Calculating rent arrears when dealing with partial payments

by Readers Question

15:57 PM, 28th January 2014
About 7 years ago

Calculating rent arrears when dealing with partial payments

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Calculating rent arrears when dealing with partial payments

How do I work out when a tenant hits the ‘2 months arrears’ threshold that allows for the serving of a section 8 notice citing ground 8 “substantial areas?

Consider an AST requiring a monthly rent payable in advance on the 1st of every month.

Lets say the rent is £800 and up till now the tenant is up-to-date on payments. Calculating rent arrears when dealing with partial payments

If he fails to pay any rent on the 1st of Jan, then he is officially ‘1 month in arrears’ even on the 2nd Jan (i.e. only actually one day late).

If he also misses his payment on the 1st of Feb he’s now two months in arrears and as such a section 8 ground 8 could be served, even if it’s only a month and a day since he missed his first payment.

So whats the situation if he pays £400 on the 1st of Feb (i.e. half the monthly rent) at what point is he now 2 months in arrears?

Does the landlord have to wait until the next rent day 1st March before serving a section 8 or can rent be calculated on a pro-rata basis allowing the section 8 notice to be served in the middle of Feb?

Thanks

Lima7


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Comments

Romain Garcin

16:06 PM, 28th January 2014
About 7 years ago

First of all, if the rent is payable monthly, the requirement for s.8 is that 2 months' rent be _unpaid_.
This should clarify the situation, but just to illustrate:
- 1st Jan. rent due and unpaid: On 2nd Jan. 1 month rent is unpaid.
- 1st Feb. rent due and unpaid: On 2nd Feb. 2 months' rent is unpaid.

So if tenant stops paying altogether it only takes 1 month and 1 day to reach the threshold, as you mentioned.

Ray Davison

16:14 PM, 28th January 2014
About 7 years ago

As stated by Romain above, if the rent is £800 per month as soon as they are in arrears by £1600 they meet the criteria for S8 eviction. This also applies for obtaining housing benefit direct to the landlord although many councils will resist either becasue they do not know their own rules or just because that's how they are! If you dig in and quote their own rules at them they soon give in.

Gary Nock

16:15 PM, 28th January 2014
About 7 years ago

As Romain says above as soon as he misses two rent payments he is two months in arrears and this triggers Section 8. The notice is valid at point of service. Then if he pays some remember he must be two months in arrears on the day of the Court hearing or Judge will not order possession. As a belt and braces serve both a Section 21 and a Section 8 ( if two months in arrears) so if you don't get them one way you get them another. Section 21 is valid provided the AST fixed term has expired, or is about to expire in two months and all the deposit protection paperwork is in order. If in doubt about the forms and the paperwork speak to Paul Shampalina at Landlord Action, who for a fixed fee ( and less than the High St solicitors) will sort it for you.

And I am not on commission!

Lima7 Seven

16:32 PM, 28th January 2014
About 7 years ago

My understanding is that the tenant needs to be two months in arrears on two dates, firstly the date you serve the section 8 ground 8 notice, and secondly on the date of the hearing.

So, back to my original question, if the tenant pays half rent ( £400 ) on the 1st of Feb, then at what point can a section 8 G8 be served? the middle of February? (since he only paid half a month) or 1st of March (when the next full months rent is due?)

Thanks

Romain Garcin

16:43 PM, 28th January 2014
About 7 years ago

As said, you can serve notice using ground 8 as soon as 2 months' rent is unpaid.
The amount of rent unpaid can only increase after a rent due date, when a new month of rent becomes due.
So in your example the earliest date would be 2nd of March (If rent due date is 1st of March you need to wait until that day has ended).

Lima7 Seven

16:57 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Romain " at "28/01/2014 - 16:43":

Thanks Romain - that was kinda the answer I was expecting, nice to have it confirmed.

Regards

Industry Observer

18:00 PM, 28th January 2014
About 7 years ago

This is referred to as a day 32 situation (or if you like once a year day 29 or 31 4 times!) as it means the day after the rent due date. So all answers above are correct.

However the actual Law dating back to the Middle Ages is a debtor is allowed until sunset to settle a debt. So depending on the time of year this could be around 3,30 pm or 10pm actually on day 32 etc as above - the day the debt fell payable.

However as we can no longer take indebted serfs before the Lord of the Manor while he enjoys his evening venison after sunset it is basically day 32

Industry Observer

18:02 PM, 28th January 2014
About 7 years ago

Oops seriously meant to add something important that ties in with the correct point above 2 months when you serve and 2 months the day you stand in front of the Judge.

You are allowed to count the whole of month 2 because the process takes so long that you know by the end of that month whether you can proceed to Court or not. And most cases the tenant is 4 or 5 months adrift on that hearing date.

BUT................

If you get a cute tenant who hovers in anout out of two months beware on the day of the hearing you can only take that number of days on a daily basis in the updated arrears schedule put in front of the Judge on that exact day.

Romain Garcin

19:43 PM, 28th January 2014
About 7 years ago

Reply to the comment left by "Industry Observer " at "28/01/2014 - 18:02":

I may be misunderstanding, but if you suggest that the whole month can be counted as unpaid when the tenant pays only half the rent, that's clearly not so.

Industry Observer

19:56 PM, 28th January 2014
About 7 years ago

Romain

No of course not give me some credit.

No I was just talking generally and about how soon month 2 can be added to month 1 or whatever is left of month 1

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