Rent arrears can be a property manager's biggest headache if spun out of control. Swift and decisive action must be taken when a tenant fails to meet their rental obligations, and Arthur can help.
After discovering a tenant hasn't paid their rent, it's essential to take the first step quickly. Getting in touch with them via a text reminder or a short phone call is the easiest way to ensure contact is established quickly. The problem might be solved by this reminder once the tenant realises they had a fault with their standing order or it had just slipped their mind.
If the tenant doesn't answer their phone and nothing is actioned following the reminder, this is when a follow-up should be made. A formal letter or email should be sent that outlines the overdue rent, any potential late fees, and the legal consequences if they don't pay by a certain date.
If it is revealed that the tenant is struggling financially, the best way to proceed is to suggest a payment plan for them. This is a short-term plan that can help them catch up on their rent quickly.
However, this isn't always a viable solution for the long term. In this case, it may be worth directing the tenant towards applying for Universal Credit, which can help them get back on track with their rent.
Dealing with many tenants can mean that certain details slip through the cracks. For example, if six tenants out of 400 that you deal with regularly fall into rent arrears, keeping on track with where everyone is up to will be challenging. Ensuring detailed notes are kept on each one is essential.
A property manager should keep a record of all written correspondence. This will be especially useful if the case goes to court.
If a tenant falls into two months of rent arrears and has made no effort to remedy the situation or talk to the property manager, then an eviction process should be the next priority. This can be done by serving a Section 8 eviction notice using the grounds of rent arrears. This does give the tenant the chance to pay back their arrears, therefore invalidating the notice if it goes to court.
Section 21 of the Housing Act 1998 is likely to be abolished, but the current system is if the tenant's fixed-term tenancy is coming to a close or if there was a break in the clause in the tenancy agreement, there are grounds for a property manager to evict the tenant. This would mean the tenant could be evicted without the property manager having to provide a reason, whereas, for Section 8, evidence of arrears must be provided to the court. However, the Renters' Rights Bill is set to shake up the property sector, seeing the abolishment of Section 21.
What else could change with the Renters' Rights Bill? Find out in our blog.
Addressing rent arrears requires a level head combined with effective communication and empathy. With these tips, the likelihood of settling the issue amicably is much increased, but it is essential not to hold back on legal action when needed.