It’s a landlord’s worst nightmare; they have let their property to a tenant who refuses to pay their rent and every month that passes results in more financial losses and frustration. The typical rate of properties in arrears is around 4%. But this time last year, around 1 in 15 renters had fallen behind on rent, largely as a result of Covid-19.

While the pandemic has shown that there are legitimate, extenuating circumstances that prevent people from meeting their financial obligations, this isn’t always the case. If you are dealing with a tenant who hasn’t paid rent in months and doesn’t wish to communicate constructively, it can be a frustrating and anxious time. Regardless, it is important to remain professional and follow the correct process to resolve the situation.

What can you do to recover rent arrears?

If your tenant has missed a payment, the first step is to contact them. Keeping the lines of communication open can clear up misunderstandings and resolve the issue quickly. Whether you choose to call or email, remember to be polite and professional. Ask the tenant why they have not paid and what they plan to do about it. In some cases, it could be nothing more than an oversight on your tenant’s part. But if it turns out that your tenant is having financial difficulties, there are a number of steps you can take.

Negotiate a payment plan

If your tenants’ financial difficulties are short-term and they have indicated that they wish to pay their outstanding rent, you may wish to arrange a payment plan. This course of action can be taken on a case-by-case basis. If your tenant has never missed a payment and is proactive about finding a solution, resolving the situation amicably could be in everyone’s best interest.

For example, the tenant could pay you a little more each month until they pay their outstanding debt. Or you could agree to a temporary rent reduction until they are in a better financial situation. You could signpost your tenant to services like Citizens Advice and Shelter. They will be able to offer your tenant advice and may even be able to point them to financial support they could be eligible for.

If you are uncomfortable negotiating with your tenant but don’t want to go to court just yet, you could use your solicitor or a mediator instead. A mediation service is quicker and cheaper than going to court and could help you resolve the situation amicably.

If you do negotiate a payment plan, write it down and get your tenant to sign it. What you choose to do depends on your relationship with your tenant and your own circumstances.

Contact the Guarantor

If a guarantor has co-signed the tenancy, you should get them involved in the conversation as well. Guarantors are usually liable for unpaid rent and can be taken for court if they refuse to pay. If a tenant can’t pay the rent they owe, the guarantor could step in and cover the late payment.

However, in some cases, guarantors may be unable to cover the rent as well due to their own financial difficulties. During the pandemic, this was a common scenario. Regardless, it is advisable to keep them looped in all communications as they are liable for the late rent payments as well.

How do you begin the process of possession if all else fails?

If you have been unable to recover rent by speaking to the tenant and contacting the guarantor, it may be time to consider possessing the property. From June 1 this year, notice periods must be at least four months in most circumstances, including where rent hasn’t been paid for less than four months. From August 1, this notice period will be reduced to two months as it is intended as a temporary Covid-19 relief measure.

Shorter notice periods can only be served in extenuating circumstances including anti-social behaviour.

You can serve your tenant a Section 21 or Section 8 notice depending on your circumstances.

Be aware that you must get the notice absolutely correct: If you are even one day out in your calculations, the notice could be deemed to be invalid and you will have to re-issue it (setting you back months) or worse still, your claim for possession could be thrown out, you could be saddled with paying your tenant’s legal costs and still, you will have to go back to the start of the entire process. If you are unsure about the exact calculations, get expert help in calculating, drafting and serving the notice.

Section 21 Notice

This notice is colloquially known as a ‘no-fault eviction’ notice. Serving this notice may seem contradictory if you are trying to evict a tenant that has not paid rent, but it may be worth considering as it can make for a smoother process as the tenant won’t usually be able to argue against the notice in court. This notice ensures mandatory possession.

However, arrears cannot be claimed via a Section 21 Notice. You are free to pursue separate debt action within six years to claim your money back if you wish to recoup your losses.

If you choose to serve this notice, ensure that you keep a record of when you served it. You can do this by filling out a N215 form or making a note of your name and date on the notice to indicate when you’ve served it.

In order to issue a Section 21 Notice, you must make sure that it has been more than four months since the tenancy started, that you have adhered to deposit protection scheme rules if the tenancy started after April 2007, and that you have a landlord’s license if the tenancy started after April 2017. Further, if the home is a house of multiple occupation, it must have an HMO licence from the council.

If you do not meet these conditions, your Section 21 Notice won’t stand.

Section 8 Notice

A Section 8 Notice can be used if the tenant is persistently late with paying rent or if they have broken the tenancy in another way. You or your legal representatives will need to fill out a form explaining clearly which aspect of the tenancy agreement your tenant has broken.

If the tenant does not leave by the specified date in the notice, you can then apply via possession claim online to regain possession of your property. This will cost you £355 at the outset.

A Section 8 Notice is useful if the tenant owes you lots of money and either the tenant or guarantor has the means to pay. However, in this instance, a tenant has the right to lodge a defence, which can delay proceedings. If the court rules in their favour, you could be liable for their legal expenses.

But if the court issues a money order against the tenant this will give you the means to claim your money back while also gaining possession of your property in the same process.

You can then apply back to Court for permission to enforce the Order of the Court.

One thing to watch out for is the backlog in possession claims within the Court system following lockdown restrictions: This means that claims can take longer than normal to resolve and response times can be slow. Be patient – You will get to the end of the process: It may just take a little longer than you expected.