Landlord and Tenant

Recovering rent arrears

One of the most frequent problems between landlords and tenants is the non-payment of rent.  Our team of expert lawyers is on hand to assist with a variety of options for recovering rent arrears.

Risk of accepting surrender

If a tenant can afford to pay the rent, but no longer requires the property, he may seek to surrender his tenancy.  In some cases, the landlord will be happy to accept this, but in others the landlord will prefer to keep the tenant.  In that event, the landlord must take care to avoid doing anything which might amount to accepting a surrender of the tenancy, such as accepting the return of the keys or re-entering the property after the tenant has left.

Suing for rent

Court proceedings can be brought for the recovery of unpaid rent.  In many cases the tenant will have no defence against such a claim, and summary judgment can be obtained.  This will then allow all the usual means of enforcing a judgment debt, such as sending in bailiffs or attachment of earnings.  This may be useful if you wish to put pressure on the tenant to pay without losing the tenant.

Insolvency proceedings

Alternatively, you could serve a statutory demand on the tenant for payment (and we would be happy to draw up a demand in the correct form).  In some cases, the tenant may pay upon service of the statutory demand, and this could be a more cost effective means of recovery than a court action.  If the tenant does not pay, bankruptcy or insolvency proceedings could be brought.  While it may be hoped that the tenant will find the means to pay rather than face bankruptcy, we possess the expertise to see the process through to the end where necessary.

Distress

Distress or distraint (the terms are used interchangeably) is an ancient remedy for non-payment of rent, which involves the landlord entering the property and confiscating the tenant’s goods to make good the short-fall.  There are provisions in the Tribunals, Courts and Enforcement Act 2007 which abolish distress and replace it with a statutory remedy applying only to commercial lets.  However, these provisions have not yet been brought into force, and the remedy of distress remains available for the time being.  Although it was expected that these provisions would be brought into force in April 2012, the government launched a further consultation on this subject in February 2012, and it is not clear when (if ever) distress will cease to exist.  Clearly this means that any landlord intending to levy distress must take great care that the position has not changed on the applicable date.

Distress is rarely used in relation to residential properties since for both protected and assured tenancies, a court order must first be obtained, and this requirement removes the main attraction of distress as a remedy for landlords.  However, it should be noted that distress could be used on properties which fall outside the scope of the Housing Act 1988 for reasons mentioned above.  We would rarely (if ever) recommend the use of distress in relation to residential premises, since the applicable law is complex and not always well-adapted to a modern context, and residential landlords are rarely familiar with the process.

Distress is more commonly used in relation to business premises, and this remedy will substantially survive the changes introduced by the Tribunals, Courts and Enforcement Act 2007, once these come into force.  The main potential change will be the introduction of a requirement that the landlord first give the tenant notice before distraining, although this is subject to consultation at the time of writing.

The procedure for distraining is as follows.  There must be some rent unpaid as at the date of the distraint.  The landlord or a certified bailiff appointed by him enters the premises (and there are certain fairly technical rules as to how entry may be obtained).  He then seizes the tenant’s goods, subject to certain exceptions, and only up to the value of the rent due.  The goods must be held for at least five days, or fifteen days if the tenant makes a written request for more time, to allow the tenant time to pay.  If the tenant has not paid the arrears within this period, the landlord may then sell the goods and apply the proceeds to the arrears.  He must obtain the best possible price for the goods and cannot buy them himself.

Possession proceedings

In many cases, once a tenant has a track record of non-payment, the landlord will wish to evict and find a new tenant.  In relation to an assured tenancy, two months arrears of rent constitutes a mandatory ground for possession (ground 8).  The section 8 procedure can be used, by giving 2 weeks notice in the prescribed form.  Once the notice period has expired, court proceedings can be brought both for possession and for the arrears.  A schedule will need to be prepared showing the amounts which have fallen due and the amounts which have been paid.  Note that the accelerated procedure is not available under section 8, so in some cases where the tenancy is assured shorthold, it will be easier to follow the section 21 procedure.

Disclaimer

This article is for general information only and shall not be deemed to be or constitute legal advice.  We cannot accept responsibility for any loss or damage suffered as a result of acts or omissions based on this article.

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