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.
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.