How can landlords deal with rent arrears? Dealing with tenants who fail to pay rent on time is time-consuming. If you find yourself with rent arrears, you can follow the below step by step guide line.
Like everyone, tenants can experience difficulties in life that may cause them to fall behind in their rent, such as redundancy or illness. If you have a good relationship with the tenant, the situation can often be quickly resolved with an informal meeting. The arrears can be an oversight on their part or a bank error.
Follow up the meeting with a formal email or letter outlining what you discussed. You are obliged to provide written notice 30 days before you start court proceedings to recover the debt, which is called pre-action protocol.
If the tenant doesn’t respond to any of your attempts at communication, in England and Wales, if they are at least two months in arrears, you can consider issuing a Section 8 notice citing ground 8, which is a mandatory ground. This informs the tenant that you intend to start court proceedings to seek possession of the property due to the arrears. You must not begin court proceedings for at least 14 days after the notice has been served.
In Scotland, the requirements and procedures for the mandatory arrears ground differ depending on whether the tenant is on an assured or short assured tenancy, or a private residential tenancy (introduced in December 2017). However, there will need to be at least three months’ rent arrears on the day notice is served.
It’s best to issue your notice by hand with a witness present. If you need to send it by post, it should be sent first class with proof of posting. Do not send recorded, because if the tenant does not sign for it, the notice will not be deemed as served.
In all cases, the notice must be properly completed to be valid.
Once the date on your notice has passed and the tenant has not made a payment to bring the balance down under the relevant threshold, the next step is applying to the county court in England and Wales, or the First-tier Tribunal for Scotland (Housing and Property Chamber).
An application to the court or the Tribunal should not be taken lightly. The process can be excessively lengthy and costly, as well as an emotional drain. Consider your options. Both the landlord and tenant can mutually agree to surrender the tenancy, bringing to an end the tenancy agreement before the due date without any legal action. However, you must agree this in writing.
Alternatively, in England and Wales, you may be able to issue a Section 21 notice. This gives the tenant at least two months’ notice that you will seek repossession. If you choose this route, you will need to claim for the rent arrears separately, using Money Claim Online (MCOL). If all your paperwork is in order, you could use an accelerated procedure for the court to grant possession, if the tenant hasn’t left by the date specified on the notice. This usually avoids a court hearing. However, it’s important to note that Section 21 is not valid during a fixed term.
If you wish to begin court proceedings using Section 8, you can apply online using the possession claim online service at www.possessionclaim.gov.uk/pcol/, which costs £325. Alternatively, you can apply in writing to your local court using an N5 and N119 form, which are available from the gov.ukwebsite. The paper format N5 (claim form for possession of property) and N119 (particulars of claim for possession) cost £355 to process.
If you choose to apply online you can only do so on the grounds of rent arrears (grounds 8, 10 and 11). If you wish to use any other grounds then you have to use the paper form application.
In Scotland, you should use Application Form E for possession and Application Form F to claim rent arrears.
Once you have applied, you will receive a hearing date. It’s important to attend the hearing date with any documentation backing up your claim. If you do not attend the hearing, the courts will dismiss your case. This means you will not be granted possession.
If the tenant attends without any defence you will usually receive a possession date 14 days after the hearing date. This is what happens in England and Wales. But the judge can choose to extend this to up to six weeks. And they can do that if there is a strong reason to do so. For example, if the tenant is seriously ill or has young children. Or if the tenant defends the claim, the judge may adjourn the hearing and set a future date.
If you receive a possession order you must notify the tenant of the date to vacate the property. If the tenant fails to respond and remains in situ in the property, you will have to apply for a county court bailiff. You can do so by using form N325 in England and Wales. This costs £121. If you are in Scotland, you can use the sheriff officer. The county court will notify both the landlord and tenant of the eviction date in writing. Bailiffs tend to take a long time – as long as eight weeks – to respond. When you have a date from the bailiffs, you or your agent will have to attend the property with the bailiffs to give them access. This is because bailiffs cannot force entry. It might be an idea to take a locksmith with you too in case the locks have been changed.