Resolving Arrears with a Non-paying Tenant
One of the biggest challenges that the owners of buy-to-let properties is the possibility of having a problem tenant occupy the property for a protracted period. These problems could range from annoying or disturbing other tenants to more grave actions like doing illegal activities within the premises. More commonly, however, many landlords may only need to worry about the arrears accrued by the tenants from late and missed payments.
The good news is that truly obstinate or problematic tenants are rare. A landlord on average will encounter a delinquent tenant one in five times at most. Landlords may find it increasingly difficult to be understanding as the costs of maintenance begin to mount. For some property owners, a non-paying tenant in unreasonable debt may be too much to tolerate. Such cases may require assistance from a bailiff company to settle accounts or arrange for an eviction.
The first recourse of the landlord is to check the records of their tenant payments and document late or missed payments. Tenants should also ideally be issued a receipt for every time they are paid. Ensuring that the system is clear is of utmost importance, especially when managing multiple tenants and properties. These records are also crucial for when applying or legal action such as possession against a tenant or group of tenants.
Once tenants show signs of delinquency (such as missed payments), landlords must act immediately to assess the situation. They must first inquire about the state of the tenants. If the calls do not come through (or if the tenant is deliberately avoiding contact), a landlord can take action by filing a formal written demand through first-class or hand-delivered mail.
Because situations that lead to delinquent rent payments vary, it is important that landlords identify the cause of the situation and discuss matters with the tenants before taking any legal action. Too often, tenants may find themselves in a problematic financial situation for a variety of legitimate and understandable reasons. Occasionally, a tenant may find themselves unable to pay because of bank issues or delayed salaries or social benefits. Changes to their circumstances may cause them to be unable to pay rent in full or pay attention to when it is due.
Most non-paying tenants are willing to negotiate either for an extension or a reasonable term to pay off their outstanding debts, and it is in their best interests to do so to maintain the integrity of their property. For minor instances of rent delinquency, landlords may concede to giving a late-paying tenant extra time to sort out their financial situation. A tenant, for example, may offer to pay part of the rent rather than all of it at a given time as a sign of good faith.
Landlords should remain understanding of their tenant’s situation and compassionate to their tenant’s plight once they have had a proper grasp at the situation. They should also, within reason, keep the option of negotiations open even when they move forward with legal action.
When delinquencies become frequent or if tenants refuse negotiations or communication,legal action becomes necessary. Landlords must inform the tenant’s guarantor of unpaid rent within 14 days of non-payment. By 21 days, the landlord can send a final letter to both the tenant and guarantor of their intent to pursue legal action.
Throughout the case, landlords must follow a strict procedure to ensure the integrity of their case in the court of law and to avoid losing deposits.