My tenant is not paying rent. What can I do?
Tenants can fall behind on their rent for all manner of reasons. Co-written with tenant history resource Tenant Referencing, our guide for landlords looks at how to ensure the problem doesn’t get out of hand.
Find out how you can insure yourself against unpaid rent with our rent guarantee cover - this can be added to your Direct Line for Business landlord insurance policy for an additional premium.
If your tenant has stopped paying rent, it’s understandably frustrating. With your own overheads and financial commitments to consider, it’s easy for the situation to get to you. But the best chance of a resolution is by acting reasonably yet decisively, sticking to the letter of the law at all times.
Of course, to stay within the law it helps if you know a little about it. There is no substitute for professional legal advice, but here are some key factors to consider if your tenant stops paying rent.
You can also check out our interactive guide which outlines the steps you would need to take to recover your money.
Unpaid rent and landlords’ rights
Put simply, as a landlord you have the right to charge rent and to receive rental payments when they are due. You also have the right to receive proper notice to end the tenancy if and when your tenant decides to move out.
Beyond your basic legal rights, your tenancy agreement may grant additional rights and responsibilities to the tenant and/or landlord. That’s why having a carefully considered and legally sound tenancy agreement is a must – it could save you significant time and money in the future.
Some tenants may think they can legally withhold rent if there is a dispute, such as over the condition of the rental property. But, as the Citizens’ Advice Bureau points out, tenants cannot legally do this and can put themselves at risk of eviction if they stop paying rent.
As a landlord you also have a legal right to explore your potential or existing tenant’s rental history. There are resources to check a tenant’s history. These provide information on the tenant’s previous landlord and whether there were any rent defaults or property damage registered to that tenant.
Finding out why your tenant is in arrears
Checking your bank account regularly will help you identify any issues quickly. The first step is to find out why your tenant isn’t paying rent, and to begin making polite enquiries quickly should something be amiss. The reason you haven’t received the rent could be something quite simple and easily fixed, such as:
- simple forgetfulness (for example, if the tenant forgot to transfer the money)
- temporary cash flow problems
- a misunderstanding between joint tenants
Or it could be something more complicated and/or long-term. For example:
- your tenant has lost his or her job
- your tenants are a couple and have split up
- your tenant is suffering from challenging personal issues (such as bereavement or work-related stress).
But with potentially more serious consequences, your tenant(s) could be simply refusing to pay rent.
As well as dealing with the problem quickly, the key is to keep accurate records of all payments and correspondence. Beginning with a phone call may be a good idea. But beyond that, written correspondence has the advantage of leaving a trail that may be useful should legal proceedings follow.
If you and the tenant agree a plan to allow them to catch up on their missed payment(s), put a written statement of this agreement in the post. It’s also advisable to mention the consequences of their not following through on their commitment to pay. This will serve as evidence that the problem had been raised with the tenant.
Getting in touch with the guarantor
A guarantor is a third party, such as a relative, who agrees to pay rent on behalf of the tenant if it’s not paid. If your tenant has provided a guarantor, write to him or her, stating that the tenant hasn’t paid their rent. In many cases this will lead to the problem getting quickly solved. If it doesn’t, then you can take action to recover unpaid rent from the tenant’s guarantor. Find more information on PRS guarantors.
Claiming possession of your property
If 21 days have passed and rent hasn’t been paid, send a letter to the tenant advising that you will reclaim your property if payment is not received. If they also miss the next month’s payment and you still haven’t received the previous month’s payment, you can now consider them two months in arrears.
The Housing Act 1988 gives you the right to take action to claim possession of your property once this deadline has passed. But the notice given and the process you undertake needs to follow a prescribed format.
For more information, see this article on how to evict a problem tenant and seek legal advice to ensure your efforts to reclaim your property are legally valid.
Collecting unpaid rent
While pursuing an eviction, you’re entitled to ask the court to make a judgment against the tenant for the rent owed as well the reasonable costs incurred pursuing it. Whether your eventually paid back the money you’re owed is another question altogether. You’ll need to decide whether the size of the debt is worth the time, effort and expense you may need to commit.
For new landlords, dealing with a tenant who isn’t paying rent can be extremely stressful. Experience should help you both feel more confident in dealing with the issue and reducing the chances of it happening in the first place. Read our guide to tenant referencing to learn how to get a good picture of your tenants before agreeing to let them your property.
Get cover for unpaid rent
You cannot second guess whether your tenants’ situation will stay the same or change. Even the most reliable tenant could suffer an unexpected cash flow problem. However, if you are a residential landlord you can safeguard your rental income with our rent guarantee cover.
Rent guarantee is an extension of our optional legal expenses cover, which you can add to your Direct Line for Business residential landlord insurance policy.
If your tenants stop paying rent, rent guarantee cover will repay the unpaid rent while your tenants are still in the property, provided the rent has been overdue for at least one calendar month.
Meanwhile, if your tenants are forced to move out of the property because an insured event, such as a fire, floor or storm, makes it uninhabitable, you can cover your potential losses with our loss of rental income cover.
Learn about the differences between the two cover options here.
If your tenant receives disability benefits and is having difficulty paying their rent, you can request that rent payment is taken from their Universal Credit here.