Tenant Rent Arrears: Your Questions Answered

There was plenty of discussion during the Rent Arrears webinar I hosted with Sim Sekhon, Managing Director at Legal4Landlords last week.

Subsequently Karen Longworth and the advice team at Legal4Landlords have taken the time to answer some more of your questions from the evening.

If you have any other legal questions you can email the team at [email protected] for completely free advice...

Q: Is there any effect on a tenant's credit result of action taken by the landlord?

A: Depending on what route the landlord takes to recover the rent if a small claim is made then the tenant will have a county court judgement against them. We would review every case and advise on the best possible action.

Q: After gaining possession, what is the success rate in following up and being able to get back rent arrears via enforcement?

A: Every case is different it all depends on the tenant's personal circumstances and you can enforce your order by either:

A Warrant of Execution - A Warrant of Execution enables the court bailiffs to seize goods from the Defendant. They will try to collect the cash award but if this is not possible they can take goods to the value of the cash award. Please be aware that Bailiffs can be refused entry to premises and cannot remove essential items like vehicles or tradesman's tools.

Attachment of Earnings Order - An Attachment of Earnings Order is sent to the Defendant's employer, we may need to run an employment trace for these details. It instructs the employer to deduct an amount from the Defendant's earnings each pay day and send it to the Central Attachment of Earnings Payment System (CAPS) in Northampton who will be responsible for collecting the payments. This will then be sent to the claimant via a cheque from court. Please be aware that if the Defendant has very low earnings or works very few hours a week the court may not grant such an order.

You have 6 years to enforce the order; sometimes it is better to wait to see if the tenant’s circumstances change.

Q: How can you prove that you have served a notice?

A: If the notice has been sent recorded delivery we can provide a proof of service and witness statement. We also send a copy first class so if the tenant does not sign for the recorded copy we can still provide a proof of service on this basis. If a landlord can provide an email address for their tenant we can also send a third copy. Any of the above will stand up in court.

Q: Is chasing the tenant by text or other means classed as harassment?

A: This can be classed as harassment as some tenants will try anything to make problems for the landlord and it is advisable to send a pre court letter, then followed by notices and wait for them to expire so the tenant has no reason for complaint or a defence when it comes to the court hearing.

Q: I have a tenant that has moved out owing a lot of rent and made a mess of the property. What do you think is my best route to try and recover the outstanding monies?

A: It is advisable to wait 6-8 weeks from the tenant leaving before carrying out a trace to locate the tenant’s new address and employment details.

Once a positive trace has been confirmed an application to the small claims court can be made the landlord can claim for arrears, damages and any legal fees.

The court asks for evidence for anything wanting to be claimed for, they will also place a county court judgement against the tenant, if the tenant still does not pay then the order can be enforced by either:

A Warrant of Execution –
Warrant of Execution enables the court bailiffs to seize goods from the Defendant. They will try to collect the cash award but if this is not possible they can take goods to the value of the cash award. Please be aware that Bailiffs can be refused entry to premises and cannot remove essential items like vehicles or tradesman's tools.

Attachment of Earnings Order –
Attachment of Earnings Order is sent to the Defendant's employer, we may need to run an employment trace for these details. It instructs the employer to deduct an amount from the Defendant's earnings each pay day and send it to the Central Attachment of Earnings Payment System (CAPS) in Northampton who will be responsible for collecting the payments. This will then be sent to the claimant via a cheque from court. Please be aware that if the Defendant has very low earnings or works very few hours a week the court may not grant such an order.

Q: Rent arrears to be taken out of the deposit? What are the rules?

A: If the tenant is still in the property, using the deposit against the arrears must be agreed in writing and signed by the tenant. The evidence should then be kept as this will be a required document if the landlord needs to evict the tenant at any point.
If the landlord is going through an eviction based on rental arrears the deposit should stay secured and it would be requested in the court to be returned to the landlord.

Q: Not quite on topic but for a good tenant what is the normal accepted rent increase %, and how often?

A: Most landlords do not increase the rents of good tenants, others do so based on the inflation rate or whatever terms are within the tenancy agreement. Increasing rents can be tricky if not handled correctly and there also notices for increasing rent to be utilised if needed.

Q: If a tenant leaves with large arrears, could we use third party debt collectors to try to get some rent back?

A: Potentially, again this would have to be assessed on a case by case basis by the third party to quantify your success rate.

Q: What is your experience of alternative payment arrangements under Universal Credit?

A: Varied, some landlords have great tenants on UC some do not. Ideally, aim to get a guarantor on this type of tenant. If you do not, then the risk is higher than a working tenant for example, or a tenant that doesn’t rely solely on UC.

Q: Any problems if a property is let to a company?

A: No, as long as it's on an AST agreement, the law and the process would be the same.

Q: What if you have a flat and the post box is outside the communal property?

A: Tricky and it does happen, there are always ways and means of proving service at properties such as this.

Q: When you have arrears but also damage, what is the technical difference between damage vs wear and tear?

A: Wear and tear is exactly what it says it is within its limits, inventories justify this and allow of it. If there is serious wear and tear, this could be argued as damage, common sense will and should generally apply here.