If you are the landlord of buy to let property, what is likely to be one of your chief worries? If you are like the majority of landlords, this is likely to be a question of your tenants continuing to pay the rent when it falls due.
Payment, after all, is not only a question of the tenancy agreement to which you are both signed up, but rental income is also something on which you are likely to rely in order to meet the costs of running your buy to let business – costs such as the monthly mortgage repayments, the let property insurance you need to protect the property, and the seemingly never-ending requirement for maintenance and upkeep.
Indeed, your entire livelihood may depend on the collection of that rent and there may be many landlords who rely on such income as their pension.
What recourse might you have, therefore, if your tenants fail to pay their rent and slip into arrears?
Let them know
- it might seem an obvious course of action, since most tenants are going to know full well when they have fallen behind with the rent;
- but the website Landlord Law gives a reminder that it is nevertheless important to let your tenant know that you also know they are slipping behind with the rent;
- you might want to avoid appearing too threatening at this stage, since there may be any number of reasons why the tenant has temporary difficulties in paying the rent and your aim, after all, is simply to ensure that you are paid what you are due, remaining on the best possible terms with your tenant;
- similarly important – and something that might seem too obvious to mention – is your need to keep a careful record of when rent is due, when it is paid and when it is not;
- if subsequent action comes down to the wire of your considering legal action to recover outstanding rent, then your written records are clearly going to count for a great deal;
- if your tenant has not responded to your letter notifying him that rent is due or has failed to answer your telephone calls, it may be time to up the ante and send a letter by recorded delivery demanding that all rent due is paid;
Is there a guarantor?
- the Consumers’ Association’s magazine Which? suggests that you might also follow up your demand for outstanding rent with any rent guarantor – once again, this needs to set out precisely how much rent is due and for what period, explaining some of the consequences for the guarantor if the rent is still not paid;
The two-month milestone
- if your tenant has still not paid the rent within two months of it falling due, you have the legal right to recover possession of your property under Section 8 of the Housing Act 1988;
- this is effectively an eviction notice on the grounds of non-payment of rent and something you might want to keep up your sleeve only as a last resort;
- legal proceedings such as this always involve costs, although these, together with the rent you are due are going to be awarded by the courts if you succeed in your action;
With the best will in the world, even the best tenants may default on their rent from time to time, in the event of their finding it genuinely difficult or impossible to pay. How far you are prepared to press for payment of what is due may call for a fine judgment as to the potential costs and hassle, compared to the actual debt outstanding and your assessment of the tenant’s finally paying.
Instead of pursuing court action, for instance, you might decide to support your tenant through their current financial difficulties on the understanding that the problems are essentially temporary.
You might offer further help by proposing a plan by which the tenant may pay off outstanding rent in instalments, thus spreading the burden of repayment.
Or, you might also want to suggest to your tenant that they consider applying for housing support if their circumstances suggest that meeting their rental obligations is likely to be a longer term problem.