N5

Landlords
& Rent Arrears

Helpful advice on managing

your rental income

Foreword
Being a landlord in the United Kingdom isnt easy. The press
vilifies landlords as money-grabbing, the rules and regulations
are unforgiving, and contract law is weighted heavily in favour
of tenants. And thats before you even start to consider those
delightful agent fees.
Rentify was founded by a group of landlords and technology
experts who saw things a little differently. We believe that
the rental industry in the United Kingdom is outdated, and
were building a service to help fix it. Much like the travel
industry before it, were starting to see changes as the high
street monopoly is broken and sleek online services become
the norm. No more commissions, no more pink ties and no
more branded minis.
The Rentify guides are a little helping hand for landlords
who want to know more about the rights, responsibilities,
and options available for landlords. Well cover everything
you need to know in order to get on with making the right
decisions for your portfolio. It can be daunting, but hopefully
our guides will demystify the essentials.
If you have any questions, or you need more in-depth advice,
give us a call on 020 7739 3277. Were helping thousands of UK
landlords and wed be delighted to hear from you.

George Spencer
CEO at Rentify

HOW TO GUIDELANDLORDS AND rent arrears

Contents
1 Introduction.........................................................................................4
2 Preventing rent arrears..................................................................... 5
What can I do before the tenancy begins?......................... 5
And once the tenancy starts?..............................................6
Housing Benefit............................................................................ 7
Dealing with rent disputes outside of court....................... 7
3 Legally recovering rent arrears......................................................8
Applying to the courts for rent arrears.................................8
4 Rent arrears and obtaining possession of your property...... 10
Accelerated possession procedure...................................... 10
Standard possession procedure..............................................11

HOW TO GUIDELANDLORDS AND rent arrears

Introduction
Rentify have produced this guide to help you know
what to do if your tenants cant, or wont, pay the rent.
Were going to run through all your legal rights and
obligations when it comes to recovering rent arrears.
And give you some tips on how best to manage
what can be a stressful situation. Theres nothing
that makes the team here at Rentify sadder than a
stressed landlord.
If you have any questions about rent arrears, or about anything landlord-related, the team at
Rentify is waiting to help. Call us on 020 7739 3277or emailhelp@rentify.com
Rent arrears are the opposite of what a landlord wants. You have costs, too. Mortgages,
broadband, solicitors: none of them pay for themselves. Whether youre renting out property
as your main or an additional source of income, or just as a favour to family or friends, youll
rely on regular and punctual payment of rent. Unfortunately, a tenant in rent arrears is one
of the most common problems for landlords. The law provides you with some important
protections. Ideally, though, it wont come to that.
Recovering rent and, as a last resort, evicting tenants can be a costly process. Chances are, as
well, that you dont have a heart of stone. Unless the tenant is a really nasty piece of work, its
never nice to have to remove someone from their home. So its also important you know what
you can do to prevent things from escalating into a situation where legal action is the only
option left.
This guide will advise you firstly on how to prevent and manage any rent arrears before
providing you with all the information you will need if recourse to the courts becomes
necessary. So, lets get started!

HOW TO GUIDELANDLORDS AND rent arrears

Preventing rent arrears

What can I do before the tenancy begins?
The first trick is to find the right tenants. Either you or your lettings agents should run credit
checks on potential tenants and collect references, so you can satisfy yourself that theyre
going to be able to afford to pay the rent. You might feel uncomfortable doing it, but its
standard practise. Besides, its no good for the tenant if they commit themselves to an
arrangement they cant afford.
If your landlord insurance policy covers rent arrears (as is advisable), most insurers will
insist that you conducted a credit check prior to the start of the tenancy before they pay up.
If the potential tenant does have a poor credit history, you can ask them to provide
a guarantor, who will be legally liable for their rent payments. A guarantor must be able
to fulfil the following criteria:

Be a UK resident (if not found on the Electoral Roll, they must be able to provide
Proof of Residency)

The rent guaranteed must be less than 40% of their salary

They must not have any detrimental credit registered against them

Must be able to sign the Agreement of Guarantee a minimum of 24 hours prior to the
tenancy commencing as shown on the Tenancy Agreement.

HOW TO GUIDELANDLORDS AND rent arrears

Tenants are
much more
likely to deal
openly and
honestly with
you, if you are
understanding
and fair with
them.

And once the tenancy starts?

The best thing is to keep clear records and a close eye on the rent, and to talk to your tenants.
Tenants are much more likely to deal openly and honestly with you, if you are understanding
and fair with them. What you want is a tenant making regular payments, and thats not what
youll get if you get drawn into a protracted dispute.
If the matter does have to go to court later on, you will need clear evidence of the tenants
lack of payment.
Here are some tips for managing rent and limiting arrears during the tenancy:
1 
Try to get the tenant to pay by Standing Order or Direct Debit to cut down on any
human error or misunderstanding
2 
Make sure the Standing Order or Direct Debit has a clear payment reference with
the tenants name and address
3 
Keep a close eye on your accounts so you can quickly establish when rent has not
been paid, and raise the issue immediately with the tenant. This limits your losses as
well as showing the tenant that you take lack of payment very seriously
4 
At the same time, avoid accusing a tenant of anything straight away. There could be
many valid reasons for late payment such as a bank error (Monopoly is based on
real life after all) or delayed payment of Housing Benefit by the local council.
5 
If you are too accusatory early on, you may spark an unwanted row and damage
future relations
6 
If they are experiencing financial difficulty, see if they might be eligible for Housing
Benefit (see below)
7 
If they do fall behind with the rent, and you can afford it, see if you can come to
some sort of arrangement for repayments.
8 
Remember that you cannot accept the deposit as a rental payment as by law it must
be under the protection of a Deposit Protection Scheme until the end of the tenancy

If you are looking to come to an arrangement with a willing tenant who is in arrears, consider
the following options. These may be useful, for example, with a tenant who you trust but who
has recently lost their job:

A realistic times-frame for repayment of the rent

A reduced rent but perhaps with increasingly additional amounts to pay of the arrears
owed to you over a period of time

A lump sum to be paid at a future date to cover the arrears

As a last resort you may wish to waive the arrears in exchange for their agreeing
to vacate the property
No matter how much you trust your tenant, make sure you write any agreement down to
prevent misunderstanding

HOW TO GUIDELANDLORDS AND rent arrears

Housing Benefit
is available both
to those who are
unemployed and
those who are
employed but
earning a low
income.

Housing Benefit
In most cases, your tenants wont have fallen behind in the rent through incompetence or
because theyre trying to pull a fast one on you, but because they cant afford it. In these
circumstances, they may be able to apply for Housing Benefit. Housing Benefit is available
both to those who are unemployed and those who are employed but earning a low income. It
some situations, housing benefit might well be able to help struggling tenants make rent.
Your tenant will be eligible for Housing Benefit if:

They are resident in the UK

They live in the property for which they are claiming

They are responsible for paying the rent or are the partner of the one responsible.
Only one member of the couple can receive it

They are on a low income

They have total capital worth less than 16,000

You can take a look at Rentifys Landlords Guide to Housing Benefit for more help and advice
on how the Housing Benefits system works
Unfortunately, even with the extra help Housing Benefit provides, tenants could still be unable
to make rent.
If this is the case, your tenant can also apply to the local council for a Discretionary Housing
Payment (DHP). This can be used to:
1 
Make up the shortfall between benefit and rent
2 
Cover existing rent arrears (unless the tenant was receiving enough benefit to pay all
of the rent at the time the arrears built up)

Dealing with rent disputes outside of court

Legal proceedings are far from ideal. They often take a long time, and although you can apply
to reclaim some of your costs with a money judgement, it can be expensive. Its better to
think about if you can avoid going to court at all in the first place.
If both you and your tenant are keen to avoid court and you have failed to come to an
agreement about any rent arrears, consider mediation.
Mediation is where a neutral mediator helps you and your tenant to resolve your dispute and
come to an agreement. Mediators you may wish to consider are:

Solicitors

Property surveyors

Professional mediators
Rentify will be happy to provide you with advice on mediation, suited to your specific situation.

HOW TO GUIDELANDLORDS AND rent arrears

Legally recovering rent arrears

Unfortunately, you may be forced into legal
proceedings, even if you have all the care and patience
in the world. Its important to know what your legal
options are.
Unsurprisingly, the law does require tenants to pay the rent. If they persistently dont pay,
it allows you to terminate their tenancy. It also provides you with some (limited) means to
recover any money owed to you. Exactly what you can do, and when you can do it depends
on the terms set out in your written tenancy agreement signed by the tenant before their
tenancy begins.
Firstly, lets look at legal ways to recover rent owed to you.

Applying to the courts for rent arrears

If a tenant falls behind with their rent, youll be able to claim under the
terms of your tenancy agreement for money owed to you using the
small claims procedure of the County Court (also known as a money
judgement). This should be used when you do not wish to
get possession of the property, just the rent arrears owed to you.
It is exactly what it sounds like: a court order which forces a debtor to repay any money they
owe a creditor. You can apply for a money judgement so long as you can prove that your tenant
owes you money. That requires a contract, outlining exactly how much rent is due, and when.
The contract will typically be your tenancy agreement. This can be either written or verbal,
but verbal contracts are much harder to prove. You wouldnt have to be crazy to make a
verbal contract, but, well, youd have to be pretty crazy. You should also have a record of rent
payments or a rent book, to prove that a tenant is in arrears.
Once a money judgement has been issued, the courtcan enforce its judgement in a number
of ways. You can apply for any of these methods of enforcement, and the court will grant
whichever it deems most appropriate:
1 
Attachment of earnings
The court orders the tenants employers to make a regular deduction from their salary to
be paid towards their debt. It will come as no surprise to learn that this only applies when
a tenant is employed. Attachments of earnings also do not apply when the tenant is selfemployed. It also requires you to know the tenants employment details.

HOW TO GUIDELANDLORDS AND rent arrears

This is an order
preventing the
tenant from
selling his land
or securities...
without paying
what he owes you.

2 
Warrant of execution

Aka, Distress, Aka: The Nuclear Option. This allows you to use a bailiff to seize and sell
sufficient of the tenants goods to recover the money due under the judgement. There
are some pretty serious limits to the sorts of items bailiffs can seize. They cant seize any
items necessary for the basic domestic needs of a tenant and their family, e.g. clothes,
bedding, and they cant seize any items which the tenant requires for their job or trade.
That rules out almost all of the items a tenant might own, unless theyre a business, say,
or they own a Picasso, in which case, they should probably be able to make rent. Theres
also a possibility that the Government are going to make any forms of distress illegal, since
theres an argument that these powers contravene human rights.
3 Garnishee
This weird-sounding order requires anyone who owes your tenant money to pay that money
straight to the court. This is particularly useful if your tenant is a business or self-employed.

Charging order
This is an order preventing the tenant from selling his land or securities (bonds, stocks and
shares) without paying what he owes you.Its most useful in the case of a tenant with no
earnings or assets apart from property.

Receiver by way of equitable execution
If the tenant is in receipt of money, for example as a landlord who receives rent on property
he owns, the Court can appoint a receiver to collect the money on your behalf.The Court
wont appoint a receiver if it doesnt consider that the pretty hefty costs of receivership
would be justified given the amount of debt.Dont use a sledgehammer to crack open a
pistachio, or whatever the saying is.

Oral examination
Not going to the dentist, but almost as unpleasant. An oral examination can be used to
obtain further information about the tenants financial circumstances. The court has the
power to order the tenant to attend at court so that he can be asked questions, on oath, as
to his ability to pay the debt. It can help you decide which enforcement action would be
the best according to the tenants circumstances.
In order to obtain an oral examination, you should apply directly to the court. The court
can provide you with the application form (N316) and a leaflet giving more details on the
procedure and suggestions for questions that might be asked.
You might, for example, ask the tenant to supply information on, the name and address of
employer, works number, PAYE number; the tenants earnings; details of any other earnings
(including those of spouse). If the tenant fails to attend or refuses to be examined, he can
be committed to prison by the judge for contempt of court.
This is all quite serious stuff. Often the court ordered enforcement will be unnecessary. If an
order remains unpaid for a period of 14 days, the judgement will be recorded on their credit
file as CCJ (County Court Judgement). This is pretty toxic for someones credit rating. The
money judgement itself can often be enough to focus your tenants mind and encourage
them either to settle their arrears, or to come to some arrangement with you.
Remember that you can get cover for rent arrears (usually up to 12 months) under most landlord
insurance policies. Please see Rentifys Landlords Guide to Insurance for more details.

HOW TO GUIDELANDLORDS AND rent arrears

Rent arrears and obtaining

possession of your property
The procedures for ending a tenancy under any
circumstances, including rent arrears, are detailed
in Rentifys Landlords Guide to Contracts. Likewise,
the legal procedures for obtaining possession of
the property if the tenant refuses to leave when the
agreement has been ended are detailed in Rentifys
Landlords Guide to Law. Please consult these guides
for more information.
If rent arrears become a real problem, you may well decide that you must remove the tenant
from the property, and replace them with someone who is able to afford the rent. Not much
fun, but it may have to be done. As we mentioned earlier, the exact circumstances in which
youll be able to evict tenants, depends on the details of your tenancy agreement.
Of course, the threat of a possession order may be enough to force the tenant to buck up
their ideas, or keep to a repayment plan. Ultimately, though, the property is yours, and if they
persistently dont pay their rent, youre entitled to replace them with tenants who will.

Accelerated possession procedure

In most circumstances, Assured Shorthold Tenancies (ASTs) allow landlords to use an
accelerated procedure. This basically means that you can evict tenants without any reason,
so long as you have given them two months notice.
You will require something called a Section 21 notice for the accelerated procedure. Under
(you guessed it) Section 21 of the Housing Act, a Section 21 notice allows the landlord to claim
possession of their property from the tenant without giving a reason. If you have issued a
Section 21 notice to a tenant and they have ignored it (i.e. they havent moved out by the date
specified in the notice), you can initiate the accelerated procedure.
The Section 21 notice is only available with an AST and you must provide the tenant with at least
two months notice before the date on which it is to take effect. Also, the date on which the
notice is to take effect must be at least six months after the start date of the tenancy. Even
when there is a valid reason like rent arrears, the Section 21 notice is often the path of least
resistance for a landlord.

HOW TO GUIDELANDLORDS AND rent arrears

10

If you want to use an APP, you must:

1 Have a written tenancy agreement
2 Have issued a Section 21 notice. This gives the tenant at least two months to quit
the property. If the amount of time between rent payments is longer than two
months, the notice must be as long as the time between those rent payments.
So, for example, if they pay rent every three months, they get three months notice
3 Have let the tenancy run for at least six months
4 Provide evidence that this notice has been served. The best way to do this it
to get a solicitor to do it for you
5 Not include a claim for rent arrears. If you include this with the application for
an APP it invalidates the whole application. You can make a separate application
for a money judgement.

Once youve applied for the order, the tenants will be served with papers informing them
of your application
Tenants have 14 days to contest to application, by sending in a defence form. They only have
two grounds for contesting the claim:
a If youre ineligible to apply for the assured procedure
b If you havent served them with a Section 21
Once the court makes its decision, they will give the tenant between 14 and 42 days to quit
the property.

Tenants have
14 days to contest
to application,
by sending in a
defence form.

Standard possession procedure

If you cannot fulfil the criteria necessary for the accelerated procedure, you will need
to claim possession using the standard procedure. This procedure will therefore apply
to the following cases:
All assured tenancies
ASTs that are to be ended during a fixed term
With the standard procedure, you must first serve the tenant with a Section 8 notice.
This gives the tenant notice that you are seeking possession, but unlike the Section 21 notice
it requires you to give grounds for taking possession of the property. Specifically, you must
give one or more of the legitimate grounds listed in The Housing Act 1988.

HOW TO GUIDELANDLORDS AND rent arrears

11

If the tenant
hasnt left the
property within
the period
specified in the
Section 8 notice,
you can apply to
the court for a
possession order.

There are 18 legal grounds for repossession listed in the Housing Act 1988 but as far as rent
arrears go, these are the two relevant ones:
1 Ground 8
This is for serious rent arrears and the conditions are quite specific. It can be used if at the
date the Section 8 is served and at the date of the court hearing:
At least 8 weeks rent is unpaid when rent is due weekly or fortnightly
At least 2 months rent is unpaid when rent is due monthly
At least one quarters rent is more than 3 months in arrears when rent is due quarterly
At least 3 months rent is more than 3 months in arrears when rent is due yearly
2 Ground 11

This can be used when there are persistent delays in lawfully due rent payment. Make sure
you know the circumstances surrounding this before using it to issue a Section 8 notice:
e.g. the courts will take it into account if the delayed payments are themselves the result of
delays in the tenant receiving housing benefit
If the tenant hasnt left the property within the period specified in the Section 8 notice, you can
apply to the court for a possession order.
If you seek possession on Ground 8, then the granting of a possession order is mandatory: If the
court is convinced that your tenant is in arrears, then they have to grant the possession order.
Ground 11, however, is discretionary: If the court thinks your claim is reasonable, they may
grant the possession order. Depending on the strength of the evidence, the result of the court
hearing will take one of the following forms:
1 The case is thrown out. The tenant can stay until another opportunity to legally
repossess the property arrives. The most likely cause for this is that you havent
followed the correct procedures
2 The case is adjourned (if the judge cannot come to a decision)
3 The judge grants an outright possession order (also known as an absolute order).
The tenant must leave before the date given in the order (usually 24 weeks)
4 The judge grants a suspended possession order. The tenant can stay in the property as
long as they comply with the conditions of the order (this is usually used in cases of rent
arrears where the tenant shows a willingness or capability to make up what they owe)
5 The judge orders the tenant to pay a money order, usually the amount owed to you in rent
arrears. This money order can also be tagged on to a possession order to cover your legal
costs, for example
If a tenant refuses to leave by the date given in the possession order, a warrant for eviction
must be obtained from the court, using Form N325: Request for Warrant of Possession of Land.
Do not attempt to evict the tenant yourself: it is illegal.
Suspended possession orders are another good way of forcing a tenant to pay back their
arrears if you suspect theyre able to, and dont want to go through all the trouble of finding
new tenants. You may want to suggest it during the hearing.
The government has an online service with all the relevant forms for reclaiming rent arrears or
possession of property. Here it is: http://www.rentify.com/howtoguide/5/possession

HOW TO GUIDELANDLORDS AND rent arrears

12

What can Rentify do for you?

Rentify is the UKs leading online service for landlords, helping
them to market, manage and make money from their properties.
We offer a wide breadth of services aimed at making life a
little easier for landlords these include:

Online advertising on leading UK websites

Photography services

Energy Performance Certificates

CP12 Gas Safety Certificates

Tenant finding services

Credit reference checks
Assured Shorthold Tenancy agreements

Deposit protection service

Inventory checks & management

Removals of all sizes

Evictions

Flexible property management
We also offer a selection of other guides we hope landlords
will find useful:
No1

No 2

No3

Landlords
& The Law

Landlords
& Insurance

Landlords
& Housing
Benefits

Navigating your way through

your legal rights and obligations

What you should be aware of when

deciding on your landlord insurance

Knowing yours and your tenants rights

when it comes to housing benefit

No4

No 6

No 7

Landlords
& Tenancy
Agreements

Landlords
& Maximising
Your Property

Landlords
& Your New
Portfolio

Understanding the types

of tenancy agreements

Maximising your
properties value

Navigating your way

through the buy-to-let market

If you have any questions please talk to those nice

people at www.rentify.com on 020 7739 3277 or email
us at help@rentify.com if you have any questions.
Please note that we cannot offer legal advice and advise
you speak with your solicitor.
+44 (0)207 193 1687|INFO@RENTIFY.com|www.rentify.com