A landlord's guide to dealing with rent arrears

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It’s the stuff of landlord nightmares: you agree to rent out a property, only to discover your tenant can’t keep up with rent payments.

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While rent arrears can be stressful and expensive to deal with, the right approach to debt recovery will help to ensure minimum hassle for landlords. Keep reading to learn the legal steps landlords can take to get money they’re owed.

You might also want to find out more about Admiral Landlord Insurance and read our other guides:

Make the right checks before renting

It’s impossible to be 100% certain a tenant will be reliable in making rent payments. However, there are several things you can do to check a potential occupant’s financial track record.

As a landlord, it’s a good idea to perform thorough checks on tenants before agreeing to let them rent your property. This includes getting references from previous landlords, carrying out credit checks and asking about the renter-to-be’s employment status.

Before you run a credit check, be sure to ask for the potential tenant’s permission, as required by the Fair Credit Reporting Act. A signed and dated document showing the tenant’s written agreement to be credit checked is enough.

Once you’ve provided proof of your own address, identification and ownership of the property you want to rent out, you can apply for credit checks via a credit reference agency or landlord screening service provider.

Look through credit reports carefully, paying attention to red flags such as unpaid accounts, county court judgments and evictions. You might want to ask about these before disregarding someone as a tenant – there may be a valid reason for a blip on an otherwise acceptable credit report.

What to do if your tenant owes you money

Assuming you’ve made the appropriate pre-rental checks and have a solid rental agreement signed by your tenants, responsibility to make regular rent payments should be clear. Sadly, this doesn’t mean guaranteed rent on the requested date each month – it’s still possible a tenant may miss rent payments or avoid paying you altogether.

If this happens, it’s best to act quickly. If several days have passed since your rental payments were due, contact your tenants reminding them of their legal obligation to pay on time, as stated in your tenancy agreement.

In the case of joint tenancies, remind tenants that they have equal responsibility when it comes to paying rent – their liability is shared, regardless of individual agreements between tenants.

After a reminder, most tenants will apologetically pay the money they owe. If yours don’t, follow up with a formal letter demanding that they pay rent in full immediately. You can also send the tenant’s guarantor a letter if the rent hasn’t been paid within two weeks (14 days) of the due date. After three weeks (21 days), send a final letter informing tenants and guarantors of your intention to take legal action.

Legal proceedings for landlords

Understandably, most landlords would prefer to deal with rent arrears without going to court. If your tenants can’t or won’t pay rent after several attempts to collect it, the next step is to hire a solicitor or other professional mediator. They’ll act as a neutral party between you and your tenant and aim to sort out your issues without needing to go to court.

If going to court is the only way, landlord rights give you a variety of options. Following the small claims procedure of the County Court (more commonly known as a money judgement) is a good option when you want to reclaim rent arrears without taking back your property. If your tenancy agreement states you should be paid regular rent payments and you can prove your tenants owe you money, the court can judge in your favour.

A variety of enforcement methods may be considered, with the most appropriate course of action dependent on the given situation. For example, if the tenant is employed, the court may order regular payments to be taken from their salary to pay off the debt. In the case of self-employed debtors, the court might make a garnishee order, meaning any third parties who owe your tenants money should pay you instead.

You can take back your property via an Accelerated Possession Procedure (APP), as long as your rental agreement is an Assured Shorthold Tenancy. This requires a Section 21 notice, giving tenants two months’ notice before you require them to have left your house. Rent arrears will need to be dealt with separately via a money judgment, as described above.

Landlord insurance for rent arrears

Many landlords choose to take out a dedicated landlord insurance policy to protect against debt owed by tenants. As well as covering the legal fees for recovering unpaid rent, Admiral's Landlord Insurance could help with costs from accidental or malicious damage, legal fees and emergency callouts to your property.

While landlord insurance can’t force your tenants to pay their rent on time, it can give you some peace of mind that the legal costs of reclaiming unpaid rent are covered.

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