4.7 Preventing, Controlling And Recovering Rent Arrears
In modern tenancies, rent is normally paid by the tenant via standing order into the landlord or agents bank account. It is advisable that the tenancy stipulates the method for which rent is payable and how it will be collected. There should be consent from the tenant if collection is to be by regular visits to the property.
Proper and reasonable enquires before letting will reduce the risk of arrears (see Chapter 3).
It is the tenant’s responsibility to make sure rent is paid in full, on time and in the manner agreed in the tenancy agreement.
Although it is not the landlord’s responsibility to issue reminders or chase payments, effective procedures for managing arrears should be established because late payment is not unusual.
Landlords letting to a tenant who claims housing benefit as a means of helping them pay their rent should make themselves familiar with the welfare benefit system and particularly housing related benefits. Arrears can occur where a landlord and/or tenant fails to complete paperwork properly and on time and claims may then not be back-dated.
In times of hardship, tenants not initially claiming benefits may need to resort to housing benefit (HB) to help pay their rent. The landlord should be sensitive to such situations and offer support to the tenant to help them submit a valid HB claim. Help may also need to be given to vulnerable tenants who lack the ability to submit a claim unaided. Offering productive support can help to reduce arrears, even though this is not a legal requirement.
Arrears can occur for a variety of reasons and sometimes this can be resolved between the landlord and their tenant. If the tenant is unable or unwilling to pay, or is habitually late in paying, then the landlord may terminate the tenancy using the most appropriate legal method for that particular type of tenancy. These methods are dealt with in Chapter 5 of this manual.
Unless trained and skilled in the procedures to terminate a tenancy early legal assistance should be sought. Failure to follow procedures properly may mean any action will fail in court and it is important not to inadvertently harass or illegally evict the tenant as both are criminal offences.
Section 8 of the Housing Act 1988 can be used to recover possession and claim arrears owed. In general, if landlords make an error, the courts will be entitled to reject the application and sometimes the court does not have to agree with a landlord’s request to terminate a tenancy, even if they agree the facts claimed are true.
A County Court Judgment (CCJ) can affect a tenant’s credit rating which in turn can affect their ability to rent in the future and can act as a deterrent to running up arrears. Obtaining a CCJ against a tenant does not mean that the landlord will automatically receive what is owed. If the tenant does not pay, the judgement (or order) can be enforced but this will involve further costs.
In incurring any court or enforcement costs landlords need to consider how likely they are to be able to recover any monies owed. Bailiffs cannot take possession of a tenant’s belongings if they are on hire purchase, so a tenant’s apparent lifestyle may not be a true reflection of their ability to pay. As an alternative to using bailiffs, the judgment can be enforced by means of an attachment of earnings order where the tenant is employed, or by a third-party payment order where someone else who owes the tenant money pays it to the landlord instead. A CCJ can also be used to recover money from a bank account when it is in credit.