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  • Writer's pictureElliot Leigh

What To Do If Your Tenant Falls Into Rent Arrears

Updated: Jan 25

As the cost of living crisis continues to bite, many are finding themselves having to rent their home rather than buy it, with many first time buyers currently cautious about taking their first step onto the property ladder.

A 2023 ONS survey revealed that, whilst inflation and interest rates remain high, almost one in three (29%) of people paying rent or a mortgage admitted they’re finding it very or somewhat difficult to keep up with these payments.

Unfortunately, 2% of the respondents indicated they were behind on making rent or mortgage payments. The upside to this statistic is that, for the period before this survey, 4% were reporting the same struggles, indicating a 50% overall reduction in people struggling to make rent or mortgage payments. This is supported by data from the English Housing Survey, which showed that mortgage arrears across England have remained at or below 2% in the last 10 years.

But if you are a landlord who is unfortunate enough to be experiencing tenant arrears, as mentioned, the best thing to do is to take action as quickly as possible.

People who rent their homes are over four times more likely than homeowners to be going through some form of financial hardship amid the cost of living crisis.

Over half (55%) of renters said they said they would be unable to afford an unexpected, but necessary, expense of £850, compared with 12% of outright homeowners, the Office for National Statistics (ONS) said.

The latest analysis of the impact of the increased cost of living on adults across Great Britain by the ONS found that around a third (34%) of people aged 25 to 34 reported borrowing more money or using more credit than usual compared to a year ago.

Taking action with tenant arrears

It’s understandably frustrating to experience tenant arrears, but there are measures you can take in order to minimise the financial damage. The key is to take action quickly and intelligently. By educating yourself on legal processes, earlier intervention can increase your chances of recovering the rent owed and getting it into your bank account as soon as possible.

Send reminders

While it may be obvious, the first course of action is to speak to your tenant amicably and try to understand why/how they have fallen into arrears. As a sensitive issue, your approach to this conversation is key. Whether a phone call or a text, get in touch with your tenant to send them a friendly reminder. If either of these fail to receive a response, follow up with a letter or email - ensuring you keep record of every correspondence in the event that things escalate.

Finding out the cause

While the cost of living is an expected reason, in order to find a solution you need to understand the cause of the rent arrears, as this will help paint a picture of when you can expect to receive payment from your tenant again. Remember to be polite and courteous, issues such as this can be sensitive and any unreasonable behaviour could affect your position if you eventually go to court.

Arrange a payment plan

Even if you’re in a position to help with their rent arrears, it might be worth talking to your tenant about whether they want a payment plan. If your tenant is having money troubles, arranging this will protect them financially and give them control over their situation. In the short term, they can pay back what they can afford, however if the situation is long term - guiding them to apply for the housing element of Universal Credit can help them make up for the shortfall in rent over time.

Talk to the guarantor

When a guarantor has accepted the responsibility to pay your rent, it's important to make sure they fulfil this obligation. If the tenant doesn't pay their rent, but has a guarantor, you can request that their guarantor pays the arrears. If they still don't pay, keep in touch until they do. Do this in writing so that you have proof of your correspondence.

Take legal proceedings

The worst case scenario is that your tenant fails to respond to any of your communication and falls into over two months of rent arrears without remedying the situation. If that is the case, you may want to seek legal advice to serve a section 8 notice on the ground of rent arrears.

How to avoid tenant arrears with Guaranteed Rent

Using a property specialist such as Elliot Leigh to manage your rental will mean that Landlords are not at risk of experiencing tenant arrears. Through our Guaranteed Rent scheme, landlords are guaranteed to receive their monthly rent payments, even if a tenant their property is vacant without them having to specifically deal with tenants. On top of this, we manage the entire property, carrying out essential maintenance and repairs, even between tenancies.

If you have any questions about rent arrears or you currently self-manage and would like to discuss our property management service to take away the hassle of letting your property, get in touch with us today to find out more.

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