This is probably one of the most common problems and also from a landlord’s point of view one of the most serious; particularly if you are heavily geared and have large mortgage payments. A few months without rent could mean that you are forced to finance them out of your savings or even your own personal income.
There are a number of scenarios in respect to this particular type of problem. For instance the tenant may have missed a payment, then resumed paying again leaving you with a tenant who is paying but has fallen a month behind. The other more likely scenario is that they just stop paying altogether.
What shall I do?
If the tenant has genuine financial difficulties, then it is undoubtedly best to try and work with them to bring payments up to date. Try to either speak to them or go round and discuss the problem. Ascertain their situation and the reasons for non-payment and if they can make a payment to bring their account up to date.
By visiting the property it also gives you the opportunity to give it a quick inspection and ensure that it’s still in good repair and nothing untoward is going on.
What are their reasons for non-payment? Do they appear genuine? Has there been a change in their personal circumstances such as change of job, or unemployment? Try and find out as much as possible.
Then it is a case of agreeing with them a course of action. This could be bringing their account up to date by a series of small payments; or arranging for them to make a single future payment to pay off their entire arrears. Try and get all this in writing & get them to sign it. You never know, you may be lucky and your sheer presence encourages them to pay up there and then.
I’ve worked in debt management and I’m always dubious of a debtor who offers to pay off their arrears sometime in the future; for instance with funds from an inheritance or a tax refund. Serial debtors suffer from what’s called the ‘Manyana Syndrome’. I’m more comfortable with a tenant that intends to make small but regular payments. Even if they promise to pay off all their rental arrears in a months time; try and insist that they make a small interim payment straight away or shortly afterwards. The amount can be small. However, if an individual makes these payments it’s an obvious sign of their commitment to dealing with the problem. If they don’t, this implies that they are probably not going to address the issue. In both cases, you can then refine your strategy to deal with the anticipated situation.
In the case of the person who makes the payment, then it is worth giving them the benefit of the doubt and working with them to pay off their arrears. In the case of those that don’t, anticipate trouble! Look to minimise your exposure, by serving them with a Section 21 Notice seeking possession.
Don’t spend lots of time negotiating with them, thereby giving them more time to rack up large debts. Act incisively, unless you are strongly convinced otherwise. If the tenant is 2 months or more behind with their rent then possession proceedings are more straightforward as Ground 8 of the Housing Act 1988 provides this as a Mandatory Ground for possession.
One thing to always be aware of is, that once you have a tenant that doesn’t pay, don’t ignore the situation and hope it will get better. Prepare for the worse i.e. service of notice for possession and legal action to recover rent arrears. Always try and keep in contact with the tenant and use this opportunity to glean as much up to date information on them as possible. This information will be vital should they decide to do a ‘flit’ and disappear and you then decide to issue proceedings to recover your losses.
The information which is particularly useful when trying to trace an individual or when trying to reclaim arrears are:
* National insurance number
* Work details
* Correct name
* Residential address
* Date of birth
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