Can’t Pay vs Won’t Pay: Dealing with Rental Arrears

If a tenant can’t pay rent due to being laid off in the COVID-19 pandemic, the landlord may be left with a headache and potentially out of pocket. So, what actions could – or should – a landlord take in these unsure times?

The first aspect is understanding the financial situation of the property. If there is a mortgage against it, then the landlord can apply for a mortgage holiday of up to three-months and put off any payments that they have to make, thereby simply shifting the need to collect rent by that time period. After that, hopefully, the emergency will have subsided and the tenant will be back in work and paying their rent. If there is no mortgage on the property, then the landlord should wait until the tenant has received any universal credit that they have applied for, with which arrears should be paid.

If a tenant is not able to pay their rent and is not in a position where they will be receiving Universal Credit, then the tenant should explain the situation to their landlord straight away and may find that they might be given more time to pay, or could receive an agreement to reduce the rent for a specified period of time. If the landlord is unwilling to suspend or reduce rental payments, then the tenant should seek advice from bodies such as the Citizens Advice Bureau, or the local council. 

If a tenant finds themselves in this situation and the landlord doesn’t offer to be flexible with rent payments, it’s a good idea for the tenant to pay as much as they can afford and keep a record of what was discussed with the landlord. This will show the tenant in a good light should possession proceedings start. However, that will not be for at least three months.

During the COVID-29 pandemic, new, emergency rules regarding possession have been put in place. The Master of the Rolls, with the agreement of the Lord Chancellor, has announced the suspension of housing possession cases in the courts during this period. This affects new or existing claims for possession for a ninety-day period from 27th March 2020. This effectively prohibits any court action to remove tenants from a rented property for a three-month period, meaning that even if a tenant refuses to pay rent, the landlord cannot even start a court action to have them removed while the possession case lull is being operated.  

If a landlord has a tenant who refuses to pay, it becomes a case of having to sit the situation out. The rules regarding housing possession claims apply in this case too, and even if the sitting tenant refuses to pay their rent, a new action to remove them cannot be started. But the same situation regarding mortgages on the property still applies. If the landlord is not getting rent paid, then they should apply for a three-month mortgage holiday so that they are not having to pay for a property that they are not receiving income on. Once the COVID-19 crisis is over, the landlord will be able to commence a repossession claim, and if there is evidence that the tenant has simply refused to pay, is likely to win it quickly.

The actions taken by the Government have been designed to ensure that people are not made homeless unnecessarily and that a landlord does not end up out of pocket through non-payment of rent.

If you are worried about your situation and need legal advice, come and speak to us at CreativeLegals.com and see how we can help you.

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