What can a landlord do when a tenant stops paying their rent?

that rental demand has increased by 15%. Despite this increase demand is still outstripping supply and according to their research an average of 5 people are competing for every one property.

With unemployment at around 8% (National Statistics Office, June 2011), banks enforcing strict lending criteria and general economic uncertainty, it is not surprising that demand for rental property is high. First time buyers can no longer benefit from 100% mortgages to purchase their properties, which leaves very little to inspire confidence. Ever-increasing living costs and spiralling inflation are added factors that cannot be ignored either. With new government initiatives only helping a small percentage of first-time buyers it is obvious why so many will have to rent for longer than planned.

This has left landlords with a positive outlook towards their investment properties with many of the cash-rich continuing to grow their portfolios. The demand for landlord insurance has therefore increased in recent years.

However, the life of a landlord is not always as easy as one may think. There are many reasons why problems might occur during a tenancy. One of the most common issues is tenants not paying their rent. Perhaps a perfectly good tenant might have lost their job and is finding it hard to pay the rent or a couple have split up half way through their tenancy agreement. In other circumstances, it’s fair to say that there are some tenants that were always going to be a problem no matter what.

When a tenant stops paying their rent they are not only in breach of their contract but they start to cause the landlord un-needed stress, mainly because chasing rent soon becomes a time-consuming process and the landlord may start to face financial difficulties. If this happens then the landlord should first write to the tenant and ask them to discuss the situation. The landlord should always try and resolve any issue with the tenant amicably, although clearly this isn’t always possible.

In many cases, the landlord may decide to terminate the tenancy agreement altogether. In such a scenario, a notice is served and then the court takes possession and finally ends the contract. This should be a last resort especially in cases where the financial difficulty may be a temporary one, such as the tenant losing a job etc. The landlord should try to offer and accept other modes of payment such as negotiating part payment terms for a temporary period until the tenant is able to find a new job etc. However, there may be cases where the financial situation of a tenant has changed drastically and receiving the arrears for the rent might not seem possible. In such cases, it is best for the landlord to ask a court of law to intervene and re-gain possession of their property so that they can let it out to a new tenant to avoid further losses. Because of the potential issues that may arise it is always advised that a landlord should speak with an insurance brokers about special cover that includes legal expenses and rent guarantee.

Tags: confidence, supply, court, positive outlook, property, financial difficulties, investment, small percentage