Westport Property - Dundee

What Can I Do If My Tenant Stops Paying Rent?

8 May 2024

As a landlord, dealing with a tenant who stops paying rent can be a significant challenge. While there might be valid reasons behind the missed payments, the impact on both parties cannot be understated. For landlords relying on rental income, such situations can cause anxiety and frustration.

Managing rental properties in the UK can be complicated for landlords. They must be well-informed about their rights and responsibilities and follow the proper procedures to resolve non-payment issues. In today’s landscape, where economic factors and rising living costs can strain tenants and landlords alike, proactive measures become essential. Let’s explore the key factors involved and initial steps landlords can take when faced with a tenant not paying rent:

  • Understanding the Situation

Before taking any drastic measures, it is important for landlords to understand the reason behind the missed rent payments. There might be a valid reason, like job loss, illness, or financial hardship, that might have temporarily affected the tenant’s ability to pay rent on time. 

By having an open conversation with the tenant, landlords can gain insights into their circumstances and find a mutually agreeable solution. However, it’s equally crucial for landlords to maintain professionalism and ensure that their rights and interests are protected throughout the process.

  • Be Organised and Communicate Well

Effective communication and organisation are key to successfully managing rental properties. Landlords should keep records of all rent payments received, including dates, amounts, and any outstanding balances. This documentation can serve as valuable evidence in case legal action becomes necessary.

Maintaining open lines of communication with tenants from the very beginning can help prevent misunderstandings and foster a positive landlord-tenant relationship. Regular check-ins, reminders, and clear expectations regarding rent payments can go a long way in avoiding potential issues down the line.

Systematic Approach to Follow If a Tenant Stops Paying Rent

Facing a situation where a tenant stops paying rent can be challenging. In this situation, landlords need to act promptly and follow a systematic approach; having a systematic approach can help landlords navigate the situation effectively. Here is a step-by-step guide:

Act Immediately and Talk to Your Tenant

As soon as you notice a missed rent payment, reach out to your tenant to understand the reasons behind the delay. This initial conversation can help you figure out how serious things are and what you need to do next.

Most Common Reasons for Late Payments:

  • Job loss or reduced income
  • Unexpected medical expenses
  • Relationship breakdown or divorce
  • Mismanagement of finances

Look for a Solution

Depending on the circumstances of the tenant, you may be able to find a mutually agreeable solution, such as: 

  • Offer a Temporary Rent Reduction: 

If the tenant is experiencing a tough time but is expected to recover soon, you might want to lower the rent temporarily. This will help ease their financial burden temporarily until they are back on track.

  • Devise a Repayment Plan

Creating a repayment plan involves meeting with tenants to devise a schedule for them to pay back missed rent gradually. It allows them to catch up on what they owe in manageable instalments, ensuring they fulfil their obligation while considering their financial situation.

  • Involve the Guarantor

If the tenant has a guarantor, you can involve them in the discussions. They may be able to provide support in addressing the rent payment issue, either by helping the tenant financially or by offering advice on how to handle the situation effectively.

Speak to Your Insurer

If you have landlord insurance that covers rental income protection, it’s important to inform your insurer about the situation where the tenant has stopped paying rent. They can offer advice on how to proceed and may even provide financial assistance according to the terms of your policy. 

Send Written Notices

When communication isn’t effective in resolving the issue, it’s important to take formal steps. Sending written notices establishes a clear record of communication and serves as an official notification to the tenant regarding the non-payment of rent. These notices typically outline missed payments and any applicable late fees, and provide a deadline for the tenant to respond or rectify the situation. It’s an important legal requirement and sets the stage for further actions, if necessary, such as eviction proceedings.

After 14 Days of Non-Payment:

  • Send a formal letter to the tenant, clearly stating the amount owed and the consequences of continued non-payment (e.g., potential eviction proceedings).

After 21 Days of Non-Payment:

  • Send a second letter reiterating the outstanding amount and informing the tenant that you intend to initiate eviction proceedings if the rent remains unpaid.

Serve a Notice to Quit

When the tenant continues to neglect rent payments or vacate the property, you can serve them with a “Notice to Quit.” This notice legally informs them that they must move out within a specific timeframe, which is usually around 28 days for certain types of tenancies in Scotland.

To ensure everything is done correctly, it’s important to follow the proper procedures when serving this notice, such as delivering it in person or sending it by recorded delivery if the tenant cannot be reached directly.

Applying for an Eviction Order

When the Notice to Quit period passes, and the tenant still hasn’t left, you might need to take further legal action by applying for an eviction order. This involves attending the First-tier Tribunal for Scotland (Housing and Property Chamber) and filling out the appropriate forms. You must provide evidence of the unpaid rent and pay any necessary fees.

It’s not an easy step to take, but it’s sometimes necessary to regain possession of your property and resolve the situation. The tribunal will review your case and decide whether to grant the eviction order.

The Tribunal Hearing

During the tribunal hearing, both the landlord and the tenant will have the opportunity to present their cases and supporting evidence. The adjudicator will review the evidence and make a ruling, which could result in the tenant being ordered to vacate the premises or being granted additional time to pay the rent.

It’s essential to have all relevant documentation, such as the tenancy agreement, payment records, and communication logs, to support your case during the hearing.

Enforcing the Eviction Order

Once the tribunal grants the eviction order and sets a deadline for the tenant to vacate, they’re expected to leave within that timeframe. However, if they refuse to move out, you may need to involve sheriff officers to enforce the eviction order and regain possession of the property legally.

Sheriff officers will visit the property to ensure the tenant leaves and, if necessary, oversee the removal of their belongings. It’s a last resort to legally regain possession of your property and resolve the situation.

Mitigating Damages and Recovering Unpaid Rent

Once the tenant has been evicted, your next step is to assess any damages and unpaid rent they may owe you. If there is unpaid rent, you can consider taking legal action through the Scottish small claims court to recover these costs. The specific procedures and limitations will depend on the amount owed.

By taking legal action, you’re aiming to mitigate your losses and ensure that you’re fairly compensated for any financial harm caused by the tenant’s actions. It’s an important step in protecting your rights as a landlord and recovering what you’re owed.

Preventing Future Non-Payment Issues

To minimise the risk of encountering similar situations in the future. Landlords should implement robust tenant screening processes and have well-drafted tenancy agreements in place. The Scottish Government offers model tenancy agreements, which can serve as a useful template for landlords. These agreements outline the rights and responsibilities of both parties, helping to set clear expectations from the start.

Additionally, conducting thorough reference checks on potential tenants can provide valuable insights into their rental history and reliability. Asking for sufficient security deposits can also provide a financial buffer in case of future rent defaults.

It’s important to clearly outline the terms and consequences of non-payment in the tenancy agreement. By doing so, tenants understand their obligations and the potential repercussions if they fail to meet them. This transparency can help deter tenants from defaulting on rent payments and minimise the risk for landlords in the future.

Seeking Professional Assistance

Dealing with the eviction process in Scotland can be tough, especially if the tenant contests the eviction or raises legal defences.  In such cases, it’s wise to seek help from an expert property management company. These professionals know the ins and outs of the law and can guide you through the process smoothly. They’ll make sure you’re following all the right steps and looking out for your best interests every step of the way. It’s a smart move that can save you a lot of stress and hassle in the long run.

Read More: What Does a Property Management Company Do?

What Can Landlords Do to Protect Themselves from Rent Arrears?

While dealing with non-paying tenants can be challenging, landlords can take steps to protect themselves before issues arise. Here are several proactive measures landlords can take to minimise the risk of rent arrears.

Reference Tenants

Conducting thorough tenant reference checks is crucial before renting out a property. This includes checking rental history, employment status, and creditworthiness to ensure tenants are reliable and capable of making timely rent payments.

Record All Payments

It’s important to write down every payment you receive, noting the date they paid, how much they paid, and if there’s any money still owed. Think of it like keeping a journal of your finances with your tenants. It’s like having proof of what’s been paid and what’s still owed, which can make things a lot smoother if there’s ever a dispute. This documentation can serve as valuable evidence in case legal action becomes necessary.

Form a Good Relationship with Tenants

Building a positive landlord-tenant relationship from the start can encourage open communication and prevent misunderstandings. Regularly checking in with them—maybe stopping by for a quick chat or sending a friendly email—shows that you care about how they’re doing. If they have any concerns or problems, addressing them quickly and effectively shows that you’re responsible and reliable.

Basically, it’s all about building trust and respect between you and your tenants. When there’s a good relationship, it’s much easier to work together and avoid any misunderstandings or conflicts down the line.

Consider a Rent Guarantee Scheme

Think of a rent guarantee scheme like having a safety net for landlords. Just like you might get insurance for your car or home to protect you in case something goes wrong, a rent guarantee scheme is kind of like insurance for your rental income. While there are costs involved, these schemes can provide valuable financial security.

Make Sure Your Insurance Policy Covers Rent Arrears

Review your landlord insurance policy to ensure it covers rental income protection in case of non-payment by tenants. Think of your landlord’s insurance policy as a shield that protects you from unexpected problems. This can provide a safety net while you navigate the eviction process.

Keep Good Records

Maintain a detailed record of all communication with the tenant, including emails, letters, and phone calls. These records can serve as valuable evidence in court if legal action becomes necessary.

Check Tenants’ References Carefully

Thoroughly check and verify any references provided by prospective tenants. Take the time to reach out to these references. Call up their past landlords to see if they paid rent on time and took care of the property. Talk to their employers to confirm their income and employment status. Basically, you want to make sure they’re as good as they say they are.

Also Read: What is a Letting Agent: A Complete Guide

In Conclusion

Dealing with a tenant who stops paying rent can be a stressful and challenging situation for landlords. However, by understanding the legal procedures, maintaining open communication, and acting promptly, you can increase your chances of resolving the issue effectively while protecting your rights and interests.

Remember, prevention is key. Implementing robust tenant screening processes, drafting comprehensive tenancy agreements, and forming positive relationships with tenants from the outset can help mitigate the risk of encountering non-payment issues.

If you find yourself in a difficult situation with a non-paying tenant, don’t hesitate to seek professional assistance from a qualified landlord-tenant lawyer or property management company like Westport Property. Our expertise and guidance can be invaluable in navigating the complexities of the eviction process and minimising potential legal and financial risks.

Contact us for your own success story

Author Image
  • Adam Hutcheson
  • Meet Adam, a proud native of Dundee with over 20 years of extensive experience in the local property market. Following his tenure with national chartered surveying firms, he founded Westport Property in 2012. Specialising in all aspects of residential and commercial property, Adam holds full MRICS membership with the Royal Institution of Chartered Surveyors, alongside a CIH Level 3 certificate in Housing Practice.