Have you written off tenant rent arrears too soon?

Have you written off tenant rent arrears too soon?

8:47 AM, 4th September 2019, About 3 years ago 3

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A tenant falling into arrears, or simply not paying at all, is a stressful situation, especially if communication between the tenant and landlord has broken down and led to an eviction. Of course, the circumstances can be tricky to navigate, especially if the tenant has not just stopped paying through choice, but has fallen into financial difficulty.

The tendency for some landlords is to assume that recovering the money will be too much hassle and to write it off as a bad experience. In some circumstances, this may well be the case, but not always.

Tenants on Universal Credit

Since the implementation of Universal Credit there has been many controversial headlines in the press surrounding the new benefit affecting both tenants and landlords.  One of the main issues that landlords are encountering is rent arrears.

If your tenant is reliant on Universal Credit and still resides in your property, but is 8 weeks or more in rent arrears, you can apply for third-party deductions by completing a UC-47 form.  DWP are currently changing this process to an online version of the form which will be much faster.  However, this system is not available to landlords with tenants on housing benefit (Local Housing Allowance).

If your tenant is on LHA, living in your property and in rent arrears, you can assist them in applying for a DHP (Discretionary Housing payment) via the local authority. The local authority will go through your tenant’s financial circumstances to see if they are eligible for assistance, however, this is discretionary so not guaranteed.

Tenants with steady income

If there are substantial arrears and the tenant is employed with a steady level of income, therefore has the means to pay but has simply stopped paying, it could be worth pursuing the money that is legally and rightfully yours as a matter of principle if nothing else.

If the tenant is still living in your property and is 8 weeks or more in rent arrears, the relationship would have inevitably broken down. With the likelihood that the tenant will continue to withhold rent, it is advised that possession of your property is sought using the Section 8 eviction procedure relying on both the mandatory Ground 8 and the discretionary Grounds 10 and 11.

Once the judge has granted possession, he will then look at the arrears schedule to see what you are owed. As part of the judgement, the judge will order that the tenant pay the arrears owed which will include costs incurred by you for bringing the claim and interest in an amount the court sees fit. The tenant will then be issued with a County Court Judgement (CCJ).  If, however the tenant does not pay the money that is owed, then you can move to enforcement by instructing a debt recovery company.

There are many ways to enforce an outstanding debt such as appointing a High Court Bailiff who can seize goods, apply for a Third-Party Debt Order (freeze bank account) or apply for an order for an attachment of earnings.  If you wish to seize goods on the eviction date this can only be done if you appoint a High Court Bailiff.

If the tenant has left your property but you know where they have moved to and you already have a County Court Judgement (CCJ), you will simply have to inform the bailiff of the former tenants new address for them to enforce the court order you already have.

However, sometimes tenants in rent arrears abscond without leaving a forwarding address. In this situation, you will need to:

  • Trace the tenant. At CLS we can perform a trace to help locate your tenant using online foot-printing systems.
  • Issue an LBA letter (Letter Before Action). This letter must comply with the Pre-Action protocol and include the following:
  1. summary of the facts
  2. what you want from the party you’re claiming from
  3. how you’ve calculated the sum you want to claim
  4. copies of the key documents that you will use to support your case
  5. a list of any documents you want from the other party
  6. a reasonable deadline for a response (usually 14 days)

Once you have the address you must issue the tenant with a Notice Before Action.  After the period for response has elapsed you can apply for a Money Claim Online (MCOL – Here) or via paper form.   The tenant then has 14 days to file at court an acknowledgement of service. If he fails to do that, then you can apply for a default judgement.  If service is acknowledged, the tenant then has an extra 14 days to file a defence statement. Once the Court has received the defence statement the court will issue further directions on how the matter is to proceed leading to the hearing.

Contact Sherrelle for offline Universal Credit advice

Sherrelle is an independent consultant and is recommended by Property118 for landlords who require professional advice and assistance in regards to dealing with Universal credit related matters


Mick Roberts

12:53 PM, 4th September 2019, About 3 years ago

Brilliant words Sherrelle.
That's loads of help there for Landlords that's took me years to learn & also time & money consuming in doing so.
I've currently got my highest ever amount of DHP claimants in 22 years. Shows how much the UC LHA HB DWP tenants are struggling in 2019. What with the shortage of houses from Selective Licensing, UC, Clause 24 etc.
And great help from you too in your help offering to recover debt, I din't know your firm did that. Anything else u gonna' surprise us with next month Sherrelle?

wanda wang

21:27 PM, 4th September 2019, About 3 years ago

Could you explain a little more detail on how your online foot-printing systems to locate the ex-tenants.

Robert Mellors View Profile

14:36 PM, 5th September 2019, About 3 years ago

What's the difference between the "Letter Before Action" and the "Notice Before Action"? Is this different terminology for the same document, or are these separate documents?

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