Tenant not paying rent during crisis

runningwind

My tenant advised he will not pay rent. I’m ok to help him out but I’m worried that at the end of 3 months he will have built up considerable arrears that he can’t pay back. He struggles to pay monthly as it is. How can I ensure I’m not left out of pocket. 

cattie

Can you not come to some agreement with him that you'll reduce or waive the rent for the period of this crisis, effectively lessening the amount that will be owed to you once this emergency is over? We all need to help each other out in whatever way we can as these are exceptional circumstances we find ourselves in & many people will struggle financially through no fault of their own.

JayRitchie

How about waiving the rent for a few months - let your mortgage company know that you need a payments holiday.

princeofpounds

You can't, unfortunately.
 
However, you can minimise your ultimate losses. You may eventually have to serve a Section 8 notice and possibly a Section 21 notice to terminate the tenancy. You can claim for unpaid rent when you go to court, although enforcing it may not be straightforward.

Covid complicates this, because the legislation means that any such notices are unlikely to be enforceable in court for the next few months. So in the meantime, it's a bit of a tactical call for you - you should try to maximise payments until you get to the point where you can issue an eviction notice that stands a chance of being enforceable (little point issuing one right away). You can offer free rent, reduced rent, accept a delayed payment plan of some kind, or offer nothing but not pursue it for now.

Personally I'd be pretty generous to a tenant with a clean payment history. It's harder with one that's already spotty, because it's impossible to know if they are telling the truth about their situation or not; some people will look to take advantage. My guess (and it is a guess) is that he may be one of these.

You should set a mental red line perhaps, but it's your choice where it sits. 

tootiemac

runningwind said:

My tenant advised he will not pay rent. I’m ok to help him out but I’m worried that at the end of 3 months he will have built up considerable arrears that he can’t pay back. He struggles to pay monthly as it is. How can I ensure I’m not left out of pocket. 

@runningwind Has he said why he "will not" pay? 
If its simply a decision to not pay then I wouldn't stand for it, Yes Boris has said he'll stop evictions but if he is still capable of paying (i.e. his circumstances haven't changed) then what is his reason?
Even if his circumstances have moved him to the 80% help scheme, there are other things that he can apply for.
plus without the cost of travel to work etc the 80% is often identical to the avg persons take home pay minus that.
I don't agree you should bear the full burden of his decision, Yes you can ask for a mortgage holiday but you're still going to pay the interest of that and that can be large depending on how long is left of your mortgage.
i'd ask him for more information on his decision and then decide on a plan, be that to take the holiday and only charge his rent that matches you interest, to agree to a few months rent free or to stick to your guns.

greatcrested

"will not pay" suggests taking advantage of the crisis. "Cannot pay" would be different. Which is it (assuming you know)? My response would vary depending on this.

Is he open to discuss? Pop round for tea (take a cake with you to break the ice? I recommend a cream sponge...) and find out more about his circumstances. I'd be reluctant to simply accept zero rent. If he is genuinely affected by the crisis, how about 50% rent for the next 3 months? As with everything, confrm any agreement in writing.

If he is not open to discussion (or throws that cake in your face...), or appears to just be taking advantage, serve a S21 Notice (if applicable - is the tenancy periodic or fixed term?) or wait till the arrears = 2 months (the day after the 2nd rent payment is missed) and immediately serve a S8 G8. In both cases, though, the notice should be dated to expire after 3 months following Boris's change to the law.

45002

princeofpounds said:

You can't, unfortunately.
 
However, you can minimise your ultimate losses. You may eventually have to serve a Section 8 notice and possibly a Section 21 notice to terminate the tenancy. You can claim for unpaid rent when you go to court, although enforcing it may not be straightforward.

Covid complicates this, because the legislation means that any such notices are unlikely to be enforceable in court for the next few months. So in the meantime, it's a bit of a tactical call for you - you should try to maximise payments until you get to the point where you can issue an eviction notice that stands a chance of being enforceable (little point issuing one right away). You can offer free rent, reduced rent, accept a delayed payment plan of some kind, or offer nothing but not pursue it for now.

Personally I'd be pretty generous to a tenant with a clean payment history. It's harder with one that's already spotty, because it's impossible to know if they are telling the truth about their situation or not; some people will look to take advantage. My guess (and it is a guess) is that he may be one of these.
 of the property
You should set a mental red line perhaps, but it's your choice where it sits. 

A section 21 notice does Not terminate a tenancy, its just a notice that a LL wants possession.

The courts and bailiffs end a tenancy if it goes that far.

Crashy_Time

greatcrested said:

"will not pay" suggests taking advantage of the crisis. "Cannot pay" would be different. Which is it (assuming you know)? My response would vary depending on this.

Is he open to discuss? Pop round for tea (take a cake with you to break the ice? I recommend a cream sponge...) and find out more about his circumstances. I'd be reluctant to simply accept zero rent. If he is genuinely affected by the crisis, how about 50% rent for the next 3 months? As with everything, confrm any agreement in writing.

If he is not open to discussion (or throws that cake in your face...), or appears to just be taking advantage, serve a S21 Notice (if applicable - is the tenancy periodic or fixed term?) or wait till the arrears = 2 months (the day after the 2nd rent payment is missed) and immediately serve a S8 G8. In both cases, though, the notice should be dated to expire after 3 months following Boris's change to the law.

He doesn`t have to let you into the property or tell you anything about his circumstances, maybe e-mail him and ask if he is applying for benefits/government help and take it from there?

purpleumbrella

greatcrested said:

Pop round for tea (take a cake with you to break the ice? I recommend a cream sponge...) and find out more about his circumstances. 

Have you not heard we're on lockdown? 

greatcrested

Oops! Spend so much time at home anyway I just keep churning out the same advice!

I'll have to eat that sponge on my own... mmmmm! Creamy!