In order to provide you with the best online experience this website uses cookies. By using our website, you agree to our use of cookies. Close More Info

Property News

Nethouseprices quick guide: recovering rent arrears

While the vast majority of landlords and tenants enjoy a great, mutually beneficial relationship, issues do periodically arise. Of these, tenants accumulating rent arrears is arguably the most problematic. In this brief guide, we set out some steps for protecting your rental income.

1. Prevention is better than cure

In your understandable haste to get your property occupied and bringing in rent, don't be tempted to cut corners in chasing up personal and financial references for prospective tenants. It's just as vital to obtain their credit rating, too. These precautions don't guarantee that you will receive your rent, but they are the best available barometers of a tenant's financial reliability. Equally, in the event that tenants do default on rent, referees and employers can help you locate them if you have no forwarding address.

NOTE: It will usually be worth considering landlord insurance, which will cover unpaid rent in certain circumstances.

2. Check your figures

When you first notice arrears, go back to the start of the tenancy to make sure that you are including all missed payments and inspect the property to ascertain whether any there is any damage to the premises or missing inventory. At the same time, do ensure that you have complied with all your responsibilities as a landlord. Failure to carry out necessary repairs, for instance, might well affect the sum you can recover from tenants.

3. Talk to the tenants

Before taking any formal action, do speak to the tenants. It might be that there is an administrative problem that they aren't aware of that can be corrected quite readily. If they are still living in your property, try to establish whether there are financial difficulties affecting their ability to pay rent. If they have been made redundant, for example, they might be eligible for housing benefit. Should the tenants have vacated the house or flat, but you know their current whereabouts, contact them and ask for a repayment plan.

IMPORTANT: Make a note of any of the tenant's valuable personal property, such as cars or electronic devices, which might be used in settlement of the arrears.

4. Contact a solicitor

A) If these approaches fail, then it's time to talk to a solicitor. Once again, it's tempting to try to deal with the problem yourself in order to contain costs. In general, we would advise against DIY in this situation because:

- a lawyer can help you understand and comply with the procedural requirements that you need to meet before taking action against tenants.
- there are various options available to you, and it's important that you are aware of the implications of all of them. In England, by way of example, there are two possible legal routes, one seeking accelerated possession of your property and the other claiming unpaid rent and seeking possession. A solicitor can advise you on the respective merits of both courses of action.

NOTE: While there are some commonalities, the laws regulating the landlord and tenant relationship do vary between the countries of the UK, so it is crucial that you obtain advice from a locally qualified professional.

Keep an accurate record of all your dealings with the tenants and retain dated copies of all documents and paperwork. The solicitor will use these when issuing the relevant notices to the tenants and they will used as evidence if the case goes to court.

B) If court action is ultimately necessary, there are various forms of redress available to you. Again, the specifics of the remedies vary between the countries of the UK but, broadly, you will obtain:

- Attachment of Earnings Order, whereby you will recover the arrears from the tenant's salary.
- Warrant of Control, whereby a bailiff (or local equivalent) is authorised to collect monies or goods in lieu of monies.
- Third Party Debt Order, whereby the tenant's bank account is frozen.

5) Alternatives

There are commercial organisations which specialise in debt tracing and recovery. Their services can save you time and money in your efforts to find a previous tenant and recover his or her unpaid rent. Before signing up with this type of agency, you should ask about:

- whether their fees are chargeable irrespective of outcome. In other words, if they fail to trace a tenant, will you still be required to pay?
- their success rate.
- the typical time scale for tracing a debtor.
- what services are included in their fees. For example, will they trace the debtor and recover the debt, or do they specialise simply in finding people?

While most of these firms offer professional and ethical services, there are one or two rogue operators across the country. To avoid these exceptions to the rule, do check the business out at Companies House to make sure it is properly registered:

Source: 09.10.17

Make a comment

Please use the comment box below. Please first or create an account.
user avatar

Register For Free

Create an account for free today to unlock some great features of Net House Prices.

Instant House Valuation