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Tenant Not Paying


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Hi all,

 

Hoping for some landlord advice as my parents are in a bit of a tricky situation.

 

They’ve been renting out a 3-bed house (30mins from York, 50mins from Leeds) for £1,200 PCM to a family for just over 2 years. To date, they’ve been perfect tenants and we have a good relationship with them. However, they’ve not been able to pay rent this month because of the self-employed father losing a contract. He’s looking for other jobs at the moment but no guarantee he’ll have a reliable income in the near future.

 

My parents have a couple of ideas for what to do including reducing rent until they’ve found new tenants to reduce impact of a void period but I’d like some suggestions from you guys as to what you’d do in this scenario? Parents are going to be very busy over next 3 months so would like to do whatever is simplest without of course losing too much rental income.

 

Thanks very much,

Jack

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Jack hi,

I'm sorry to hear your story and it must also be challenging for both your parents and their tenants as I'm sure they too do not want to be in the situation that they are in.  The rent amount is a lot of money but it would be worth your parents conversing with their tenants to see if there is a way out for them to recover the situation.  It is not legally permissible for your parents to demand their immediate departure and the minimum process is likely to be 3+ months if the tenants do not move on of their own volition.

 

If they are on a statutory periodic tenancy agreement (a rolling contract) they could give your tenants a Section 21 notice 

 

https://www.gov.uk/guidance/assured-tenancy-forms#form-6a 

 

which formally notifies your tenants that your parents want to bring the tenancy to a conclusion and that if they do not depart by the time the notice expires (2 months from the day before their next rent due day as the agreement sounds like it precedes 1 Oct 2015 when the rules changed) that they will look to seek accelerated possession which can an extra 6-8 weeks to get before a judge and only then if the paperwork has all been correctly done.  If your parents took a deposit and did not protect it properly and issue the correct Prescribed Information for the deposit scheme then the the section 21 will not be actionable at all. 

It the tenants are on a fixed term notice your parents will not be able to serve notice until 2 months before the end of the agreement and indicating that they want it back on expiry (technically called efflux I believe!) however, if the tenants fall more than 2 months behind in rent payments your parents could serve whats called a Section 8 notice

 

https://www.gov.uk/guidance/gaining-possession-of-a-privately-rented-property-let-on-an-assured-shorthold-tenancy

 

and after 14 days from serving the notice could go to court and the judge would be mandated to give possession of the property however, the sting in this tale is they would not be able to pursue for unpaid rent which makes this route doubly expensive as there are court costs involved too and also bailiff's fees to get the property.

 

The above all sounds very gloomy and it could be that the tenants. who have been good to date, will want to do the honourable thing and move out to prevent the escalation of further bills and hopefully look to pay your parents off as soon as they are able to.  The one thing I would not recommend is for your parents to sign a new contract at a reduced rent "until new tenants can be found" as technically the new tenancy agreement will protect them automatically from any eviction  for 6 months whatever notice is served on them. (there are also a lot more regulations that they would have to comply with as the laws have changed significantly since the last tenants moved in)

 

So really your parents have two options - either hope that the tenants get back to being solvent again and start paying current rent and catching up the arrears or your parents serve notice, hope the tenants leave the house in good order and in good time so that the void period is minimal.  I would advise them trying to keep in as good a relationship as possible as they may be able to persuade the tenants to have viewings at the property while still there and trying to move somewhere cheaper so that the void is as short as possible.  Also, the tenants will be under a lot of stress and your parents want the property to be returned is as good a condition as possible and souring of the relationship could lead to at best neglect or at worst wanton damage.

 

It's not an unusual occurrence for life to happen to people and this is unfortunately a downside to some tenancies.  As and when your parents get new tenants it may be worth looking to use an accredited agent who use good quality tenancy referencing companies and accompany this with a landlords' tenancy insurance policy to protect against such non-payment.  The policy my office uses would cost about 1 week or less rent for annual cover.  They may be able to use a recognised referencing company if they are self finding tenants and installing them but I would imagine the referencing fees and insurance policy would be more expensive as we would get cover at these prices because of the bulk numbers we process through them,

 

I hope this helps a bit and good luck

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