Tenant is Not Paying Rent in London: What Should I Do?

Non-payment of rent happens to the best of landlords occasionally, but that doesn’t make tenant rent arrears any less anxiety-inducing – especially if you’re a buy-to-let landlord relying on the monthly rent to pay your mortgage. 

Even if your tenants in Romford, Upminster or Grays have been reliable at paying rent in the past, financial struggles can affect anyone. Over the past few years, the rising cost of living and energy bill hikes have significantly impacted tenants and landlords.  

Whatever the financial climate, in our experience, there are three factors you need to prioritise throughout the tenancy to make sure you’re in the best position to act if your UK tenant stops paying rent: 

• Be organised – have a good system to monitor payments, so you know if there’s a delay in the payment. It is also essential that you meet the legal requirements for UK landlords. For example, ensure your tenant has the government’s ‘how to rent’ guide and the correct gas safety certificate. This will help if you do need to start the eviction process. 
• Communicate well – be approachable and friendly but maintain a professional relationship. Respond to your tenants’ communications quickly. You want your tenants to feel comfortable contacting you with any issues. 
• Know the law – understand the process of chasing late payments. If you take legal proceedings to reclaim unpaid rent or evict a tenant, you must have done everything by the book. 

Read on to find out how to master these three areas, what your legal rights are and the correct legal processes you must follow. 

Rent Arrears And Landlords Rights 

There are several pieces of legislation in place to protect landlords and enable them to take the appropriate action when faced with rent arrears. These are: 

• The Housing Act 1988 – This includes the right for a landlord to serve a Section 8 notice to evict tenants for breaches of the tenancy, such as rent arrears. Under this legislation, the landlord must complete the required form, stating the grounds for eviction. The courts can then make a money judgment to recover arrears and possibly legal costs. 
• Landlord and Tenant Act 1985 – This act covers the process that landlords should follow in terms of addressing rent arrears and other tenancy breaches. This also includes addressing recovery of unpaid service charges for leasehold flats. 
• Protection from Eviction Act 1977 – Legislation that protects tenants from being evicted without proper notice and a court order.  

The sections below provide the correct legal steps to take to stay compliant with these acts. 

What To Do When A Tenant Stops Paying Rent 

If your tenant is not paying their rent on time, the most important thing to remember is – don’t panic. You must follow the correct process to avoid any problems if you go down the legal route. The best way to resolve the situation while complying with your landlord’s responsibilities is to follow these steps: 

1 Approach your tenants promptly about arrears 

Don’t wait around hoping they will get around to paying their rent. Contact them to establish why they haven’t paid. By being transparent with each other, you might come to a solution between you. If you get a better understanding of your tenant’s situation, you might be able to decide on a new payment date or work out a payment plan over a longer period.  

You can also recommend appropriate solutions to your tenant, for example, they might be able to apply for benefits such as a discretionary housing payment or regular housing benefit payments. 

If they still can’t pay rent and are open to leaving the property, then it might be best for you to cut your losses. 

2 Write & deliver a formal demand for rent 

Next, write a formal demand letter to your tenant, ideally delivered by hand. Request that all overdue arrears be paid immediately and stipulate that all future payments be made in full and on time. Advise that if they fail to pay rent, then this could lead to court action. 

3 Write a second letter to reclaim rent 

If you have not received payment after 14 days of the original due date, send another letter advising them that you intend to seek possession of the property. If your tenants have a guarantor, you should also inform them in writing at this stage. 

When the tenant hasn’t paid after 14 days of the rent due date, landlords can also  apply late fees, so you can include this in the letter. Late fees cover the interest on the rent due, and interest can be calculated at up to 3% above the Bank of England rate. 

4 And again 

After 21 days, send another letter to both the tenant and guarantor. The guarantor has liability for paying the rent if the tenant is not able or willing to pay it, so it is important to keep them informed, especially if you are not getting a response from the tenant. 

5 Contact insurer  

Next, contact your insurance company to see whether you can claim for the missed rent payment. If you have taken out cover for missed rental payments, you may be able to submit a claim to cover the costs, but you will have to check the terms and conditions. If you are covered, find out what the claims submission process is and start your claim. 

6 Decide which eviction route you will use 

Once the rent is a month overdue, and the next month’s rent is also due, your tenant is considered to be in two months of arrears, and you can now take action to seek possession of the property. There are two ways you can evict tenants with assured shorthold tenancies under the Housing Act 1988: 

Section 8 Notice 

If your tenant has breached their tenancy agreement by failing to pay rent, you can legally give them a Section 8 notice at any point during the tenancy. If the rent is paid on a monthly basis, the landlord can service a Section 8 once the rent is overdue by two months. If rent is paid weekly, the landlord can serve a Section 8 when the rent is 8 weeks overdue. 

Serving a Section 8 is really the last solution that landlords want to resort to. It can take a long time to go through this process, with stressful court hearings and court fees that must be paid even if you lose the case. 

Section 21 Notice 

If the fixed term of the tenancy has ended, or you have a periodic tenancy, then you can give the tenant a Section 21 notice to seek possession, and you do not have to provide a reason for this. 

The Renters Rights Bill is currently in the process of passing through parliament to become law. The proposed changes include the abolishment of Section 21, so it is important to stay up to date with the progress of the Bill to ensure you follow the correct eviction process. 

You should seek professional advice if you are unsure about the eviction process and which notice to serve. 

6 Go To Court 

If your tenant is in rent arrears, you can apply to the court to seek possession of the property. The court may decide the tenant has to leave the rental property and serve a possession order, or it could allow them to remain in the property if they agree to pay the rent money they owe and stick to the conditions of the tenancy agreement. A judge also has the power to add a monetary judgment to cover rent arrears, court fees and legal costs. 

What to know more about how do you evict a tenant for not paying rent? Check out our article for more information on how long it takes to evict a tenant and other important information about eviction proceedings. 

Things You Can’t Do If Your Tenants Stop Paying Rent 

If a tenant is not paying rent and not responding it can be frustrating but you need to try and remain calm. Do not enter the rental property without the tenant’s permission or attempt to remove any belongings – this could lead to you being on the wrong side of the law, and you need to follow the correct legal process to gain entry.  

The tenant is protected with the ‘right to quiet enjoyment’ of the property, which means you can’t turn up at the property unannounced and you can’t harass them by continually calling them or sending lots of messages. You should also ensure that you remain professional and don’t threaten the tenant or resort to using aggressive language. 

Can you lock a tenant out for not paying rent? 

Locking the tenant out and changing the locks is definitely not an option, and you could end up in a worse position than missing out on rent payments. You must not change the locks and doing so would be an illegal eviction, and the tenant could take legal action against you. 

Tenants Not Paying Rent Under The Renters Rights Bill 

The Renters’ Rights Bill (RRB) is due to come into force in 2025 and this will introduce changes to eviction legislation, amongst many other reforms. One of the key reforms related to rent arrears is the proposed abolishment of Section 21 and extension of the grace period.  

This will mean that landlords will not have the option of serving a Section 21 for rent arrears and Section 8 will be the only process for eviction proceedings for rent arrears. 

The RRB will also extend the period of rent arrears before a landlord can serve a notice of eviction from two months to three months. Additionally, the notice period that a landlord will have to give will also increase from two weeks to four weeks for tenants not paying rent. 

What Can Landlords Do To Protect Themselves Against Unpaid Rent? 

There are some proactive actions that landlords can take to protect against missed rent payments, such as: 

1. Record All Payments 

Before problems arise, ensure efficient processes and procedures, especially if you have multiple tenants. Send dated receipts to your tenants after each rent payment has been received. This will make life easier if you need to go to court. 

2. Get Insurance Cover  

Landlord insurance may be worth looking into if you cannot pay your buy-to-let mortgage if your tenant defaults on their rent. Landlord insurance covers the loss of rent if the tenant doesn’t pay and some of the costs involved in evicting a tenant. 

3. Consider A Rent Guarantee Scheme 

Another way to prevent the financial impact of unpaid rent is to join a rent guarantee scheme, such as the one offered by Sandra Davidson. This way, you are guaranteed to receive rent for 365 days of the year, even if the rental property is vacant. 

4. Reference Tenants 

Requesting tenant references will provide information that will help determine whether the tenant is likely to get into rent arrears. Referencing can include a credit check, employer reference, previous landlord references and bank statements. 

5. Maintain A Good Relationship With The Tenant 

If you have a good relationship with your tenant, they are more likely to keep you informed of any situation that could result in them being unable to pay their rent. You will probably find it easier to make a repayment arrangement for missed rent rather than facing the stress and expense of going through court. 

Dealing With Arrears – A Landlord Checklist 

Five things to do now to help avoid arrears: 

• Keep communication channels open with tenants so they will come to you before problems escalate. 
• Signpost them to benefits such as universal credit and housing benefits. 
• Consider a payment plan – talk openly with your tenants and pull together a realistic plan that works for you both and will see them through their difficulties. 
• Speak to your lender – don’t wait until there is a problem if you have a buy-to-let mortgage and are struggling. 
• Find out if help is available to you as a self-employed landlord. 

Find Out More 

If you are a landlord in Rainham, Ilford or any other areas of East London and would like to talk to us about dealing with rent arrears and many other aspects of letting property – we’d be happy to help. 

Looking for a stress-free lettings solution? Then explore our guaranteed rent services in Harrow, Barnet, Enfield, Ealing, Luton & beyond.