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What to Do When a Tenant Refuses to Pay Rent

The coronavirus pandemic has caused many businesses to struggle, or even shut down completely. This has resulted in a number of commercial tenants deferring their monthly rent due to profit loss.

In November, new laws were introduced protecting commercial tenants from being evicted until 25 March 2022. This is part of the UK government’s efforts to help businesses that suffered major losses due to the pandemic. Tenants and landlords can use this time to negotiate payment terms.

But what if, even after the moratorium, your commercial tenants still refuse to pay rent? This guide explains what you should do to recover missed payments.

Coordinate with Your Tenant

If your tenant has not yet paid even after the grace period, reach out to them first. Give them a call or send a text or email to remind them of the missed payment. If the tenant is purposefully avoiding you, send a formal written letter via first-class or hand-delivered mail.

Be sure to keep records of your correspondence in case you encounter issues down the line.

If the tenant is having financial difficulties, try to come up with a temporary solution. Here are a few workarounds to consider:

  1. Forgiving of Rent. If you’re not too pressed for cash, consider waiving the rent for a month, then arrive at an agreement to revisit payment terms at a later date.

  2. Postponing of Rent. Offer to delay payments for a month, with a deal to pay it at a later date. State how you want to receive the payment—in instalments or all at once.

  3. Rent Reduction. Another option is to lower the rent for at least a month to a rate that will still allow you to meet obligations.

Reach Out to the Guarantor

If the rent hasn’t been paid after 14 days, send a letter to the tenant’s guarantor explaining the missed payment. The debt is usually paid after coordinating with the guarantor. But, if the guarantor fails to pay, send another notice after 21 days in arrears.

Talk to Your Insurance Provider

You can tap into your landlord insurance to recover the loss of income due to unpaid rent. Also, if the tenant has outstanding rent payments, you can opt to take out the unpaid rent from their deposit.

Begin the Eviction Process

If the tenant falls two months into arrears and has displayed zero efforts to solve the situation, it’s time to take legal action. Under the Housing Act of 1988, you can serve the evictee a Section 8 or a Section 21 notice.

A Section 8 notice is served in the event of a breach of contract. The notice informs the tenant of your intention to take them to court if they fail to meet payments within another 14-day extension.

A Section 21 notice is issued to break a tenancy agreement, so you could regain possession of the property.

If the tenant refuses to leave within the specified date, you can apply for a possession order in court. You can also request a judgment on the arrears. The court may issue any of the following orders:

  1. Ask the tenant to evacuate the property before a specified date.

  2. Allow the tenant to stay with the condition to meet payments or follow the conditions stated in the order.

  3. Ask the tenant to pay you the amount specified in the order.

  4. Ask the tenant to leave the property and pay the money owed, court fees and legal fees.

Need Help in Recovering Overdue Rent?

MS Webb is at your service. With over 25 years of experience, we ensure seamless enforcement and debt recovery management processes. Our reliable bailiffs and enforcement officers operate with fairness and compassion, ensuring the best possible outcomes for our clients.

Successfully recover what is owed to you. Reach out to us today to book our services.

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