The topic in this chapter is fairly fundamental to all tenancies.

In fact, the occupation of property is not really a tenancy without it. It’s the main reason (along with capital growth) why landlords invest in property and rent it out to tenants. I am of course,

Talking about Rent

A few facts to start with that you may not be aware of:

• The default position is that rent is payable in arrears. The reason most rent nowadays is payable in advance is because this is required by the tenancy agreement. So that is another compelling reason to have a tenancy agreement! *
• Rent is due on the morning of the rent day given in the tenancy agreement (or as agreed if there is no tenancy agreement) but is not overdue until after midnight of that day.
• If rent is paid weekly, then you must give the tenant a rent book. However, if you don’t do this, it doesn’t mean your tenant can withhold rent. You can be prosecuted though.
• However, tenants DO have the right to withhold rent if you fail to give an address in England or Wales for the service of notices. This is a requirement under s48 of the Landlord and Tenant Act 1987 and rent is not ‘due’ until you have complied. Just having an address for the landlord in the tenancy agreement (provided it is in England or Wales) will satisfy the requirement. If you have failed to comply, all the back rent will fall due once you serve the notice. So, you will not, long term, lose any money. However, quite a few landlords have lost possession claims based on rent arrears due to this rule.  The address does not have to be your home address.  So, if you live in Scotland or Argentina, your letting agents address in, say, London, will suffice.
• Rent demands also need to have the name & address of the landlord (s47 of the Landlord & Tenant Act 1987) as well as (if you are not resident in England or Wales) the address for the service of documents as in s48 – although this is not critical as payment of rent is not dependent on a demand being made.
• If you fail to comply with your repairing obligations (to be discussed in a later article), tenants can get the work done and offset the cost against their rent. However, they need to warn you first, and get estimates first which they need to send you before the work is done. If the landlord still fails to carry out the repairs, they can then get the work done using the lowest estimate and offset the cost against their rent.

So that’s a few facts for you. But let’s take a look now at the big rent topics.

How to increase rent

It’s very important that you increase rent in the proper way. If you don’t, the rent increase won’t be effective, and your tenant will not have to pay it.

If you then go on to issue proceedings based on the shortfall, you will lose and may even be ordered to pay your tenant’s legal costs.

So it’s worth taking the trouble to do it properly. There are currently three main methods of increasing rent:

• By agreement
• By the statutory notice procedure and
• By a rent review clause in the tenancy agreement.

Of these three, the most common is ‘by agreement’, which is then confirmed by the tenant signing a new tenancy agreement or renewal form.

If you want to use the statutory notice procedure, this can only be done after the fixed term has ended and the tenancy is periodic, and you MUST use the proper prescribed form. (We have one available for landlords on my Landlord Law site in the forms section.)

If you are using a rent review clause you need to be sure that this is enforceable and does not breach any of the unfair terms rules.  For example clauses should not give landlords an unfettered right to increase the rent to whatever they want.  You will find a blog post about this in the further reading section below.

Note though that generally, you CANNOT increase rent just by sending the tenant a letter telling them their rent is going up. They will normally be quite within their rights to ignore this.

Note for the future

The Renters Reform Bill, currently wending its way through Parliament, will be changing the rules for increasing rent and will probably provide that only the statutory notice procedure can be used.

This article will be amended once the new law has been passed and come into force.

Rent arrears

This is every landlord’s nightmare! If your tenant suddenly stops paying – what do you do?

My advice, first, is that you must put in place systems so that you will find out immediately if your tenant fails to pay.  For example many of the new apps will do this.  Or you can just log into your bank account and check every month.

Once you learn that your tenants have missed a rental payment, you should contact them immediately, asking them (nicely) why. Sometimes it may just be a mistake and your tenant will thank you for letting them know.

However, at other times, it will be the start of a long difficult period which may end in having to evict your tenant.

Try to help tenants to pay

Before aggressively threatening legal proceedings, you may want to see if you can help your tenants to pay.  Here are some suggestions:

• Change the date that rent is paid and set up a new standing order (or other arrangement). 

Sometimes it will help your tenants if the rent is paid the day after their salary is paid – as there will be less scope of them to spend it on something else!

You don’t need to amend the tenancy agreement to do this, a simple letter is normally all that is required.  We have one for Landlord Law members in our Rent Arrears Action Plan section.

• Help your tenants apply for or check their benefit

Some tenants may find the bureaucracy involved in this daunting and will welcome assistance.   There is a website where you can check whether the tenants are getting all that they are entitled to (for example, tenants often believe they are not entitled to benefits when they are).

• Check the Local Authority. 

For example, your tenants may be entitled to a Discretionary Housing Payment or other grant aid.

• See if they are eligible for grant aid. 

For example, if they are having problems paying their utility bills, check out their utility website to see what help is available.

For other grant aid,  Turn2Us is a very useful site where you can search for grants that your tenants may be entitled to – for example, because of their job or profession, having children, nationality, etc.  You can also search the register at the Charities Commission.

There are thousands of organisations which may be willing to give grants to tenants in need so this is well worth trying.

• Agree to a payment plan for the outstanding rent. 

This will normally be that the tenant pay the current rent plus an extra payment to reduce the arrears.  We have draft letters for our members on Landlord Law.

• Help the tenant to set up a ‘jam jar’ account. 

These are particularly useful for tenants on benefit.  This can be done using a Credit Union which offers this service.

The tenant’s benefit or salary is paid into a special account which will then make payments out to you for your rent and to any other regular creditors and then pay the balance to the tenant’s bank account.  This can dramatically reduce rent arrears and indeed is recommended for all tenants on benefit.  However, it looks as if fewer credit unions offer this service than formerly.

Eviction should be your last option

Eviction is expensive, time-consuming (it can take up to a year or more), and tenants often stop paying if they know they are being evicted.

So you will often end up with a massive arrears bill, plus you will need to find new tenants.

In some situations you will have no option.  For example often tenants will be told by their Local Authority that they cannot rehouse them if they move out, and the tenants are told to remain in the property until a possession order is made. 

Local Authorities are not supposed to do this, but they often do – mainly because they have few or no properties available to rehouse tenants.

A classic sign of this is when tenants just refuse to speak to you.

In this case, the best thing to do is just to proceed with a claim for possession as soon as possible. We will be discussing eviction later in the series.

And finally

The most important thing in a rent arrears situation is to do something and not let things drift. I have known situations where landlords have allowed the rent arrears to reach horrendous proportions before they take action.

Don’t fall into the trap of putting off action because your tenants promise to pay. It is easy to promise payment, less easy to do it!

Tell your tenants you expect them to make at least some payment first and that THEN you will hold off, or consider holding off taking action.

Many tenants have effectively been able to negotiate additional free accommodation for themselves and their families by promising to pay landlords and then failing to do as they promised.

I have written quite a bit about rent arrears and rent problems on the blog and you will find links to several of these below.

* Note that this (i.e. rent being payable in arrears by default) is a common law rule so I can’t point you at any specific act of Parliament.  See the blog post below on this.