If you speak to any landlord - new or established - and ask them what their greatest concern is, they will inevitably say "the tenant not paying the rent".
This is understandable, as, when taking out a Buy To Let mortgage, landlords are essentially taking on the risk of the tenant not paying the rent, because the landlord will still be liable for the mortgage, whether the tenant pays or not.
If the landlord does not keep up to date with the mortgage payments, it can result in the property being repossessed by the lender, being sold at a shortfall, and the lender will come after the landlord to make up the difference. This can also affect the landlord's ability to get finance in the future.
Being landlords ourselves, we thought it would be helpful to put together a few tips for dealing with rent arrears, as every landlord will face it as some point on their property journey, no matter what rigorous tenant referencing procedures they use.
1. Communicate first
The first thing to do when a rental payment does not appear in your bank account is to contact the tenant and find out the reason why.
It could be a banking error, or another legitimate problem, that, with a polite nudge, the tenant can put right and get the rent paid.
However, all landlords should remember that tenants are people, and people do experience problems such as death, family crisis, redundancy, relationship break-ups, health issues, and accidents.
If it is a more serious problem, such as the ones indicated above, then you will have to decide whether you wish to work with the tenant to keep them in their home while they get back on their feet.
Many landlords take a compassionate stance and will consider a payment plan to allow a tenant to remain in the property. This may be very important if tenants have children who are in local schools, and the tenant will want to work with you to avoid disruption.
Sometimes tenants will with-hold the rent if they feel that repairs and maintenance are not being completed in a suitable time-frame. You can explain to them that it is a breach of the Terms and Conditions of their tenancy to with-hold rental monies, and you should endeavour to get all repairs and maintenance done in a timely manner - responding to any such requests within 24 hours.
2. Be firm, but fair
If there are no legitimate reasons for the rental arrears, then you must start to take a tougher stance.
By law, you are not allowed to hassle tenants, so make sure all your approaches and communication are polite and professional.
Keep a record of all phone calls, texts, and emails.
Politely remind the tenant that it is a breach of the Terms and Conditions of their tenancy agreement not to pay the rent.
Set them a deadline to make the payment. Do not threaten them in any way, as this can be regarded as harassment.
3. Serve a Section 21 notice
If you still cannot claim the rent and communication with the tenant starts to break down, then you should consider serving a Section 21 notice to gain possession of your property from the tenant.
There are strict protocols for serving a valid Section 21 notice, and, if you are in any doubt about these, then you should consider using an industry leading service, such as Landlord Action.
The Section 21 notice explains to the tenant that you are seeking possession of the property, and typically gives them 2 months notice to leave your property.
Sometimes, the serving of a Section 21 notice is enough to get the tenant to pay up the rental arrears, and the problem is solved.
Often though, the tenant disregards the Section 21 notice and will wait for the court hearing - the next stage of the eviction process. It can take between 6 weeks and 3 months to get a court hearing, depending in which part of the country you are in, and during this time, rental arrears will be mounting up.
Also, tenants waiting for a council property are told by the council to remain in the property until they are evicted!
This is because the council cannot, by law, house a tenant who has left a property voluntarily. Tenants wanting council houses will be advised by the council and Citizen's Advice Bureau to stay put, and only then will they get re-housed!
Landlords find this advice hard to stomach as the tenant continues to stay in the property until evicted, which can take several months.
If the tenant does not leave, then the Section 21 will result in a court hearing.
The landlord should attend this along with all the necessary documentation. If documentation has not been filed our correctly, the case may get thrown out, and you are back to "square one"!
The court hearing typically lasts about 10 minutes, and, if it is all straightforward, the landlord will be awarded possession of the property and the tenant will be given 14 days to leave.
The court hearing is a good opportunity to see if the tenant would like to pay up their rental arrears to stop getting a CCJ against them, which could affect their ability to rent in the future.
If the tenant still does not leave the property, then you have to apply to the Courts for bailiffs to attend the property and remove them. There are legal costs associated with this.
On average, it can cost around £1500.00 in legal fees to get a tenant evicted and will be awarded these against the tenant, but enforcing this is another matter in our experience.
4. Sell your property to a cash buyer like us!
Rental arrears and evicting a tenant are a huge hassle for landlords and sometimes they feel like they have had enough and simply want to exit from their investment and sell a house with a sitting tenant in place.
That is where we can step in. We will buy a tenanted property for cash, even if the tenant is in rental arrears, and take the problem off your hands.
No more paperwork, court hearings, worries, hassle, or having to evict a tenant - which can be a very upsetting experience for everyone. Some tenants even show their displeasure by damaging the property or asset stripping it and this can cause landlords many thousands of pounds to put right.
Taking all of the above into account, a cash sale of a property can be a solution and take away the threat of your rental property being repossessed by the lender because you have not been able to keep up with the mortgage payments.
Our service is friendly, discrete, fair, and hassle free and provides money in your bank account on a guaranteed date.
If you wish to sell your property fast, then do not hesitate to contact us. We are waiting to make you a genuine cash offer!
Open Property Group have a mission to raise standards and improve customer experience.
Give us a call on 0800 990 3939 to receive a no-nonsense cash offer for your property or send us an email at firstname.lastname@example.org
We buy property directly and you won't pay any agent's fees.