How to deal with late rent payments as a landlord

If you are active in the private rental sector then at some stage you will come across the issue of late rent payments. The majority of late payments tend to be short term issues which can be resolved with a little compassion but others may ultimately end in eviction. We will now look at ways and means of tackling the issue of late rent payments, your legal obligations and how to keep the courts on side.

Taking legal advice

Whether informal or formal, it is worth taking legal advice at the first sign of late rental payments. This will ensure that the procedures that you have planned abide by the tenant/landlord laws which can change from time to time. There is no need to actively involve solicitors in the early stage, when hopefully a degree of sense and mediation can resolve the issue, but further down the line formal legal action may be required.

An incorrectly served notice, missing documentation and inaccurate record-keeping can very quickly undermine a strong case for eviction. This will then lead to delays, further legal costs and possibly more missed rent payments. It is essential that you know your rights and your obligations as a landlord as well as those of your tenant.

Establish the reason for late payment

In the vast majority of cases rent payment delays tend to be of a short-term nature and in no way malicious. The chances are that the tenants enjoy living in your property and possibly through no fault of their own they find themselves with a short-term cash flow problem. So, the first thing to do is to find out why they are late with their rent, whether this is a short-term issue or a long-term problem which needs to be resolved.

Communicating with tenants

It is worth noting that even in the event of late rent payments your tenants do not lose their statutory rights and protections. It is illegal to harass your tenants, try to force them out of your property and take action which could be seen as spiteful and vindictive by the courts. Initially it would make sense to contact your tenants and arrange either a phone call or a meeting at a convenient time for all parties.

Record communications

In the “olden days” a simple chat with your tenants to see what was happening would probably help to resolve late payment issues. The situation today is very different, if you have a meeting or a telephone call with your tenant about any matters (including late rental payments) it is sensible to make a record of these. If you have a meeting or telephone call then write a summary of what was discussed, what was decided and any action to be taken. Print out or email a copy to the tenant and retain one for yourself because at some point you may need these if court proceedings are required.

Showing compassion and understanding

While some people work on the basis that “business is business” it makes sense to show some compassion and understanding while trying to resolve the issue of late rent payments. If all parties are able to communicate, this will give you the best opportunity of getting payments back on track in the medium to long term. It also ensures that where possible you avoid the cost of eviction, advertising for a new tenant and any lost rental income during the process.

Official notice of late payment

It is sensible to put together a simple self-explanatory letter which confirms that a tenant’s rent payment was expected on a specific date but has not been received. At this point it is worth offering an extension to give them time to collate funds to cover the missed payment. This ensures that all parties are aware of the situation – the late payment may have been an oversight – and also gives you evidence in case the situation does eventually move to eviction.

We have seen instances of some landlords writing late payment penalties into their tenant agreements but sometimes this can add fuel to the fire. If they haven’t got the money to pay your rent then they are unlikely to be able to afford to pay a penalty. Is the financial reward greater than the loss of trust and the breakdown of the landlord/tenant relationship?

Offer a solution

You are quite within your rights to ask your tenant to put forward a solution to make up the missing payments, something which could be staggered over a number of months. At this point it may become clear that the problems are more long-term and either an amicable parting of the ways or an eviction order may be required. Again, if the issue does go to court it will benefit you as the landlord to show the judge that you have offered a degree of mediation and a sensible affordable payback plan.

There may be situations where the tenant is unable to pay back the debt in full but at the end of the day even a partial repayment is better than writing off the full amount – look at the overall picture.

Re-organising your finances

Many people fail to realise that if a tenant is late with their rent then this can have implications on a landlord being able to cover their mortgage payments. We often talk about “headroom” which is basically the gap between a landlord’s liabilities and income. These are situations where a small savings fund may assist with mortgage liabilities in the short term until the tenant situation is resolved one way or another. Fail to prepare, prepare to fail, this is something to bear in mind if you are working on relatively thin income/liability margins.

Taking action

Unfortunately, there are situations where the tenant is simply not able to afford the agreed rent going forward and not willing to vacate the premises. You have offered various deals, assistance and compassion but sometimes this is just not enough. At this point, it is worth noting that a landlord cannot instigate eviction proceedings until the tenant is at least two months in arrears with their rent. If the rental issue continues beyond the two-month period there are two options to consider.

In this situation landlords can look to serve a Section 8 or Section 21 notice on their tenant. These are the legal means by which a landlord is able to begin the eviction process with the backing of the courts. Unlike the majority of legal proceedings in the UK, even in the event of proven rental arrears, the courts may show a degree of compassion with the tenants for a variety of reasons. If the landlord has been unhelpful, aggressive or attempted an illegal eviction, it is likely that the eviction notice will be dismissed by the courts. However, if there is evidence of discussions, a degree of compassion and understanding then the courts will likely assume the landlord has done all they can to help and an eviction is the only option left.

Right to appeal

As with the majority of legal rulings, a tenant will have a right to appeal against an eviction notice but they must have firm grounds and evidence to do so. In many cases this will delay yet further the eviction process and could extend financial pressures for the landlord. It is therefore sensible for all parties to try and agree a solution without involving the courts, legal costs and the slow-moving wheels of justice in the UK.

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