What do I do if one of my tenants stops paying rent?

One of the most stressful situations for landlords is when a tenant stops paying rent. Rent arrears can disrupt your cash flow, lead to costly legal battles, and create a tense landlord-tenant relationship. However, knowing the right steps to take can help resolve the situation quickly and protect your legal rights.

At First4LandlordAdvice, we specialise in helping landlords navigate disputes with tenants, including issues related to unpaid rent. In this blog, we'll walk you through the necessary steps to take when a tenant stops paying rent and how to resolve the issue effectively.

1. Investigate the Situation

When a tenant misses a rent payment, the first step is to investigate the situation. There could be many reasons why a tenant might fall behind on rent—job loss, personal circumstances, or even a misunderstanding regarding payment dates.

Reach Out to the Tenant

Before taking any formal action, contact the tenant to discuss the missed payment. This can be done via phone, email, or letter. Remain calm and professional, and ask if they are experiencing financial difficulties or if the missed payment was an oversight. Open communication can often resolve minor issues before they escalate.

2. Serve a Formal Rent Arrears Letter

If the tenant is unresponsive or continues to miss rent payments, your next step is to send a formal rent arrears letter. This written notice should clearly state:

  • The total amount of rent owed.
  • The dates for which the rent is overdue.
  • A request for immediate payment.
  • A deadline for settling the arrears (e.g., 7 or 14 days from the date of the letter).

This letter serves as an official record of your efforts to recover the rent and can be used later as evidence if the issue escalates.

3. Consider a Payment Plan

If the tenant is genuinely struggling with finances but willing to pay, it may be worthwhile to set up a payment plan. This plan can allow the tenant to pay off the arrears in smaller, manageable instalments while continuing to pay their regular monthly rent.

Ensure the payment plan is agreed upon in writing and signed by both you and the tenant to avoid future disputes. Be specific about the repayment schedule and amounts to be paid.

4. Serve a Section 8 Notice for Rent Arrears

If the tenant is unable or unwilling to pay the rent, and the arrears continue to accumulate, it may be time to consider formal legal action. In the UK, landlords can issue a Section 8 notice under the Housing Act 1988 to begin the process of reclaiming possession of the property due to unpaid rent.

Grounds for Issuing a Section 8 Notice

Ground 8: If the tenant owes at least two months' rent (or eight weeks if rent is paid weekly) at the time of issuing the notice and at the court hearing, you can use Ground 8, which is a mandatory ground for possession. This means if the tenant still owes rent at the hearing, the court must grant you possession.

Ground 10: This can be used for any amount of unpaid rent, though it is a discretionary ground, meaning the court may choose not to grant possession.
Ground 11: Used when the tenant has a history of persistent rent arrears, even if they have made some payments.

Once you've served the Section 8 notice, the tenant has 14 days to settle the rent arrears or vacate the property. If they fail to do either, you can apply to the court for a possession order.

5. Apply for a Possession Order

If the tenant doesn't comply with the Section 8 notice and continues to withhold rent, you'll need to take the matter to court. Applying for a possession order involves submitting the appropriate forms to the county court. The court will schedule a hearing where both you and the tenant can present your case.

Possession Order Types:

Standard Possession Order: If the tenant has not left the property or paid the arrears by the date specified in the Section 8 notice, you can apply for a standard possession order.

Accelerated Possession Order: If you're not claiming unpaid rent and only seeking to recover the property, you can apply for an accelerated possession order, which usually doesn't require a court hearing.

Once the court grants the possession order, the tenant is given a date by which they must leave the property. If they fail to vacate, you may need to apply for a warrant for eviction, which allows bailiffs to remove them.

6. Use a Section 21 Notice for No-Fault Eviction

If the tenant is nearing the end of their tenancy agreement or you simply want them to leave, you may also consider serving a Section 21 notice to regain possession of your property without needing a specific reason (such as rent arrears). However, this route may take longer than a Section 8 notice, as Section 21 notices require a minimum of two months' notice and the tenant isn't obligated to leave until the notice period ends.

7. Seek Legal Advice

Rent arrears cases can be complex, particularly if the tenant contests the eviction or if you need to navigate court proceedings. Seeking legal advice early on can help you avoid costly mistakes and speed up the process. A solicitor or specialist legal advisor like First4LandlordAdvice can guide you through the legal steps, ensuring that you follow the correct procedures and meet all your obligations as a landlord.

8. Preventing Future Rent Arrears

While rent arrears can happen unexpectedly, there are steps you can take to reduce the risk in the future:

Thorough Tenant Screening: Perform background and credit checks on potential tenants to assess their financial stability before agreeing to a tenancy.

Clear Payment Terms: Make sure your tenancy agreement clearly outlines rent payment dates, consequences of missed payments, and any late fees.

Use Rent Guarantee Insurance: This type of insurance protects landlords by covering lost rent if a tenant defaults, providing financial security and peace of mind.

We bring specialist expertise in helping landlords handle tenant disputes, including rent arrears and evictions. Whether you need advice on serving notices or support with legal proceedings, our experienced team is here to help you navigate the process smoothly.