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A brief guide to the residential rent recovery process in the United Kingdom.
Introduction
Rent arrears are one of the most common problems faced by landlords. We aim to provide you with a general understanding of the process for recovering rent arrears.
The first step is to consider if you want to obtain possession.
Section 8 Notice
If you want to obtain possession and pursue rent arrears, you need to serve a section 8 notice. You will need to clearly outline the outstanding arrears and the period the arrears cover.
Upon receipt of this notice, the tenant will have the opportunity to settle the arrears, vacate the property or dispute the notice within a specific timeframe, (usually 14 days but this may vary dependent on the grounds listed on your notice).
For more information on the section 8 procedure, please click here.
If the tenant fails to comply with or disputes the section 8 notice, you may proceed with issuing court proceedings to recover the rent arrears, for which there is a strict criteria that must be met. Once you have issued the claim, a hearing will be listed and the tenant will be given a chance to respond. The court will determine if possession should be ordered and if you are entitled to any arrears.
Non-Possession Based Debt Claim & Court Proceedings
Rent arrears can be pursued by issuing a debt claim. This involves sending a claim letter (also known as a letter before action), to the tenant in line with the pre-action protocol. The letter must provide details of the sum due and will usually specify payment must be made by a certain date.
If the tenant does not respond to the letter within 30 days, you can proceed with issuing a claim. Once the claim is issued, your tenant will have a specified time to respond.
If the tenant admits the debt or fails to do anything in response to the claim, you can request judgment. If the tenant puts forward a defence, your claim and any defence will be reviewed by a judge, a hearing may be listed and further directions may be given, prior to a determination being made.
If your claim is successful, a county court Judgment will be awarded against the tenant, and you can take enforcement action. A CCJ will have an impact on the tenant’s credit score and can be an incentivising factor towards payment of arrears.
If the tenant has no income or assets, it may not be possible for the landlord to recover the rent arrears. Litigation can be more costly and take longer than other recovery methods, so should be considered carefully.
Statutory Demand
A statutory demand is an initial step to commencing bankruptcy proceedings against a debtor. This can often be a useful incentive when seeking arrears as the tenant is faced with the possibility of bankruptcy or insolvency.
A statutory demand can only be served where the tenant owes at least the minimum sum of £5,000 and the debt is undisputed.
Once the statutory demand is served, the tenant will have 21 days to settle the arrears. When the 21 days deadline has passed, you can present a bankruptcy petition to the court, unless the tenant has made an application at court to prevent this.
Depending on the tenant’s financial position, this option may not be worth pursuing because you will rank only as an unsecured creditor in any bankruptcy or liquidation. In practice, you may only recover a small percentage, if anything at all, of the original debt.
How Can CWJ Help?
Resolving rent arrears can be a challenging and expensive process. Our team of solicitors offer advice on a range of landlord and tenant issues, including recovery of rent arrears.
We are able to provide you with your options when seeking to evict a tenant, regain possession of your property and obtain rent arrears.
To contact a member of our team, please see Private Landlords - Clarkson Wright & Jakes Solicitors (cwj.co.uk)