Home  Finance  What to do if tenants owe you rent

Category: Finance

What to do if tenants owe you rent

Reading Time: 6 Mins Read

No matter how diligent you have been in your search for the right tenant, you could find that they fall behind with their rent payments. Sadly, having a tenant in rent arrears is a common problem for private landlords. Managing the situation efficiently is essential if you are to recover your loses and it is vital that you act within the law. Here’s our guide to resolving rent arrears.

What to do if your tenants owe you rent


Always remain diplomatic

If your tenant’s rental payment hasn’t reached you on time, there could be a reasonable explanation for the problem. Banks do make mistakes and the payment of housing benefit can be delayed. In the first instance, contact your tenant and ask them politely why their rental payment hasn’t reached you on time. They may not even be aware that there is a problem. Going on the offensive from the outset won’t help the situation and could cause a breakdown in your relationship with your tenant.

Try to reach an arrangement for the repayment of the arrears and remember that you cannot use your tenant’s deposit to clear their debt. If your tenant can’t pay their rent because they are experiencing financial difficulties, suggest that they seek advice as they may be eligible for financial assistance.


Maintain detailed records

Taking legal action to recover unpaid rent or to evict your tenant can be expensive and so should be a last resort. If you do need to take legal action against your tenant, it is vital that you have accurate records to support your case.

Keep a record of all payments received and send a receipt to your tenant for every payment made. This should detail the date the rent was paid, the time period the payment covers and the amount paid.

Make it clear that tenants with a joint tenancy agreement are equally liable for the rent and any arrears.

Retain copies of any letters sent to your tenants and any correspondence that you receive from them.

Ensure that you understand your obligations under the Housing Act 1988 and that you keep up to date with any changes to the act which may affect you.


The steps to take to deal with rent arrears

If several days have passed and there is no sign of the last month’s rent, and you have failed to obtain a satisfactory explanation from your tenant, issue a formal demand. This should be in writing and delivered by hand or sent via first class mail, ideally signed for.

The letter should request that any arrears be paid immediately. You should also ask the tenant to ensure that all future payments are made by the due date. Explain that a failure to pay could result in court action and that you will may make an application to the court for possession of the property should more than two months’ rent remain unpaid.

After 14 days, if your tenant has a guarantor, advise the guarantor in writing that the tenant has failed to pay the rent. Send a letter to your tenant expressing your intention to take the matter further.

After 21 days, send a final demand to both tenant and guarantor, clearly stating your intention to take legal action.

On the day that a second month’s rental payment becomes due, you can consider your tenant to be two months in arrears. This means that you now have the right, under the Housing Act 1988, to take legal action to claim possession of your property.

Hopefully, your efforts will now see your tenants pay their arrears to avoid eviction.


How to take legal action

If all attempts to recover the rent arrears have failed, and you haven’t reached any workable agreement with your tenant, you will have to instigate legal proceedings.

The first step is to serve your tenant with a Section 8 Notice which informs them that you intend to take them to court, if they don’t pay within a further 14 days. It is vital that this is completed correctly, otherwise it will not be legally valid.


  • Complete a ‘Notice seeking possession of a property let on an assured shorthold tenancy’.
  • On the notice, specify which terms of the assured shorthold tenancy agreement your tenant has broken.
  • Give your tenant notice to move out. The notice period will be between two weeks and two months depending on which terms they have broken.
  • If your tenant fails to move out by the specified date, apply to the court for a possession order.
  • You may also request that the court makes a judgement against your tenant for the rent arrears. However, if they have failed to pay because they are struggling financially, you may never be able to recover your losses. You have six years in which to enforce the judgement made at the court hearing.


Tenants receiving housing benefit

If your tenant receives housing benefit and is paying you directly, there are several reasons why they may have fallen into arrears. The most common are:

  • their benefit has been reduced
  • their benefit payment was late
  • they are struggling to manage their finances

It is worth talking to your tenants to establish exactly why they have failed to pay their rent and to offer advice. They may qualify for a Discretionary Housing Payment or a short-term benefit advance from Jobcentre Plus. If they are struggling with budgeting, suggest that they seek help from the Money Advice Service or the charity Stepchange.

If your tenant has rent arrears of at least one month, you can request that their housing benefit payments are made directly to you. If their arrears are equivalent to two months’ rent, the payments will automatically be switched to you but will be switched back when the arrears have been cleared. Jobcentre Plus can also make deductions from your tenant’s benefit payments to repay any arrears.


If you require further assistance

If you are unsure as to how to proceed, seek legal advice or consult Citizens Advice.

It is all too easy to become overwhelmed by the difficulties of managing your properties. Contact Assetgrove today to discover how we can save you time and take the stress out of being a landlord.

Neil Jennings

Neil background is in marketing and business development and has over 20 years experience in the field. He runs Asset Grove and is involved in the marketing strategy for most of our campaigns.

Related Post

How secure are buy-to-let property investments?
Updates: 6 Mins Read
How secure are buy-to-let property investments?

With changes to the tax laws, increasing regulation and uncertainty surrounding the property market, are buy-to-let investments in the UK a secure choice?

Should you rely on a mortgage valuation?
Updates: 4 Mins Read
Should you rely on a mortgage valuation?

If you apply for a mortgage, your lender will commission a valuation report. But can you rely on a mortgage valuation to tell you what you need to know? Find out in this article.

When is a good time to expand my property portfolio?
Updates: 3 Mins Read
When is a good time to expand my property portfolio?

This articles helps buy-to-let investors assess when is the best time to expand their property portfolios.