Can a Landlord Recover Rent Arrears?Written By PropertyLoop May 10, 2021
It goes without saying that rent arrears for many landlords can mean more than a lighter pay packet than expected at the end of the month, leaving them far more exposed to the costs associated with managing a property portfolio. Of course, there are many precautionary measures a landlord is able to take, from tenant default insurance to a higher tenancy deposit these safeguarding measures unfortunately fall short of the mark on occasion. Especially ringing true for landlords faced with tenants that disappear without warning, rental property owners will naturally want to know, ‘how do I recover my rent arrears?‘
- How Do I Track My Ex Tenant?
- Using a County Court Judgment for Rent Arrears
- Using County Court Bailiffs for Rent Arrears
- Using High Court Sheriffs for Rent Arrears
- Charging Order for Rent Arrears
- Attachment of Earnings Order for Rent Arrears
- Third Party Payment Order
- Deducting Rental Arrears From the Tenancy Deposit
How Do I Track My Ex Tenant?
It goes without saying that if a tenant has abandoned the rental property, leaving the landlord with unpaid rent, any chances of recouping this amount will hinge on the ability to communicate with the tenant and serve any appropriate documentation and notice. However, this is usually far easier said than done, especially if the tenant neglected to provide the landlord with any notice that they intended to vacate the rental property. Thankfully there are now a number of tracing services and agencies available for landlord to track down any ex tenant that accumulated significant rent arrears. As can be expected the landlord will be required to provide any identification that the tenant provided them with to aid the pursuit, any other residents of the property or partners of the debtor could have any bills or lines of credit in their name to avoid detection from the tracing agency so landlords could find any available information on these parties useful to provide. Naturally once the ex tenant has been tracked down the landlord can begin the process of reclaiming any owed rental payments.
Using a County Court Judgment for Rent Arrears
If a tenant was to abandon a rental agreement due to rent arrears any landlord in this situation can understandably feel lost as to where to begin. Of course, with no knowledge of a new address or where the tenant may pop up next can leave dismissing the issue altogether seeming like the easier alternative to pursuing the owned amounts. However, with this being said it is possible for a landlord to claim for any missing rental payments up to 6 years after the date the payment should have been made by the tenant.
Given the longstanding nature of a county court judgment, the mere enactment of the ruling will, for many tenants, be enough to have them repay the full outstanding amount as doing so within a month of the ruling will prevent this from leaving a lasting impression on the their credit history. Simply put a county court judgement means that the court has decided that the person served withthe judgement owes a sum of money to another party.
Typically landlords will be awarded with a CCJ if once the amount of outstanding rental payments leave the tenant with a significant amount of debt owed to the property owner. Once this has been served to the tenant, they have 14 days in which to file a response to the courts. This response allows for the occupants of the rental property to better explain their financial outlook, how the rent arrears took place, alongside the details of any contributions they have made towards clearing this debt. Of course, if a tenant has abandoned the rental property then there will be little chance of them filing this response, however, it would be an understatement to say it would be in their best interests to do so. If the tenants fail to issue a response to the CCJ then the court will be unable to make a ruling with their individual circumstance in mind, potentially even making the penalties increasingly severe in the lack of compliance.
As mentioned a count court judgement can leave a lasting impression on the credit history of a tenant, making it far harder for them to successfully take out new lines of credit, mortgages and of course, rental properties in the future. Naturally, many landlords look to safeguard their investment and ensure a consistent return on their buy to let whilst ensuring that a tenant can meet the financial obligations that come with a rental property being one of the more insightful applications of the tenant referencing process. With this in mind a county court judgement will be highlighted each time the tenant goes through this referencing process, making them far more susceptible from being rejected from a prospective tenancy by the landlord.
It is possible for tenants to have the lingering reprocussions of having a CCJ issued against them nulliffied, by paying the landlord the full outstanding amount within the first four weeks of the judgement being issued. Howeve , in most cases this is far easier said than done, as can be expected the tenant is unfortionatly not in the financial position to do so.
There is some good news for tenants that are issued with a CCJ that wish to continue renting. It is highly recomended to let any letting agencies or landlords for properties that you wish to view about the judgement before the referencing process begins. Naturally all tenants and landlords want their renting expereince to be simple and transparent, so starting the dynamic with this in mind can be all a property owner needs to see past any historical financial complications or struggles.
Commonly when pursuing a tenant for rent arrears a landlord may also be seeking to reclaim possession of their rental property. It is worth keeping in mind before doing so that the residents may be able to curate a defence or have a notice nullified if specific documentation was not provided by the landlord at the outset of the rental period. Additionally, if the tenant finds they were not issued with the proper safety certificates, or the tenancy deposit has not been placed in a government approved deposit protection scheme, a possession order may not be upheld.
Using County Court Bailiffs for Rent Arrears
Once the landlord has acquired a CCJ against a tenant they will be able to have the judgement enforced by the county court bailiffs. Essentially this party will act in the best interests of the landlord and seize any of the tenant’s possessions and assets, selling these in order to meet the outstanding some owed to the landlord. With this being said, the county court bailiffs are unable to enact any of their responsibility if the tenant refuses them access to the rental property. Additionally, the bailiffs are only able to lawfully take possessions that are owned by the party that is in debt, not other residents of any new dwelling. It is also worth noting that the possessions taken for sale must be free from any lease or credit purchases and entirely owned and paid for by the debtor. However, even when this resolve is met the landlord still incurs additional costs, with the storage costs of any taken goods alongside auction fees being settled by the property owner. This does unfortunately mean that if the amount raised by the sale of the tenant’s good was not substantial enough to not only cleared the outstanding rental amounts, but also fund the costs of the bailiff enforcement, the landlord could be left in a worse off financial position than before.
Using High Court Sheriffs for Rent Arrears
Providing that the amount of rent arrears the landlord is pursuing from the tenant is significant enough, the landlord may be able to employ the services of the high courts sheriffs. If the landlord chooses to chase the owed amounts through the high court sheriffs they may find this procedure to be far more efficient that the county court bailiffs. In either instance it may surprise may new or accidental landlords to hear that the desired outcome when using these forces is not to have the assets and good of the tenant go up for sale at auction. Instead landlords would rather see this as a last resort, hoping that the repossession of their items will be enough to encourage the tenant into repaying the debt.
Charging Order for Rent Arrears
Arguably less effective than any of the previously discussed methods of obtaining any owed amounts from a tenant is a charging order. In this instance the court would adapt the county court judgement, converting the ruling into a legal charge that will be directly registered against the tenants occupancy. However, whilst this does tie the tenant to the outstanding amount, allowing the landlord to have the court sell the property to recoup any outstanding debt, it is highly likely that the tenant will not outright own their new dwelling, making the method somewhat redundant.
Attachment of Earnings Order for Rent Arrears
Whilst this can only be accomplished if the tenant has an active employment status, if a landlord successfully gains an attachment of earnings order money from the tenants wages will be sent to the court, and then to the landlord directly. However, whilst this may on face value seem like an efficient way to settle rent arrears, especially when the tenant has moved on, the court typically orders the repayment of notoriously low amounts meaning landlords may have to wait a while to receive the full amount they are owed. Additionally if the debtor leaves their current job, the landlord must then seek a new attachment of earnings order for their new employer.
Third Party Payment Order
Another asset at the disposal of rental property owners seeking to collect any outstanding rental payments is a third party payment order. This enables the landlord to request any sums of money that is owed to them, from a party holding the debtors money, typically a bank or building society. First through an interim third party debt order the tenant’s bank account will be froze until the court has ruled on whether the outstanding funds should be paid to the landlords. Additionally, whilst the banking information of the tenant will have been collected at the outset of the rental period, the landlord does not have to provide this information when making the request.
Deducting Rental Arrears From the Tenancy Deposit
It is worth stressing that when a tenant illegally vacates a property, doing so whilst neglecting to inform their landlord, the property owner still has ways in which they are empowed to reclaim any owed amounts. Whilst it certainly isnt a prominent issue for many landlord, a more common cause of tenant abandonment is mounting rental arrears. Naturally a rental property owners situation can rapidally deterorate through this missing income, seeing them more exposed to mortgage payements, alongside the many other costs of managing a property. Although the move is more synonymous with landlords recouperating any amounts they may have lost funding repair work, or replacing furnishings at the end of a tenancy, rental property owners are also able to deducted any amount of owed rent from the appropriate tenant‘s security deposit. With this being said, this may no be a viable solution or alternative for any landlords pursuing repayment for significant amounts of owed rent as there is of course a limit to the amount of money a landlord is able to take from their tenants in the form of a security deposit. This financial threshold was introduced with the Tenant Fees Act 2019, establishing a series of regulations that prevent potential residents of rental accomodation from paying unreasonable fees before moving into a property to let. With the implementation of the Tenant fees Act, landlord are effectively capped on the size of the tenancy depoist they are able to request from their tenants, with the limit being placed at the equivelent cost of five weeks rent when the annual rental charge for the property is under £50,000. If however, the amount the lanldord charges their occupants in rental payments each year is over this amount, the property owner is able to take a deposit equal to the cost of six weeks rent.
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