At Rocket Lawyer UK, we’ve helped to answer over 10,000 legal questions from our members since 2012. From doing some analysis we’ve managed to pick out some common issues that businesses and individuals face. This Ask a lawyer blog series will feature step-by-step instructions to help you solve some of these common legal issues, such as tenant eviction, dismissing your employee, business compliance and more!
In ‘Ask a lawyer: How do I deal with unpaid rent’, I’ll set out some practical steps and tips for you.
Step 1: Take immediate action
As soon as your tenant is late on rent, you should take immediate action. Whilst being one or two days late is usually not an issue, it’s important to ensure late rent is not a recurring problem.
You should let the tenant know that they are late by sending a Rent demand letter. Most tenants will respond quickly when reminded about a missed or late payment.
Step 2: Talk to your tenant
If your tenant still hasn’t paid rent, you should establish why. There may be several reasons, including the bank’s system going down, the tenant has switched bank accounts and forgot to reinstate a standing order or direct debit, or there could be problems with their work paying their salary.
It’s important to keep in touch with your tenant at every stage and keep copies of all communication as these may be necessary if you decide to take court action.
Step 3: Set up a payment plan
You could set up a repayment plan, especially if the tenant has had a good record in the past and the problem is short-term. This is especially useful if you’ve had a good relationship with the tenant and both of you are keen to continue the tenancy.
Step 4: Ending the tenancy
If it looks like the tenant will no longer be able to rent the property, it may be best to end the tenancy. This is a good option if both you and the tenant mutually agree. Ending the tenancy early ends liability for rent payments and allows you to move on and find new tenants. This is a good way of minimising the financial impact of unpaid rent.
Step 5: Evicting the tenant
If the tenant refuses to leave the property after discussing various options and is still late with rent, then it may be appropriate to evict the tenant. You will need to serve an Eviction notice.
If you want to reclaim any rent arrears from the tenant, you can make a claim through the Small Claims Court. However you should consider the value of the rent arrears and whether there is any real prospect of recovering any of the money owed. If the tenant is in no position to repay the debt, then it’s unlikely you’ll be able to recover any money owed, even if win in court.
For further information read Managing residential rent arrears.
To wrap up…
Individual landlords may have times where tenants are late or don’t pay their rent. Individual landlords have to chase these tenants themselves, especially if they don’t use a managing agency who can do it on their behalf. Therefore it’s important that you understand the process of dealing with unpaid rent and dealing with the issue quickly before it escalates. Ask a lawyer if you need further assistance with dealing with unpaid rent.