What to do if your tenant stops paying
Hello readers. This is simply one of the worst situations for a landlord to be in and whilst it can happen purely by accident, there are times when it signals the start of what can be a long, expensive road.
Rent collection is part of our management service and there are times when, for whatever reason, the rent does not come in as planned. We have a very robust internal system to handle these situations and the first tip that I give landlords is simply not to panic!
This article looks at four things to do if the rent stops and some of the points are quite simple to implement.
- Maintain excellent communication
The first thing you should always do is to simply pick up the phone and speak with the tenant. Mistakes do happen, so perhaps they changed their bank account and forgot to move the standing order over or were paid a little late that month.
The important thing to do here is to get in touch quickly and aim to remedy the situation. If the tenant explains that there was a mistake, confirm when rent will be paid and follow up in writing, generally by email.
If this payment is missed, then I advise that you consider other options as whilst you will want to be flexible where you can, it is important not to set the precedent that paying late is acceptable.
If they explain that they simply can no longer afford the rent, you may want to consider giving the option to leave by the end of the week with no penalty and if they do not then you will need to issue a formal eviction notice. This may seem harsh, but you don’t want to be stuck with a tenant not paying rent whilst you are needing to pay the mortgage.
- Send a notice of eviction
If rent remains unpaid, you will need to begin eviction proceedings and the first step is to send a notice of eviction. I always recommend consulting a reputable lawyer when issuing any notices. For example, some situations may require a section 8 notice, others a section 21 notice and others simply a letter with a given time period.
Notices can vary from two weeks to two months depending on the terms of the tenancy agreement. However, in general, you will have to give a two-month notice, but there are exceptions (e.g. – if the tenant has been in the property for under six months, if the property is an HMO without a license, etc…).
A lawyer would be able to look at your situation and advise on the right notice that should be issues. Whilst these can be downloaded as templates, it is best to get things right from the start as the additional cost at this stage could save you a lot of time and money at a later stage.
Using the right wording issuing and right notice is extremely important; particularly as it may be examined by the courts at a later stage in the process. For example, issuing the wrong notice could invalidate the whole process and at worst, mean that you do not gain right of possession.
- Seek a possession order
The only way to force a tenant to leave a property is through the courts. There are significant fines and penalties for landlords who do not follow this, and an illegal eviction can also land you with a prison sentence.
If you have issued a notice and the tenant has not moved out, the next step is to seek a possession order. The standard cost for this if you are managing it yourself is the court fee of around £350. However, as property law can be little complex, I always advise using a reputable lawyer to handle the process on your behalf to give you the best chances of gaining possession.
The form will then be filed with your local County Court. The court will then send a copy to the tenants who will need to reply within 14 days. If the tenant is in serious difficulty, the judge may grant an extension to this 14-day period.
- Apply for a warrant for possession
If, after taking the steps above, the tenant is still refusing to leave, the final option is to apply to the court for a Warrant for Possession. This will then give bailiffs the permission that they need to remove the tenants from your property.
If you are claiming over £600 including court costs, this can be sped up by asking the case to be transferred to the High Court, where a High Court enforcement officer will carry out the eviction. At this point you will get your property back, however you will need to pursue any unpaid rent through the usual processes.
This whole process is stressful and costly to any landlord and one that you will want to avoid. Some landlords advise that it might be a good option to pay your tenants to return their keys and leave the property however whilst this would save you the cost and stress, it should be handled properly and I always involve a lawyer to mitigate against any potential problems later down the line.
This process also outlines the importance of maintaining a good relationship with your tenants as well as keeping your property in good repair. This will not only help to prevent void periods, but also help if you need to evict anyone as a consistently poorly maintained property could mean that you do not gain right of possession.
We manage hundreds of properties for our landlords and there are occasions when things don’t work out with a tenant meaning that we need to follow up on unpaid rent. If an eviction is required, we handle this on behalf of our landlords.
Our experience in managing properties also means that we know some of the pitfalls and signs, which we can deal with early to prevent them from becoming a problem. If you would like to discuss this further, then I will be more than happy to help. I run strategy workshops and portfolio review sessions. If you want more information about that, please email me at firstname.lastname@example.org.