Help with rent arrears – a guide for landlords

When a tenant struggles to pay their rent and falls into arrears, it can be a difficult time for both sides of the rental agreement.

Read on to find out how you can help tenants to reduce rent arrears, plus the eviction options available to you as a last resort.

What are rent arrears?

If a tenant fails to pay any of their rent by the due date on their tenancy agreement, this is known as rent arrears.

For example, a tenant’s monthly rent is £860 and due on the first day of every month. If by the second of the month, they haven’t paid the full £860, they’ll be in arrears and owe the landlord money.

A common issue is that rent arrears can increase over time. Tenants struggle to pay back what they owe without falling behind on the next month’s rent.

Unpaid rent can be problematic for landlords as they may have planned to use the money to pay off their buy-to-let mortgage, pay their annual landlord insurance bill, or fund essential repairs.

What is a rent arrears letter?

If you notice that your tenant has underpaid or not paid their rent, the first thing you should do is contact them.

You could send them a polite text or email to remind them that their rent is due. In many cases, this type of communication will spur the tenant into action and resolve the issue.

It can also give them an opportunity to disclose if they’re having financial problems that mean they’re unable to pay their rent. This information can help you work together to find a resolution.

If your initial contact doesn’t work you could send the tenant a formal rent arrears letter, reminding them how much they owe and the conditions of their tenancy agreement. These reminders are usually sent on the seventh, 14th, and 21st days of arrears.

A rent arrears letter should include key information such as:

• how much rent is owed
• how long it is overdue by
• when you expect payment
• the next steps you’ll take if they don’t pay

When you send a text, email, or letter, make sure you keep a record as you may need this information in the event that the problem escalates.

How landlords can help with rent arrears – 3 steps to follow

If your tenant falls into arrears, it’s in your interest to address the issue sooner rather than later. The less money the tenant owes, the easier it will be for them to clear their debt and get back on track.

It doesn’t take long for arrears to become unmanageable for the tenant and costly for you as the landlord. However, if you follow the three steps outlined below, you can increase your chances of clearing arrears and avoiding the worst-case scenario of an eviction.

1. Open lines of communication

By reaching out to your tenants as soon as you notice rent is unpaid, you can start to understand the extent of the problem and how you might be able to support them.

For example, the tenant might explain that they’ve changed banks so the money will be paid very soon. Alternatively, they might tell you that they’ve lost their job and won’t be able to pay their rent in full until they get a new one.

If your tenant feels they can speak to you openly and honestly, it’ll be easier to work together to resolve the problem.

Although you may initially contact your tenant by phone or email, it may be more suitable to have a more in-depth conversation in person.

As mentioned above, it’s important to keep a record of all communications related to rent arrears.

2. Set up a repayment plan

If your tenant has built up significant arrears, a repayment plan is an effective way of reducing their debt in a manageable way.

These are the main things you’ll need to consider when setting up a repayment plan:

• how long the agreement will last for
• how much the tenant will pay back
• how frequently the payments will be made
• the date payments will be made on

For example if the tenant owes £1,200, a repayment plan could look like this:

• a repayment plan over six months
• the tenant pays £200 a month
• payment due on the fifth of the month (on top of their existing rent)

When coming up with a repayment plan, make sure you consider the tenant’s monthly outgoings (including rent and bills). There’s no point setting a repayment plan that the tenant can’t afford.

3. Show the tenant help that’s available to them

Another option to help tenants reduce rent arrears is to discuss the financial help that may be available to them.

Getting support could help the tenant to get their finances under control and be in a position to pay their rent on time each month.

Some of the help that tenants in arrears could access includes:

• Universal Credit or Housing Benefit
• paying less council tax
• Cost of Living Payments
• Personal Independence Payments
• Attendance Allowance
• Winter Fuel Payments

Remember, you’re only there to point your tenants in the direction of help and resources that could be available to them. Make sure to remind them to contact an organisation like Citizens Advice or seek professional help from a debt advisor.

Are there grants to clear rent arrears?

As well as the support options above, tenants in arrears may also be able to get a grant (money they don’t have to pay back) to clear their rent arrears.

These include:

• Discretionary Housing Payments
• local council grants
• grants from charities

For more information about how to apply for these grants, tenants should contact the following organisations:

• Citizens Advice
• National Debtline
• StepChange Debt Charity

Landlords should also be aware of The Debt Respite Scheme (also known as breathing space), which can stop you from chasing or adding to debt such as rent arrears for a set period.

When should you speak to a guarantor if a tenant is in arrears?

If your tenant provided a guarantor as part of their rental agreement, you can contact them to let them know that the tenant is in arrears and that they’re liable for the unpaid rent.

You should only contact the guarantor if you’ve already contacted the tenant several times and haven’t heard back.

The guarantor, who’s usually a friend or family member, could pass on your messages to the tenant or work with you to reduce the arrears.

Eviction for rent arrears – what do landlords need to know?

If your tenant is in arrears and you’ve not heard from them or their guarantor after several attempts to contact them, you may need to start thinking about eviction.

Seeking eviction should always be a last resort as it can be an expensive, time-consuming, and stressful process. And as rental evictions can be complex, make sure you seek professional legal advice at the earliest opportunity.

Issuing a Section 8 notice for rent arrears

If your tenant owes a minimum of eight weeks’ rent, you can issue them with a Section 8 notice to start eviction proceedings.

Section 8 has a minimum notice period of two weeks and can only be used when a tenant is in serious arrears.

The eviction notice will ask the tenant to leave the property by a specific date. If they fail to do so, then the landlord will have to go through the courts to regain possession of their property.

Read our in-depth guide on Section 8 evictions for more information.

What’s your approach to managing rent arrears? Let us know in the comments.

More guides for buy-to-let landlords

• Lettings agency fees for landlords – a guide
• Revealed: how rental reforms to allow pets in lets could work
• Buy-to-let tax changes landlords need to know about
• What does landlord insurance cover?

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