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Tenant stops paying

I’ve been talking recently about the concerns of many landlords over tenants who stop paying their rent. The causes are typically unemployment and the resulting financial hardship.

Up to now thankfully, I’ve avoided tenants missing their rent payments. However it appears that one of my tenants may have succumbed to the financial downturn.

Despite an attempt earlier on in the year to reduce the financial burden of their rent by reducing it from £375 to £315, this months rent failed to turn up at the beginning of October. Not necessarily a problem in itself, but far more ominous was the fact that despite several attempts to contact them, they have failed to return my calls. In the past they have been pretty prompt at responding. A responsible tenant even when they get into financial difficulties will firstly have the courtesy of letting you know that they won’t be paying the rent before failing to ‘cough up the readies’.

A tenant that just goes ‘incomunicardo’ is normally planning something more serious. Typically this is to do ‘a runner’ without settling up their owed rent. The last thing I want is a tenants disappearance – that will make getting back the rental property an even longer and more tedious process than it already is.

Don’t panic when a tenant stops paying rent

My first advice to landlords faced with this situation is not to panic.

Starting possession proceedings on a rental property is pretty straightforward and dealing with tenants that fail to pay their rent is just an unfortunate part of running a rental business. Like any business, landlords sometimes have to face the situation of poor payers – accept that it is all part of being a landlord. There is plenty of advice on the subject and if the tenant and the situation is handled correctly it shouldn’t prove to be insurmountable. Most mportantly, don’t put your head in the sand and pretend it’s not happening – when a tenant stops paying rent, time is money, so act promptly.

Concerns over tenant

Luckily, I’d had some concerns about this tenant before. I don’t know what it is, but you often can. Unfortunately, I’d not met this tenant before they’d moved in as I’d used a letting agent to find him. I’d also not obtained a tenant guarantor, which is something that in the current climate with young tenants I would now not entertain going without.

Served a Section 21 notice

Earlier this year because of my concerns in response to a bout of under payment of rent I’d issued the tenant with a Section 21 Notice at the start of April. A section 21 notice allows a landlord to obtain non fault based possession. This means that it is not necessary for me as the landlord to prove to the courts that any one of the 17 grounds for possession have been met, just that the Section 21 Notice has been correctly served.

Some letting experts actually advocate that landlords serve a Section 21 Notice at the outset of the tenancy as a way of opening this option for landlords irrespective of any non performance of the tenancy by the tenant. There is no time limit for issuing a Section 21 Notice so once it has been correctly issued it stays valid. Download a free Section 21 Notice.

My next steps

Having issued the Section 21 Notice my next steps are to seek possession of the property through the courts.

It should be noted that the issuing of a Section 21 Notice does not allow me, as a landlord to reclaim any unpaid rent. It only allows me to get possession of the property. However, for many landlords this is the most important thing at this stage, as possession will allow me to re-let the property and start earning rent again.

There are several routes to claiming unpaid rent back. Firstly the tenant has paid a deposit of £475 which I have protected with the governments custodial scheme the Deposit Protection Scheme.

I can therefore potentially make a claim against that for unpaid rent or damage to the property. The other route is to apply for a money claim.

Keeping the liberal minded judiciary happy.

I will obviously pay lip service to the ‘liberal inclinations’ of the judges which means that they often side with the ‘poor tenants’ in cases of possession giving them the benefit of the doubt. It’s always worth therefore sending the tenant some kindly worded letters of ‘encouragement’ to pay the rent to show demonstrate what a reasonable and understanding landlord you are. This means that if the case goes to court the landlord reading the case will hopefully look favourably on you and your case for possession quickly.

Twin track approach

Whilst making the gentle ‘cooing’ noises that the judges like to hear I’m going to get on with the real business which it issuing the court forms seeking possession.

This in theory has been made easier by the advent of the government’s online possession service Possession Claims On Line (PCOL).

This means that the whole process including paying the fees can be conducted online. However, this service is only available to landlords seeking possession on the grounds of non-payment of rent.

Currently the tenant has only missed one rental payment, therefore I would not be successful in taking action against the tenant on the basis that they contravene one of the mandatory grounds for possession – of having 3 months rent unpaid at the date of the possession hearing. The so called fault based possession.

Claims form for possession

The next step is therefore for me to issue a claim form for possession of property (accelerated procedure) through the county court where the buy-to-let property is located.

The form required is a N5B.

Over the next few months I will keep landlords updated on the live process and the trials and tribulations of taking action against a non paying tenant, getting possession and hopefully also getting all my money back.

Do you have suggestions and thoughts about getting possession of your property?

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