What Can I Do If My Tenant Stops Paying Rent in Scotland, UK?

As a private landlord in Scotland, dealing with a tenant who stops paying rent, i.e, rental arrears, can be a challenging and stressful situation. According to recent GOV.UK data, nearly 5.3% of renters reported rent arrears during the last year 2022-23.  It can be a stressful challenge for landlords, especially if you rely on rental income to cover your mortgage or day-to-day costs. In Scotland, tenant protections are strong, and the legal landscape is distinct from other parts of the UK. It’s important for landlords to understand their rights and responsibilities when dealing with rent arrears.

In this guide, I’ll walk you through the steps to take when a tenant stops paying rent, how to handle rent arrears, navigate the legal process, and protect your property under Scottish law. With the right approach, you can manage rent issues confidently while maintaining a smooth landlord-tenant relationship.

What are Rentals Arrears?

Rental arrears, i.e Non non-payment of Rent, is an overdue rent payment that has not been made by the due date specified in a lease or tenancy agreement. When a tenant fails to pay rent on time, the unpaid amount is considered to be “in arrears,” meaning it is an outstanding debt owed to the landlord.

When Do Rental Arrears Occur?

When a tenant misses a rent payment, they are immediately considered to be in arrears from the first day the payment is late. Even if the tenant later pays the missed rent, the period of arrears is still considered. Rental arrears occur when:

• The tenant does not pay rent by the due date as set out in the tenancy agreement.
• The rent remains unpaid for a certain number of days after the due date. For example, in some jurisdictions, rent unpaid after 5 working days from the due date is considered overdue, and landlords may issue notices of overdue rent.
• The tenant consistently misses payments or pays late, causing a cumulative outstanding balance.

Common causes of rental arrears include financial difficulties such as job loss, unexpected expenses, or irregular income. Other causes can be miscommunication about payment dates, banking issues, disputes over property maintenance, or benefits overpayment adjustments that reduce rental support.

Landlords’ Rights in Scotland Against Rent Non-Paying Tenants

In Scotland, tenants must pay rent as outlined in the tenancy agreement. Rent is late if unpaid by the due date and becomes serious arrears after three consecutive missed payments. If unpaid for three months or more, landlords can issue a Notice to Leave and take legal action through the First-tier Tribunal for Scotland.

Under the Private Housing (Tenancies) (Scotland) Act 2016, landlords have the right to:

• Receive rent on time.
• Recover unpaid rent legally.
• Repossess the property for persistent non-payment.

Clear lease terms help prevent disputes, while understanding legal protections ensures landlords take the right steps when dealing with rent arrears.

What to Do When a Tenant Stops Paying Rent

While encountering and dealing with a tenant who doesn’t pay rent can be frustrating, it’s crucial to follow a structured and legal approach to resolve the situation smoothly. Here’s a step-by-step guide on what to do:

1. Review the Tenancy Agreement

Go through the tenancy agreement in order to verify if the rent is actually late. In a tenancy agreement, you can find everything related to rent payments, late fees, and the procedure for handling late payments or non-payment. You should check that both you and your tenant are in compliance with the lease terms and are aware of what you can and cannot do according to the agreement.

Key Points to Review in the Tenancy Agreement:

• Rent payment schedule: Confirm the due dates for rent and the agreed-upon payment methods.
• Late payment provisions: Check whether the agreement includes any clauses or penalties related to late rent.
• Notice requirements for arrears: Most agreements specify the procedures to follow when rent payments are overdue.

2. Communicate with the tenant

Attempt to communicate with the tenant as soon as possible, either by phone or mail, regarding the rent arrears. Make sure to be polite and professional with the tenant and avoid words that sound threatening or harassment. Also, be careful of legal requirements, including proper notice before entering the property.

Ask whether the tenant is facing temporary financial hardship. If they’re struggling, consider sharing information about local housing associations, council housing options, or other forms of financial assistance. Encourage the tenant to provide relevant financial documents, such as bank statements, which may help determine their eligibility for additional support, including the housing element of universal credit. The goal is to foster open dialogue and work toward a fair solution.

3. Issue a Formal Notice

When a Renter fails to respond to informal communication or refuses to make the necessary rent payments, you can proceed by issuing a formal notice. In Scotland, the process is more regulated than in other parts of the UK, and landlords must adhere to the rules under the Housing Act.

What Type of Notice to Serve:

• Notice of Rent Arrears: When a tenant falls behind on rent, a formal notice should be served. This notice informs the tenant of the arrears and demands payment.
• Eviction Notice: If the rent arrears are significant and there has been no resolution, you can issue an eviction notice. Under the Private Residential Tenancy (PRT), you need to provide tenants with 28 days’ notice to either pay the arrears or vacate the property.

It’s important to note that you cannot evict a tenant without a valid reason, such as failing to pay rent or causing damage to the property

4. Offer a Repayment plan

Consider offering the tenant a payment plan before proceeding with eviction action. This can be especially helpful if the tenant is facing temporary financial difficulties. A repayment plan allows tenants to catch up on missed rent payments over time.

Make sure that any payment arrangement is put in writing, specifying the amount to be paid, the frequency, and the duration of the payment plan. This ensures both parties are clear on expectations and helps protect you in the event of further issues with the tenant.

5. Look for a solution

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

• Offer a Temporary Rent Reduction: Offer the tenant a temporary rent reduction if he/she is experiencing a tough time but are expected to recover soon. This helps ease their financial burden until they are back on track.
• Involve the Guarantor: If the tenant has or needs 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.

6. Contact your insurer

Contact your insurer if you have landlord insurance so that your income is covered if your tenant falls into rent arrears. They can provide advice on how to claim back money you’re owed according to the terms of your policy, and can advise how to proceed further as well.

In case tenancy ends with outstanding rent payments, you can request to deduct any unpaid rent from the tenant’s deposit. 

7. Seek Legal advice and mediation

Consider seeking legal advice in case the tenant stops paying rent and refuses to cooperate with you. Organisations such as Citizens Advice Scotland and Shelter Scotland can help with debt advice and legal support for both landlords and tenants. They can provide guidance on your next steps and help you to navigate the legal process.

In some cases, mediation services can be helpful. Mediation allows both parties to communicate and resolve issues without resorting to legal action. Many housing associations and local councils provide mediation services for landlords and tenants.

8. Begin court proceedings for Eviction

There are various courses of action the court can take. When resolving the issue through communication, repayment plans, or mediation fail, eviction may become the only option. The eviction process is governed by strict rules, and you must follow the correct procedures to avoid any legal Consequences.

Steps for Eviction:

• Serve a Notice of Proceedings: Before filing for an eviction order, a notice of proceedings is served. This notice gives the tenant a final chance to pay the arrears or reach a payment agreement. The notice must clearly state that you are taking legal action if the arrears are not settled.
• Apply to the First-Tier Tribunal: If the tenant still fails to pay, you can apply to the First-Tier Tribunal for eviction. The tribunal will consider the case and schedule a hearing. The tribunal may issue an eviction order, depending on the circumstances.
• Eviction Order and Sheriff Officers: If the tribunal rules in your favour, they will issue an eviction order. You then need to enforce the order by employing sheriff officers, who carry out the eviction.

Remember, eviction should always be the last resort, as it can be costly, time-consuming, and stressful. In some cases, the tenant may be eligible for temporary accommodation through the local council if they are facing homelessness due to eviction.

9.  Recover Unpaid Rent

Recovering unpaid rent is not always a straightforward process, especially if the tenant has no assets. However, there are a few ways you can attempt to recover the outstanding rent:

• Claim via the Sheriff Court: You can take the tenant to court and claim for the outstanding rent owed. The court may issue a judgment requiring the tenant to pay the arrears, including any applicable court fees.
• Tenancy Deposit Scheme: If the tenant has not paid their security deposit, you may be able to recover some or all of the arrears from the deposit through a tenancy deposit scheme.
• Debt Collection Agencies: In some cases, landlords may resort to using a debt collection agency to recover the tenant’s arrears.

Things Landlords Can’t Do If Tenants Stop Paying Rent 

Dealing with a tenant not paying rent and not responding to it can be frustrating, but you need to try to remain cool and calm. You should follow legal procedures, typically issuing formal notices, such as late rent or pay-or-quit notices. You shouldn’t take any action in a hurry that violates the tenant’s rights and causes you trouble. Here are some things you cannot do as a landlord if the tenant stops paying rent:

• Enter the rental property without proper legal notice or tenant permission.
• Harass or threaten tenants to force payment.
• Evict tenants without following the legal eviction process, which usually requires written notices and possibly a court order.
• Confiscate tenant belongings or take other illegal self-help actions.
• Shut off utilities or lock tenants out to force payment.

Landlords should respect tenant rights and comply with all applicable housing and tenancy laws throughout the process.

How Landlords Can Protect Themselves from Rent Arrears

To effectively safeguard rental income and minimize the risk of arrears, landlords can take several proactive steps:

• Thorough Tenant Screening – Always conduct comprehensive background checks, including rental history, employment verification, and credit assessments. A reliable tenant is the first step in preventing arrears.
• Clear Documentation and Payment Records – Maintain accurate records of rent payments, outstanding balances, and all tenant communications. This includes keeping track of the documents needed to rent a property, as they can serve as important evidence if legal proceedings arise.
• Establish Open Communication – A strong landlord-tenant relationship fosters transparency and encourages tenants to communicate financial difficulties before arrears accumulate.
• Utilise Rent Guarantee Schemes – These provide landlords with financial protection in the event of non-payment, ensuring consistent cash flow and reducing financial strain.
• Ensure Comprehensive Insurance Coverage – Review landlord insurance policies to include rental income protection, offering a safety net in case of tenant defaults.
• Legal Preparedness – Stay informed about local tenancy laws and have clear clauses regarding arrears and eviction procedures within the tenancy agreement.
• Diligent Reference Checks – Verify previous landlord references and employment details to ensure prospective tenants have a history of responsible financial management.

By implementing these measures, landlords can mitigate the risk of rent arrears and protect their rental income.

Conclusion:

Dealing with a tenant who stops paying rent can be a stressful and challenging experience for landlords. However, understanding the legal procedures, maintaining open communication, and taking immediate action can significantly increase the likelihood of resolving the issue effectively while safeguarding your rights and interests.

Prevention plays a crucial role. By implementing thorough tenant screening processes, drafting comprehensive tenancy agreements, and fostering positive relationships with tenants from the beginning, you can reduce the risk of encountering payment issues.

If you find yourself in a difficult situation with a non-paying tenant, seeking professional assistance from a qualified landlord-tenant lawyer or a property management company like Westport Property can provide valuable support. At Westport Property, we can help you navigate the complexities of the rental arrears and eviction process in Scotland, UK, while minimizing potential legal and financial risks.