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What can I do now my tenant has stopped paying rent?

non paying tenantHere is a blog clinic question from Moneca who is a landlord

My (now ) ex partners lettings agency has always handled the tenants/ tenancy’s of my one bed flat, advertising and finding tenants, doing credit checks, signing them in, managing any probs, late rent payments etc.

They found and moved the current tenant in who is on HB and he’s been a few days late on several payments but they were paid eventually. The tenancy is an assured shorthold tenancy for 3 months from last Oct and now rolling as a periodic tenancy, but he gave notice in mid April that he wanted to leave.

The agency explained that he needed to give notice on a rent day so notice started on 8 May expiring 8 June. He said he couldn’t pay the last months rent so instructed us to use the deposit as the last month’s rent which we were not happy about but we did as instructed as clearly I cannot be without rent.

The agency didn’t instruct me to pay it into a deposit scheme and didn’t provide me with a copy of the tenancy until after 5 months into the tenancy. Needless to say the tenant despite giving notice has not moved out. We agreed a date to move out, he allowed the agency to show prospective new tenants around and a new one paid a holding deposit and was ready to move in on 9 June.

But the old tenant hasn’t moved out and is now refusing to move out saying it was the agency’s responsibility to find him new accommodation when it clearly wasn’t.

He said he was moving to his brother’s and confirmed the move out date. Now the agency is saying to me that they’ve done all they can and it is not their problem. They say I didn’t have a managed letting and that I should have taken a different level of service, but this was an informal working agreement with my ex-partner who’s agency always dealt with this letting.

I am not sure what remedy is open to me now. I called the HB department in April to inform them the tenant was not paying his rent and that he’s said he’s spent the money to live on. They said they’d suspend his claim and would contact him but I don’t know what has happened since.

What action should I now take to recover rent and possession? I am now at a massive financial loss as I’ve lost the incoming tenant and am not receiving rent from the current defaulting tenant.

I’ve done a bit of research and see that I can do one of two things – in these circumstances, do I serve S21 or S8?

First of all, whenever you use an agency to manage your properties it is always best to have a proper agreement setting out what they will do (and what you will pay them for) even if you are friends.  Otherwise things can get difficult if it all goes wrong.

So far as evicting the tenant is concerned, you need first of all to find out whether the tenancy deposit has been protected or not. If it has, then check whether you can prove that the prescribed information was served on the tenant.

If the answer is yes, then my advice would be to serve both notices.  You will find a lot of guidance on this blog to help you, and if you need more help you will find all the notices and a detailed ‘Rent Arrears Action Plan‘ on my Landlord Law site for members (membership starts at £20 pcm – see more >> here).

If the tenancy deposit is not protected (which sounds as if it is the case) then you have a problem.

The first thing to do is to protect the  deposit as soon as possible and serve the relevant notices. This should be done before you do anything else.

Note that as you have not protected the deposit within the 30 day time limit (or by the 6 May for deposits paid before the regulations changed in April), you will almost certainly be in a position where your tenant can sue you for the penalty at any time during the next six years.  The agency will also be liable if the deposit money was paid to them.

You may need to refund the deposit money to the tenant before you can use the section 21 eviction route.  You will find more about this >> here and elsewhere on this blog.  There is also a little guide >> here.

I would suggest you start taking action as soon as possible, as the ONLY way you can evict the tenant and put a paying tenant in his place is by getting a possession order through the courts.  This can take five months or more.

Note however that if he served a valid notice to quit on you and then failed to vacate you may be entitled to >> double rent.  This may be useful if you are bringing a claim for possession based on unpaid rent and also  as a counterclaim to any claim he may make against you for the penalty for non protection of the deposit.  Otherwise a successful claim for the penalty may wipe out your rent arrears claim (and your ground for possession).

As the agency should have advised you about protection of the tenancy deposit you may have a claim against them for negligence.

Rent Arrears

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Important note. If you are reading an old post, remember that the law may have changed since it was written.

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12 Responses to What can I do now my tenant has stopped paying rent?

  1. My god what a bloody mess, and yet these kinds of scenarios come before me several times in a week.

    I’m not condoning the tenants behaviour at all but all this could have been avoided if the landlord and the agent actually knew the law on renting. Ignorance and lack of knowledge is the curse of the Private Rented sector. When oh when will landlords and agents realise that this business isnt about just chucking the keys at someone and turning a profit and then complaining that the law is all on the tenant’s side when things go wrong?

    I’m not saying that is Monica’s beef but yet again we see a landlord trusting an agent to be the professionals in all this only to find the person they are paying to manage their affairs has dropped them in the crapper because they didnt know what they were doing either.

  2. Sorry to double post but who has the deposit now? Unless things have changed my understanding is that the only scheme that can take out of time payments is the DPS, which means Monica is going to have to hand the money over to them before she can serve the s21

  3. Its probably worse than that Ben. If Moneca has not protected at all, then she will only be able to use section 21 AT ALL if she has handed the deposit money back to the tenant.

    Unless the tenant agrees to the deposit being offset against rent (unlikely if they know that otherwise they will get it back) or if the tenant has already brought a court claim for the penalty. Which in this case has not happened.

    From what she says it looks rather as if the deposit money was never protected and was then paid to Moneca by the agency as her months rent.

  4. Wow thats a change. Passed me by too. Is that in response to the ‘Must also return’ argument that ran in Tiensia?

    I must confess I have been advising late paying landlords to whack it into the DPS as per the old legislation. What did I just say about ignorance being the curse of the PRS? haha

    How bad would that feel?, to pay a rent owing tenant before you can even serve notice on them? And lets not forget the prescribed information rules too

  5. Tessa’s comments are spot on.

    Whilst I really do sympathise with the landlord, I have to say that this ‘perfect storm’ is a good example of all that is wrong with the Private Rented Sector – lack of professionalism (of both landlords and agents).

    Aside from the deposit issues, the landlord has clearly made no allowance for vacant periods in their financial model (do they even have a model?). Out of desperation they have agreed to accept the deposit in lieu of the last months’ rent and had arranged the new tenancy to commence immediately after the current tenancy was due to end. If you don’t appreciate why these are both bad decisions then you should probably not be letting property.

    I have a dream that one day, landlords and agents will be prevented from going into business until they can at least prove they have a basic understanding of the word ‘yield’.

  6. It says the tenant has already agreed for the deposit to be used in lieu of rent, so it has been given to the landlord who could subsequently protect it in order to issue the S21.

  7. Whilst I accept the difficulty that a tenant has not paid remt why do lanldords blame agents, because they haven’t followed the law, by protecting the deposit. Why is it always someone else’s fault.

  8. Victoria I would say that in these kinds of cases blaming is approriate. Agents are supposed to be the industry profesionals that landlords go to for advice and help with setting up a letting. The law certainly requires the landlord to protect the deposit but I would expect an agent to tell them this. Moneca’s is an incredibly common complaint that I hear all week

  9. Tessa (and Ben to continue his eductaion!!!)

    Isn’t the date in the tenant’s notice wrong anyway. If the rent due date is 8th monthly then the after date in section 4 should surely say “after 7th June” – though it does seem rather academic.

    Monica in my opinion your best bet here is to let this tenant go as quickly and easily and early as you can with no pressing for any arrears or further payments. Otherwise if and when he realises he will simply counterclaim with an action for a penalty award for wrong handling of his deposit.

    If he does anyway then of course you sue your ex!! Am just dealing with a tenant find case myself where a well known and self promoting agent has done half the job i.e. iossued a half completed attempt at a PIN and then left the Landlord to fill in the blanks and as the Landlord protected with Mydeposits to pass on the Certificate of Deposit issued by them.

    Needless to say the Landlord has not done anything more on the PIN front.
    Afraid this Landlord is now in same boat as all others who have deposits unprotected on tenancies that started 0n 6.4.07 or after. If they haven’t protected and served the PIN by 5th May they are in trouble.

  10. @Industry Observer – I said “if he served a valid notice to quit ” – I prefer not to advise on dates unless I have the paperwork in front of me and am being paid for my advice!

    You have to be really careful with dates.

  11. Tessa

    I wasn’t commenting on your date comments, this was a reference to what Monica said. She referred to May 8th and June 8th.

    Valid notice from the tenant must follow same rules as Landlord and end last day of period of the rent. Though Landlord can of course be more lenient/generous to a tenant than a Judge would be to the Landlord!!



About the post author:

Tessa Shepperson

Tessa is a lawyer and specialises in creating products and services which help landlords and letting agents learn and understand landlord & tenant law. For example, she runs the Landlord Law website (now in its 14th year) and is a director of Easy Law Training Ltd and Your Law Store. Tessa also sits on the Property Redress Scheme Council. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google

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Tessa is an English lawyer specialising in residential landlord and tenant law.

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