A landlord has a number of options available to it when a tenant falls into rent arrears.
If the landlord does not want to evict the tenant or if the tenant has vacated the property, the landlord can commence court proceedings against the tenant.
This should start with a letter before action setting out the value of the claim, the clause(s) the landlord relies upon and provide a date by which the tenant is to pay the rent arrears. 14 days is usually a suitable period of time to allow for payment to be made.
If no payment is received then the landlord can issue court proceedings. How the court proceedings are dealt with will depend on the value of the claim.
In the event the landlord is successful in its claim and a Judgment against the tenant is obtained then, on the basis the tenant still does not pay, there are a number of enforcement options available to the landlord.
Insolvency proceedings for rent arrears
Providing the amount of the arrears is over £5,000.00, bankruptcy proceedings can be started.
These involve initially serving a statutory demand on the tenant giving the tenant 21 days within which to pay the amount claimed. If payment is not received then the landlord can present a bankruptcy petition against the tenant.
This is a very hard hitting way of dealing with matters and can force a tenant to face up to matters swiftly, or face the risk of being made bankrupt.
Depending on the value of the rent arrears, a landlord may be able to commence possession proceedings based on the rent arrears. To be successful in this claim, the value of the arrears must be over a set level, for example, over two months where a tenant is to pay the rent monthly.
It is imperative that the landlord serves a valid notice on the tenant and complies with the rules. Failure to do so can deem the proceedings invalid, which means the tenant gets to remain in the property whilst the landlord has to incur the cost again of re-issuing the correct notice and proceedings.
It is possible to try negotiate a resolution with the tenant. For example, a landlord may agree to allow the tenant to remain in the property, if an additional payment is made over and above the normal rent payment. A further example may be where a landlord agrees to waive its right to claim arrears providing the tenant gives up possession of the property immediately.
Whilst this may not sound attractive, the landlord needs to consider whether or not it is likely to ever receive the arrears. If the answer is no then the priority is to get the property back as quickly and cost efficiently as possible.