Falling behind on the rent
According to the Association of Residential Letting Agents, there is growing evidence of tenants struggling to pay the bills. The trade body’s latest research found that in the final quarter of 2010, 40% of member agents reported an increase in tenants struggling to meet the rent over the preceding six months, a jump from 35.9% in quarter three.
This is the first time there has been an increase in 18 months.
And it’s a big problem for landlords, as they rely on the tenant keeping up to date with the rent in order to pay their own mortgages. If these problems continue, or even get worse, there is a decent chance that repossessions will increase.
So if you’re a landlord and your tenant isn’t paying the rent, what are your rights?
Get it in writing
If your tenant keeps falling behind with their payments, it’s a good idea to issue them with a rent arrear reminder form, to highlight the fact they owe you money. It’s always good to keep this sort of correspondence in written form, in case things get worse and you need to proceed to the courts.
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You can check out a sample rent arrears notice on the Property Mentor website.
The Housing Act 1988
Should the tenant continue to fail to pay up, you may want to get them out of your property.
Here you have two options: Section 8 and Section 21 of the Housing Act 1988.
If you are still within the fixed term of the Assured Shorthold Tenancy agreement, then you’ll need to issue the tenant with a Section 8 notice (known as such because it falls within Section 8 on the Housing Act 1988).
If you’re trying to reclaim possession of the property due to rent arrears, you can give just two weeks’ notice of your intention to remove the tenant.
However, you’ll need to specify on exactly which grounds of Section 8 you wish to proceed. So for example, you could go for ground 8. This can be applied if:
- Rent is paid weekly or fortnightly and at least eight weeks' rent is owed.
- Rent is paid monthly and at least two months' rent is owed.
- Rent is paid quarterly and at least one quarter's rent is more than three months overdue.
- Rent is paid yearly and at least three months' rent is more than three months overdue.
Should the court find your application is justified, then it is mandatory for them to grant a possession order, allowing you to get your property back.
However, there are other grounds related to rent arrears which may also apply. For example, ground 10 refers to rent which is lawfully due to the landlord not being paid by the time possession proceedings have begun, while ground 11 covers the tenant repeatedly failing to pay rent on time, even if there are no rent arrears at the time of the possession proceedings commencing. The Tenancy Agreement Service recommend making use of all of the grounds that apply to your specific case.
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A problem for landlords employing Section 8 is that should the tenant pay some of the owed rent on the day of the court appearance (so that they no longer owe at least eight weeks’ rent), then the judge may not find in favour of the landlord.
According to the National Landlords Association, this is the approach preferred by many landlords who need to start possession proceedings, as the process (in theory) is much simpler.
That’s because, as Section 21 only applies to tenancies where the tenancy period has come to an end, they don’t have to specify grounds on why they want to reclaim the property. They don't have to provide a reason for wanting to reclaim the property - all they are doing is pointing out that the tenancy agreement is at an end, and they wish to reclaim the property. As a result, it’s far easier for the judge to find in the landlords’ favour.
However, a Section 21 notice needs to be issued with two months’ notice, rather than two weeks. It’s also worth remembering that as you do not issue grounds for the possession of your property, with a Section 21 notice you’ll be giving up on reclaiming that rent you’re owed.
What if they won’t leave?
Sadly, even if a judge grants you a possession order, that doesn’t mean you’ll be able to reclaim your property stress-free.
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If the tenant has not left by the time the notice period expires, you will need to issue them with a notice of intention to seek possession. This is notice that you will be applying to the courts to evict them.
Should the court find in your favour, they will give the tenant a specific date by which he or she must have left the property. It's then time to get the bailiffs in.
However, the courts may choose to ‘suspend’ the order. This means the tenant can remain in the property so long as they continue to meet certain conditions laid out by the court.
Picking the right tenant
Of course, the best idea is to avoid all of that hassle, and make the right decision at the outset when determining which tenant to rent to and begin advertising your property to rent.
For starters, you should always check out the references provided by the tenant. In fact, a more thorough inspection of the tenant may be worth it – the National Landlords Association offers a tenant check service where it will check out a potential tenant’s credit record on your behalf for £8, or a more detailed full tenant check for £28 for non-members.
For more on how to ensure you get the right tenant for your property, be sure to have a read of How to pick a perfect tenant.