What to do if your tenant stops paying the rent

9 hints and tips every landlord should know

It’s the landlord’s biggest worry, a tenant who suddenly stops paying the rent. You’ve probably got a mortgage to pay on the property, and other expenses like buildings insurance and maybe a service charge.

We’ve put together some hints and tips to help you spot the problem early and take steps to try to make sure you’re not out of pocket.

1. Check your bank account

On the day the rent is due, check your bank account to make sure the payment has arrived. A day or so late could be down to the bank, any longer and you need to contact your tenants.

2. Talk to your tenants

As soon as you notice the rent is late, call your tenants and ask them why (politely. There’s no sense in escalating a situation that could be resolved amicably). If you contact your tenants quickly, you may be able to sort out the problem before the debt gets so big they can’t pay it.

If it’s simply forgetfulness or a temporary cashflow problem, agree a date when you’re going to get your money. And send them a letter detailing exactly what you’ve agreed.

Most common reasons for late payments

There could many reasons why your tenant hasn’t paid on time. Some should concern you more than others:

• a mistake by the bank
• your tenant simply forgot to transfer the money
• they’re having temporary cashflow problems
• your tenant has been made redundant
• your tenants were a couple but now they’ve split up
• your tenant is experiencing difficult personal issues like bereavement, stress or mental-health difficulties
• your tenant is simple refusing to pay the rent, this could be because of a dispute about the property so ask them to detail (in writing) what this is

3. Keep records

Keep accurate records of all letters, emails, phone calls and payments. If you can’t resolve the situation amicably you may have to go to court. So you need to be able to prove that you took all reasonable (and legal) measures to resolve the situation.

4. Try to come to an agreement

You may be able to reach a compromise with your tenant. If they’re temporarily unemployed for example, you may decide to reduce the rent while they find another job. If they’ve been reliable you might not want to lose a good tenant. Do them a favour and they’re more likely to make paying the rent their top priority.

Anything you agree needs to be documented, so everyone knows what they’re signing up to. If you agree a rent reduction for 6 months for example, send a letter to your tenant and get something in writing to say they’ve understood and agreed to the arrangement.

5. Is there a guarantor?

Did someone agreed to guarantee your tenant’s rent when they signed the tenancy agreement, a friend or relative for example? Write to them and tell them about the rent arrears. They’ll be keen to help you resolve the situation, so they don’t end up being liable for the money themselves.

If you can’t reach an agreement with the tenant, you may have to take action to recover the rent from the guarantor.

6. The tenant refuses to communicate with you

If your tenant is unresponsive, you may have to start eviction proceedings. There are two ways to do this.

If there’s less than two months to run on a fixed term tenancy, or you have a periodic tenancy in place, you can serve your tenant with a Section 21 notice.

Once your tenant hasn’t paid the rent for two months, you can serve them with a Section 8 notice. Use this if the tenancy agreement has longer than two months left to run.

7. Take legal advice

If you’re unsure which eviction procedure to use, you might want to take legal advice – especially if your tenant is contesting your claim for repossession. They might be saying the property is in disrepair. If that’s the case, try talking to them again and offer to make any reasonable repairs to the property.

8. Collecting your unpaid rent

Once you’ve started eviction proceedings, the only way to get the rent arrears may be through the courts. You can also claim any reasonable costs. However, even if the court finds in your favour, if your tenant has no money they may be unable to pay you what they owe.

Think carefully before you go down this route. Legal fees can be expensive. You might be better off cutting your losses, getting your property back and finding a new tenant. In which case…

9. Check tenants’ references carefully

Reference checks are never 100% reliable because your tenant’s situation can change during their tenancy. They could be made redundant, for example, or split up with a partner and not be able to afford the rent on their own. However, rigorous checks on tenant’s renting and credit history are an important tool for every landlord.

Tenants’ references – what you need to know

You may decide to use your letting agent or another professional to carry pretenancy checks. But you can also do quite a lot of the work yourself. For example, ask to see:

• an employment contract or letter from your tenant’s employer
• recent payslips or bank statements
• proof of benefit entitlement

You could also run checks with a credit agency such as Experian or Equifax – but you must ask the tenant’s permission to do this (if they refuse, you may draw your own conclusions).

Who to trust?

You can also ask for references from a current or previous landlord, and from your tenant’s employer. They should be happy to give these.

If you’re still unsure about your tenant’s ability to pay the rent, you could ask for a guarantor (see point 5) or simply find another tenant. Remember to run the same credit checks on the guarantor.