What should a landlord do if a tenant falls into arrears?
Jordan, Senior Property Advisor, offers some advice to landlords who are facing rent arrear issues with their tenant...
Estimated reading time: 6 minutes.
As a landlord, you’re likely to face many different issues over the years. One such issue could result from a tenant falling into arrears with their rent. This is a difficult situation to navigate for several reasons. Firstly, you’ll be curious to know why your tenant has fallen into arrears in the first place. Secondly, you’ll want to ensure you address the issue in a fully compliant way in terms of the legislation you must follow during the process of trying to resolve it.
It can be said that most private landlords do not necessarily prepare themselves for what they should do if their tenant suddenly falls into arrears. When things are going well, payments are on time, and there are no complaints, landlords can fall into a false sense of ongoing security and take on a “I doubt it’ll ever happen to me” approach - but life can spring many things upon all of us, and this can include your tenants suddenly facing some form of financial hardship.
Below, we cover a few of the things a landlord should do and not do while chasing their tenants for rent arrears, including the legal notices that must be legally used, and the process you should consider following to successfully handle this complicated situation.
Why do tenants fall into arrears?
In our experience, there are typically two main reasons as to why tenants fall into arrears. There are tenants who regrettably fall into arrears as they face financial difficulties and find that they simply cannot afford to pay the rent at that moment in time - perhaps they recently lost their job and are struggling to find work again or faced a sudden costly life expense that they didn’t foresee or have adequately covered with savings. Then there are tenants who can be far more troublesome as they have the funds to pay the rent but choose not to do so. In these instances, we often find that it’s because of a dispute, such as a tenant believing that a landlord hasn’t rectified a problem and therefore feel they are within their right to withhold rental payments.
Each case will be different, and your tenant will have their personal reasons for why they have fallen into arrears, but as a landlord it’s your job to have a process in place that allows you to deal with the issue in an efficient and legally compliant manner.
Read: Did you know we offer a Rent Collection Service?
What to do and what not to do when chasing rent arrears
We believe that in most cases, communication is the key to sorting out a rental arrears issue. As soon as you’re aware that a tenant is missing payments, you should contact the tenant sensitively and see if you can find out some information as to why your tenant has missed the payments.
Finding the source of the problem will allow you to quickly understand whether your tenant is missing payments due to financial difficulty, or whether they are withholding rental payments for another reason. Do bear in mind that even if the tenant is facing financial difficulty, they may not necessarily want to reveal the full story to you, so it’s something you will have to keep a very close eye on, and also act on, if necessary, if they continually promise to catch up with their payments in the near future but fail to do so.
In the best-case scenario, you and your tenant will be able to come up with a plan that allows them to successfully catch up with rental payments over a period of time, before everything returns to as it should. However, we understand that this often isn’t the case, and things can quickly spiral if they aren’t monitored and kept under some form of control.
Read: Tips to help you improve the landlord-tenant relationship
Sending formal letters and attempting other forms of communication
The first sensible step to take as a landlord is to send a formal letter by first class mail requesting payment if a tenant hasn’t paid the rent for 7 days. After 14 days, a letter should be sent to any named guarantor to make them aware of the missed payments, and a final letter to both the tenant and guarantor confirming your intention to take legal action after 21 days.
Be sure to keep copies of any letters you send as well as any correspondence you receive from either the tenant or guarantor.
During this time, you could also try occasionally making contact by phone or email to see if you can gain any information or find a way to negotiate a payment plan, but you should be very mindful to not overdo the communication attempts as a landlord does not have the right to harass their tenant.
Acting to take possession of your property
If there is no solution to the rent arrears in sight following the above steps, it will be time to escalate things so that you can begin the process of regaining possession of your property. It’s important to act as soon as possible, especially when the tenant is simply refusing to pay despite their ability to do so.
To date, landlords have been able to claim for mandatory possession of their property due to rent arrears accumulation of two months or longer by serving a Section 8 under the Housing Act 1988, but from December 1st 2022 onwards, this will be replaced with serving a possession notice under section 181 as part of the new Renting Homes (Wales) Act 2016.
Read: Our guide to becoming an accidental landlord
In summary
Effective communication is the one tool that may help a landlord and tenant reach an agreeable solution to sort out a rental arrears issue. When a tenant is facing money troubles, they will appreciate a landlord being sensitive and understanding to the situation and are far more likely to do all they can to quickly map out a plan that will allow them to catch up on any missed payments. Communication may prove less effective with tenants who are withholding rental payments for another reason as they tend to be less communicative, so legal action is likely to be required if a resolution between you cannot be reached. Fully understanding and abiding by all current legislation is extremely important to ensure you reach a successful outcome, and you may want to consider seeking the advice and guidance of a solicitor with expertise in the letting field.
Are you a landlord in Cardiff looking for an ideal property investment opportunity? Perhaps you’re searching for suitable tenants, or would like to hand over the property management reigns to a reputable company? Here at CPS Homes, our lettings team have a wealth of experience in pairing landlord with tenants, investment properties, and property management services that are right for them. Don’t hesitate to get in touch to find out more about how we can help by calling 02920 668585, e-mailing enquiries@cpshomes.co.uk or by popping into one of our three Cardiff based branches.
