Over the last few years many people have found themselves letting properties which they have not been able to sell. The government has recently reduced welfare benefits, which has squeezed the budget for many tenants who rely on housing benefit in order to pay their rent.
This means that many tenants are likely to fall into arrears, or at least partially into arrears. If the tenant simply stops paying the rent at all the advice to the landlord is fairly straightforward: once the tenant has missed two rental payments and is therefore two months in arrears he should instruct his solicitor to serve a notice on the tenant giving the tenant 14 days’ to vacate the property after which he can then issue proceedings.
Also, in these circumstances if the tenancy is nearing the end of a fixed term or indeed, if the fixed term has expired when the tenancy has become a periodic one, the landlord can also consider serving a Section 21 notice which would give the tenant two months to vacate, and the tenant must vacate the property regardless of whether of whether or not they have managed to repay the rent.
However, what are the landlord’s options if the tenant keeps paying the rent each month but pays a slightly reduced rent to reflect the reduced amount of money the tenant is receiving in housing benefit? For example, if the tenant’s rent is, say, £500 per month and the tenant keeps paying £450 per month it is going to take some 20 months before the tenant is two months in rent arrears. A landlord is entitled to serve a notice as soon as any rent arrears occur but unless the rent arrears are at a level of two months or greater, the Court is not compelled award a landlord possession; it is the writer’s experience and advice that the Court has discretion and will often exercise its discretion in favour of the tenant. Clearly, that is not an attractive option for a landlord. If the tenancy is anywhere near conclusion or in a periodic tenancy, one option would be to serve a Section 21 notice thereby bringing the tenancy to an end two to three months from the service of the notice. Another option may be to agree a reduced rent with the tenant if you do not feel the losses associated with losing one tenant and replacing them with another would not justify losing a tenant who is still regularly paying a significant part of the rent. A further option may be to agree with the tenant that you could take a balance of any rent due from any bond or deposit that you hold.
If you come to this agreement, it is worth recording it in writing and having the tenant sign it so that there can be no dispute with the tenant deposit scheme at a later date.
You may be interested to know that we charge a fixed fee for any notice which we serve. It is the writer’s experience that approximately every other notice we see which has been served either by a landlord or a letting agent without having sought legal advice is defective. The resulting costs to the landlord are then often significantly more than the fixed fee (of getting legal assistance) in terms of lost time and rent.
Should you wish to discuss any of these options, or indeed arrange for a notice to be served, please do not hesitate to contact us on 033 3344 9600 or complete our online enquiry form.
This Fact Sheet is for information only and is not intended to be a substitute for legal advice.