Imagine this scenario: you are a landlord. You have a tenant living in your rental property. You made the tenant provide references before they moved in. You crossed the T’s and dotted the I’s on the lease before they moved in. You’ve done an inventory, all your legal certificates are up to date, you have registered as a landlord and lodged the tenant’s deposit with a deposit scheme provider. You are expecting a long and smooth running tenancy until the day the rent is due, no payment appears in your bank account. What now?
The first thing I should point out is that rent arrears are not a common occurrence providing the tenant has been screened properly prior to moving in. If, as a landlord, you do find yourself in the unfortunate position of having a tenant in rent arrears then I would recommend a simple process to follow.
- Contact the tenant. The sooner you contact the tenant to establish what the problem is, the better. I would advise doing this within 7 days of the rent being late. Most tenants will pay their rent by standing order and depending on the banks involved it can sometimes take a few working days for the rent to leave their account and appear in yours. However, if a week after the rent being due it has still not been paid then there is a problem. Contact the tenant to find out what the situation is. Sometimes the tenant will not even have realised the rent is late and they will immediately contact their bank to resolve.
- Inspect the property. Whether you have heard from the tenant or not, if there is still unpaid rent after 14 days then contact the tenant in writing (email or text message is fine) and notify them that you will be conducting a late rent inspection at the property. It is important to give them at least 24 hours’ notice of the inspection. This is your chance to visit the property and gain more information on the situation. If you have not heard from the tenant by this point then you can find out if they still have belongings in the property and are still living there (i.e. have they run off). If you have been in contact with them then it is an opportunity to meet face to face to discuss whatever the problem might be. Either way, it will press home the seriousness of the situation to the tenant and provide you with more information.
- Serve notice. If there is still unpaid rent after three weeks then I would recommend serving notice to the tenant via a sheriff officer. This will usually resolve the situation in one of two ways; the tenant will pay the unpaid rent and clear the rent arrears promptly or they will vacate the property allowing you to remarket the property and find a replacement tenant. The type of notice you serve will depend on whether the tenancy is still in the initial period and if it is a short assured tenancy. If it is a short assured tenancy and is outside of the initial period I would recommend serving a standard notice to regain vacant possession of the property (not related to the rent arrears). If the tenancy is within the initial period and has several months to run then you can serve notice using the discretionary grounds 11 & 12 of the Housing Act (Scotland) 1988. If there is three months’ worth of arrears then you can gain compulsory repossession of the property under ground 8. Once the tenant has vacated the property you can begin debt recovery proceedings if necessary.
Benefit of the doubt
I am regularly contacted by landlords who have a tenant with rent arrears where the situation has run out of control. This is usually because the landlord & tenant has given the tenant the benefit of the doubt and the landlord finds themselves in a spiral where the tenant is providing excuses every week that buys them more time delaying proceedings and ultimately making the situation worse. The legal process for regaining vacant possession of a property can take months so for this reason I would never advise giving a tenant the benefit of the doubt and delaying proceedings. While the legal process runs its course, the tenant will have plenty of time to turn the situation round in which case the landlord can put a new lease in place if they wish the tenant Edinburgh to stay on.
To summarise my advice on rent arrears, take swift a decisive action as soon as rent arrears occur and chances are that the tenant will pay up or move out if they cannot afford to stay on. In the unlikely event they do neither then as a landlord you are that bit closer to taking the legal action necessary to regain vacant possession of the property.