a simple guide to managing rent arrears
This page refers to a number of documents that are only available to members of the Residential Landlord's Association (RLA). These are just a small sample of the hundreds of resources the RLA provides for its members. If you would like to access them then you can join the RLA for a small annual fee.
Here are a few facts about the payment and non-payment of rent:
- Rent payment dates come around with monotonous regularity
- The larger the overdue rent amount the less likely it is to be paid
- If landlords turn a blind eye to overdue rent the tenant will do the same
- Chasing overdue rent through the County Court can be done quickly and easily
- There is no point in suing a tenant who does not have the financial resources to pay
This short guide provides some tips on how to help landlords prevent rent arrears building up.
BEFORE THE TENANCY STARTS
So what can be done to ensure a landlord is paid their rent on time regularly?
When preparing to let a property a landlord has two major concerns:
- Does this prospective tenant have the ability to pay the rent on time each month?
- Will this tenant look after and maintain my property?
For the purposes of this guide we will focus on the first question. The RLA Advisors are often amazed by the number of landlords who do not carry out a credit check before offering a tenancy. This is amazing when an RLA credit check only costs £12.00 and the credit report is received back immediately. This report will provide an early snapshot of a prospective tenant's ability to pay the rent. If any doubts are raised by the report, further enquiries such as requesting sight of recent bank statements and proof of earnings can be made before committing to the tenancy.
CHARGING FEES FOR CREDIT CHECKS
It used to be common practice for landlords to charge an administrative fee for performing credit checks or tenant referencing. This has now been banned in England and Wales along with a number of other fees. For further information on what you can and cannot charge please visit our Tenant Fees Toolkit.
MANAGING RENT ARREARS
When rent has not been paid on time the landlord should be actively doing what he can to contact the tenant. This might involve telephoning, texting, writing or emailing the tenant. The best advice is to start with a friendly reminder letter and steadily ramp up the seriousness of the requests over time. The RLA provides a number of template letters for its members to make this as easy to do as possible.
If a tenant receiving housing benefit owes at least two full months rent, write to the local council, enclosing an up to date statement of rent and request that any further benefits are paid direct to the landlord from the date of that letter. For tenants who are being paid Universal Credit, landlords should fill out a UC47 form and send it to the Department for Work and Pensions (DWP) instead.
At any point during the tenancy or after the tenant has moved out, a landlord can pursue a tenant through the Small Claims Court to recover any overdue rent. This can be done by going to the Moneyclaim website. A landlord has six years in which to take steps to recover any monies owed.
WHAT IF THE TENANT REFUSES TO PAY?
Unfortunately, some tenants do not pay the rent. In those cases you may have to protect your investment by serving a notice to regain possession of the property. There are two options for this at the moment. Section 21 notices can be served when the fixed term tenancy is nearly over or has finished. Section 8 notices can be served when the fixed is not finished but are more difficult to use. The RLA provides a number of guides and documents to assist with these notices which are available to our members.
We also provide a number of training courses on regaining possession.