As a landlord in the UK one of the most stressful thoughts is that of your tenant stopping to pay your rent. In the event that this situation arises, you should know what steps you can take before deciding which course of action is the most appropriate for you.
What type of Tenancy Agreement is in place?
Before moving forward, it is important to consider what type of tenancy agreement is in place between the landlord and the tenant. As you would imagine, the types of tenancies which arise between a landlord and tenant vary from fixed term or periodic tenancies to assured shorthold tenancies – also known as “ASTs”. The remainder of this article deals with the options available to landlords when their tenant stop paying rent under an AST.
Discuss the matter with your tenant
Depending on the circumstances, it is definitely worth discussing the issue with the tenant before getting involved in litigious combat. Understanding the tenant’s point of view can be important and may impact a landlord’s decision on what steps to take next. If it is simply the case that the tenant is momentarily in financial difficulties but expects to be back on their feet soon, a landlord may wish to take a more sympathetic approach and agree to reduce the rent for a period agreed with the tenant. Alternatively, if the tenant is outright not willing to pay rent which is clearly unjustified, a landlord is less likely to have a productive conversation to find a solution.
In any case, a landlord should keep detailed records of when the tenant stopped paying rent as well as any correspondence with the tenant in this regard. If an agreement is reached and not formally recorded in a document, it is still important that a landlord keep records of any discussions they have with the tenant as this will be useful later if any disputes about what was agreed surface.
Section 21 Notice
A section 21 Notice under the Housing Act 1988 can only be used to regain possession of the landlord’s property when the type of tenancy agreement is an AST. The tenant is protected from being removed from the property without due process of law which means the landlord will need to make an application to the County Court for a Possession Order before the tenant can be removed from the property if the tenant does not move out voluntarily. If a tenant refuses to leave the property by the date set out in the Possession Order, the landlord will need to get a warrant for the tenant’s eviction and a court bailiff will evict the tenant. In the UK, there are two types of Section 21 procedures which can be followed by a landlord: 1) Accelerated Procedure; and 2) Standard Procedure.
Accelerated Procedure
The benefit of serving a Section 21 notice using the accelerated procedure is that a landlord is able to regain possession of his property and will not be required to provide a reason or justification for serving the notice. The landlord is required to provide the tenant with the requisite notice period before their tenancy is determined. Usually, the notice period a landlord must afford is 2 months, however due to the coronavirus (COVID-19) pandemic, the notice period as of 1 June 2021 currently stands at 4 months’. However, it is worth checking government guidelines and enquiring with a solicitor about the requisite period of notice as this will inevitably change in the future.
It will typically suffice that a landlord simply wants to regain his property from the tenant and the tenant will only have a defence in very limited circumstances. As such, eviction by way of the accelerated procedure rarely requires a hearing to take place and instead is typically a paperwork exercise for the Courts. Therefore, the accelerated procedure is considered a much ‘easier’, cheaper and quicker method of regaining possession of the property making it an attractive option for landlords.
However, landlords should be aware that if they seek to regain possession of the property by using the accelerated procedure, they will not be able to make a claim for outstanding rent arrears. The landlord will also need to consider the tenant’s financial means before deciding which route to pursue. In some circumstances, it is more appropriate to regain possession of the property quickly using the accelerated procedure even if there is significant sums of rent outstanding landlord is aware that the tenant does not have the financial means to make the outstanding payments. It is worth nothing that using the accelerated procedure does not prejudice the landlord’s ability to make a separate claim for a money judgement to recover the outstanding rent arrears. The benefit of this is two-fold, firstly the landlord can regain possession of the property sooner to re-let the property and secondly, the landlord can pursue the tenant for the outstanding rent.
Standard Procedure
The standard procedure is a more complicated procedure which suitable when the requirements to use the accelerated possession procedure do not apply or where the landlord wishes to make a claim for possession with an additional claim, e.g. for rent arrears. A massive benefit of using the standard procedure is that, if successful, the landlord is able to simultaneously regain possession of the property and also recover outstanding rental arrears. However, unlike the accelerated procedure, the standard procedure is a more costly exercise which will usually involve a court hearing.
Section 8 Notice
Finally, another option available to landlords is to serve the tenant with a Section 8 notice under the Housing Act 1988 which can only be used when the reason for eviction meets one of the many Grounds set out in the Housing Act 1988. There are both mandatory and discretionary Grounds which landlords can seek to rely when evicting tenants. Naturally, if the landlord is able to establish there is a mandatory ground for the eviction, the Court must grant possession of the property. Conversely, is the landlord is able to establish that there is a discretionary ground for possession, the Court may grant possession but is not necessarily required to do so.
A landlord is able to rely on Ground 8 as set out in the Housing Act 1988 in support of his Section 8 notice when the tenant is in rental arrears. Ground 8 is a mandatory ground which means the Court must grant possession of the property back to the landlord if he/she is able to establish that this Ground has been sufficed. Furthermore, the landlord in some circumstances can typically provide the tenant with as little as two weeks’ notice if they are in rental arrears. However, as an impact of coronavirus (COVID-19) the notice period has been modified as of 1 August 2021. Currently, the landlord is required to provide the tenant with either a) 4 weeks’ notice where arrears are at least 4 months outstanding b) 2 months’ notice where arrears are less than 4 months.
Landlords will be keen to learn that unlike Section 21 notices, landlords are afforded the ability to make a claim for the outstanding rent arrears if they pursue the Section 8 procedure. However, the landlord will require a Court Order before he is able to actually evict the tenant which can result in the matter being heavily litigated and a more expensive procedure. Similar to the Section 21 procedures, if a tenant refuses to leave the property by the date set out in the Court Order, the landlord will need to get a warrant for the tenant’s eviction and a court bailiff will evict the tenant.
Rent Deposits
Landlords will usually take a rent deposit before renting to the tenant. From 6 April 2007 landlords renting their property under an AST are required to protect the deposit monies via a government-backed tenancy deposit scheme. Provided that the landlord has complied with his responsibilities in this regard, a landlord will be able to drawn down on the rent deposit money (or withdraw the appropriate amount) to ‘off-set’ the outstanding rent arrears. This will be particularly helpful for landlords who are were heavily relying on the rent payment/s and urgently require money for outstanding bills etc. Unfortunately, the rent deposit may not be enough to suffice the outstanding rent in its entirety in which case the landlord should consider one of the steps outlined above.
If you have found yourself in a dispute with your tenant and require some legal advice get in touch with Sangita Manek on 01494 770980 or email sam@blasermills.co.uk.