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Article:
If you take the precautions outlined
in 20 steps to
Successful Landlording you can considerably
reduce the risk of rent payment problems. However, you can
never eliminate the risk entirely, and sometimes
financial problems go beyond your tenant's ability to
control.
If you are wise you will insist
that tenants pay by Bankers Standing
Order. This
eliminates anxious waiting for cheques that never
arrive, or worse still, tramping the streets collecting
rent.
You need to continually monitor your bank
account to ensure that payments have been made on time.
These days you can do this by telephone or using an
Internet link. If you don't do this, it could be up to
one-month before you find out that a payment has been missed,
and that's too long to delay.
Rent arrears need immediate
action: 1) to let the tenant know they just cannot get
away with it, and 2) to take appropriate steps at an
early stage.
You must quickly establish why the
rent has not been paid. It's quite possible that the
bank has not made the payment, or the tenant has
overlooked his account balance or has switched accounts,
forgetting to re-instate the standing order
payment. Or, alternatively, if you accept cheque
payments, your rent cheque really may have been lost in the
post - unlikely, but anything is possible!
Most tenants, when reminded about
a missed payment, will respond quickly and remedy the
situation. However, if after a few days the situation
still persists, then you probably have a more serious problem
on your hands and you need to act quickly.
It can take a long time to regain
possession through the courts, often 4 to 6 months, and sometimes difficult
tenants can delay matters even further. It's
imperative, therefore, that if you decide to go for possession of the property,
to minimise your losses as much as possible, you act quickly.
First of all, though, you need to establish
contact with the tenant to find out exactly what the
problem is. If there are debt
problems or the tenant has lost his or her job it
may be possible to come to some mutually acceptable
arrangement. You need to set out (in writing) a plan of
action, with timescales for payments and back payments
of arrears.
This may include accepting smaller
rent payments with increasingly additional amounts to
pay off the arrears over a period, or the
agreement to pay a lump sum at some future date to make
up arrears. At this point do not include the security deposit
as a rent payment - this is your only security in this
situation.
You should advise the tenant to
seek assistance from the various help agencies: The
local authority Social Services Department regarding Housing
Benefit payments, Housing Advice Centre, and the
Citizens' Advice Bureaux.
You need to establish with the
tenant what the future holds. If the tenant's situation
is likely to improve, you may be prepared to "see
it through". Otherwise if the tenant is unable or
not willing to make payments there may be no alternative
but to seek possession
of the property, if large losses are to be avoided.
Above all, you need to maintain
a good relationship with your tenant if at all
possible. After all, the tenant is still living in
your property, which you want him to look after and
respect. Some tenants will be able to leave within a
short time quite voluntarily. This will release your
property to re-let, to minimise your losses by starting
to earn income again.
However, if the tenants are to be
re-house by the local authority, there could be not
alternative but to go through the court possession
proceedings. Local authorities will not normally
re-house tenants who have voluntarily made themselves
homeless.
Some tenants may just refuse to go
or to co-operate with you in any way. In these cases the
sooner you take action for re-possession and eviction
the better.
Whatever you do though, never
ever be tempted to harass or in any other way interfere
with the tenant's peaceful occupation of the property.
The penalties for harassment
are severe and have resulted in heavy fines (over
£10,000) and in theory, even imprisonment for landlords.
It is unlikely that landlords will
ever recover all outstanding losses in many rent arrears
cases and the best solution is often re-possession and
to re-let quickly to minimise your loss.
If your tenant is on an assured
shorthold tenancy, with a term-certain of six
months, it may well be possible, depending on how long
the tenant has been in residence, to wait until the
mandatory possession notice can be served in the normal
way.
The Accelerated
Possession Procedure cannot be used in rent arrears
cases and therefore if you are not able to use the
mandatory shorthold possession procedure you will have
to fall back on the various grounds
for possession mid-tenancy
Ground 8 gives mandatory
possession where the the tenant is a full two months
in arrears both at the time of serving notice and at the
actual court hearing. In the case of a monthly tenancy a
full 8 weeks rent arrears is required. There
are other non-mandatory grounds, known as discretionary
grounds, which can also be invoked, but with less
certainty of outcome - see grounds
for possession.
Debt
Recovery can be expensive and time consuming,
but it is sometimes cost effective to do-it-yourself
using the Small Claims
Court.
Experience shows that avoiding
litigation if at all possible, writing off small short-term losses, and moving on as quickly as possible,
is the best overall landlording policy.
Contents ©
LandlordZONE® 2006 all
rights reserved.
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