with your paperwork to keep a record of what you have done.  There are also possession notices you can use with detailed guidance notes on how to fill them in.  You can read more about the Rent Arrears Action Plan on my website, plus there is a short video explaining how it works on our You Tube Channel.  http://www.youtube.com/user/LandlordLaw .

OTHER ARTICLES IN THIS SERIES

1. Have you got what it takes to be a landlord?
2. Make sure your property is legal before you rent 
3. Check out your tenants or live to rue the day
4. Why you need to have the right tenancy agreement for your letting
5. All about tenancy deposits
6. How to increase rent the proper way
7. You are here | Help!  My tenant has stopped paying rent – what do I do?
8. I think my tenant has left, can I change the locks?
9. What do you do if your tenant won’t leave when their section 21 notice expires?
10. The various and wondrous ways that tenancies end.

Tessa Shepperson is a solicitor specialising in residential landlord and tenant law. She practices online via her web-site Landlord Law www.landlordlaw.co.uk and blogs at the Landlord Law Blog www.landlordlawblog.co.uk.

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