Landlord Guide When a Tenant is in Rent Arrears
Whether you are a professional landlord with a property portfolio spread across London or a first-time landlord renting out the family home you may find yourself dealing with a tenant in rent arrears.
In this blog, our Landlord and Tenant Solicitors look at what landlords need to do if their tenants fall into rent arrears.
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For legal advice for landlords, call the experts at OTS Solicitors on 0203 959 9123 or complete our online enquiry form. Top of Form
Managing rent arrears
Rent problems can occur with the very best tenants so our Landlord and Tenant Lawyers always recommend that lawyers don’t over or under-react when a tenant is first late in paying their rent.
Some landlords are too laid back and either don’t notice or don’t say anything when rent isn’t paid on time. In the long term that isn’t good for the tenant as it can lead to the assumption that on-time payment of rent isn’t important to the landlord or that arrears won't be chased. Other landlords are red hot on day-late payments to the extent that they could be accused of tenant harassment because they over-bombard the tenant with demands. There is a balance to be struck to ensure rent arrears don’t add up (and are therefore irrecoverable because the tenant doesn’t have the assets or savings to pay them) against the risk of losing a good tenant because of the tenant’s temporary financial problem.
Managing rent arrears is down to good communication between Landlord and tenant and getting landlord legal advice at an early stage.
Serving notice for rent arrears
Some landlords are reluctant to serve notice on a tenant to seek possession for rent arrears. That may be because the tenant says their financial problems are temporary (for example, the tenant has been made redundant) or because the tenant has children. Serving notice does not mean possession and eviction; it’s the first step in a long process to recover the property.
Many lawyers for landlords do not recommend delaying the service of notice for rent arrears unless there is a good reason. For example, a guarantor who is good for the rent arrears or there is a particular reason why the landlord will struggle to rent out the property again if the property is repossessed.
Assuming that the possession order will be made quickly and a county court judgment will ensure payment of rent arrears may be taking positive thinking too far. Many tenants won't be able to find another property to rent and will therefore be forced to remain at the property until eviction day and won't have the means to pay rent arrears or will offer an instalment amount that is so small that it will take years to pay the arrears off. That’s why landlords with mortgages or property maintenance bills to pay need to serve notice on tenants in rent arrears.
Under current landlord and tenant law, a landlord has the choice of issuing either a Section 21 notice or a Section 8 notice. However, once the Renters' Rights Bill becomes law a landlord won't be able to apply for no-fault eviction.
Serving a Section 8 notice
A Section 8 notice is the first step in the legal process to evict a tenant in breach of their tenancy agreement.
To serve a valid Section 8 notice a landlord must:
- Have an assured shorthold tenancy with the tenant – other types of tenancy agreement aren’t covered by Section 8 notices
- Identify the Section 8 notice grounds
- Follow the strict legal procedure
If errors are made in any of the above points the notice could be invalid. That means time and money are wasted whilst rent arrears mount up and may not be recoverable if the tenant has no assets and limited income. That’s why it can be best to take early specialist landlord advice from our team of Tenant Eviction Solicitors.
Rent arrears as a ground for possession
Under Ground 8 of the Housing Act, a landlord can serve notice if there are substantial rent arrears. These are defined as:
- At least two months' unpaid rent if the tenancy is monthly or
- At least eight weeks' unpaid rent if the tenancy is weekly
Landlords should be aware that applying for possession under Ground 8 won't secure a possession order if their tenant reduces the rent arrears below the two-month or eight-week threshold before the court hearing. Legal advice for landlords can help a landlord obtain possession even if the rent arrears are reduced by using additional grounds for possession.
Alternative grounds for possession for rent arrears
The court will normally make a possession order if the tenant owes at least two months' rent at the hearing and the landlord served a valid Section 8 notice before starting the possession application. There are alternative grounds for possession for non-payment of rent in situations where the rent is reduced to under the threshold by the date of the hearing.
Unlike the mandatory possession in a Ground 8 possession application, the court can make a discretionary possession order if Grounds 10 to 13 are used.
Ground 10 possession for rent arrears allows landlords to seek possession if the arrears are less than two months at the hearing date. The court considers the tenant’s rent payment history and ability to pay when deciding whether to exercise discretion. Ground 11, for persistently late rent payments, allows a landlord to seek a possession order even if there are no arrears at the date of the possession hearing. However, to secure possession using ground 11, a landlord must prove a pattern of late payment of rent.
Eviction Lawyers may also advise a landlord to consider issuing the tenant with a Section 12 possession application if the tenant has breached the terms of their tenancy agreement (in addition to any non-payment of rent) or a Section 13 application if the property has deteriorated because of the tenant’s neglect or actions. For example, failing to inform a landlord about a substantial leak at the property and thus being neglectful by failing to take reasonable care of the property.
Taking landlord legal advice on rent arrears
It may seem counterintuitive to take landlord legal advice on tenant rent arrears when rental income is down because of non-payment. However, serving notice and trying to get possession can be expensive and time-consuming, especially if a landlord makes a mistake at any stage in the service of notice or during the possession and eviction court proceedings.
Speak to our Landlord Lawyers in London now.
Our Landlord and Tenant Solicitors conduct appointments at our offices in central London or by phone or online through Zoom or Skype consultations.
FAQ by landlords on rent arrears
Can I get possession without serving notice?
A landlord can't get possession of their property without serving valid notice unless the tenant voluntarily leaves the property either during or after the end of the tenancy agreement.
Landlords need to be careful about being accused of landlord harassment as discussions about a tenant leaving may be construed as harassment in extreme circumstances.
What evidence is needed for a possession order when a tenant is in rent arrears?
In all rent arrears possession claims a landlord needs to be able to prove the tenancy agreement, compliance with notice rules and the amount of the arrears.
Landlords need to produce the tenancy agreement, a copy of the prescribed notice, evidence that the tenant was given the correct information, the deposit was protected and evidence of arrears.
The arrears figure is important as if the figure is less than two months’ rent for a monthly tenancy the court won't make a possession order under Ground 8. Possession could be granted on alternate grounds such as a Section 21 notice and no-fault eviction or on discretionary grounds such as persistent late payment but if a landlord is relying on grounds 10 or 11 evidence of late payments is needed, ideally in the form of a due date and received date schedule.
Is an eviction order necessary to secure possession?
Often landlords require an eviction order after serving valid notice and getting a possession order. That’s because in most areas of the country, and particularly London and the South East, rental demand is high and it's difficult for a tenant to find another rental property if their financial situation means they are in rent arrears. If a tenant is hoping that their local authority will rehouse them the reality is that most councils will treat the tenant as having made themselves intentionally homeless if they leave the rental property before the eviction date. Unfortunately, this adds to the eviction stress for tenants and landlords.
Online and London-based Landlord and Tenant Lawyers
For landlord and tenant advice call OTS Solicitors on 0203 959 9123 or complete our online enquiry form.
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