Open Communication is Essential

As we often advise our clients, engaging with tenants in arrears is the best approach. Keeping the lines of communication open and working out a repayment plan can prevent issues from escalating. A proactive strategy ensures that both landlords and tenants can find a workable solution.

The Impact of the Pandemic on Rent Payments

With millions of people now under additional lockdown restrictions, many businesses have been forced to close or limit operations. This is leading to a rise in rent arrears, particularly in affected areas. To protect tenants from homelessness, the Government has restricted bailiff actions in Tier 2 and Tier 3 areas. However, it’s crucial for tenants to understand that rent is still legally due, even during these uncertain times.

Options for Landlords to Manage Rent Arrears

According to insurance firm CIA, landlords have a couple of options to help struggling tenants:

• Rent deferment – The landlord temporarily pauses rent payments, allowing tenants to repay the deferred amount in monthly instalments over an agreed period. This should be clearly documented to avoid future disputes.
• Rent abatement – The landlord waives a portion of the rent permanently. Some landlords offered this option during lockdown, as it was preferable to maintaining an empty property and going through the costly and time-consuming process of re-letting.

The Importance of Landlord Obligations

Even if a tenant has stopped paying rent, landlords must still fulfill their obligations under the lease. Failure to do so could negatively impact any future legal action. Courts are more likely to rule in favor of a landlord who has demonstrated reasonableness and a willingness to negotiate.

Alternative Solutions for Landlords

One suggested approach is to waive the remaining tenancy term and agree to keep the tenant’s deposit in lieu of unpaid rent in exchange for them vacating the property. This solution avoids:

• A formal eviction process.
• Damage to the tenant’s credit rating.
• Delays in re-letting the property.

This can be a quick and simple resolution in cases where neither party has a vested interest in continuing the tenancy. However, landlords must ensure that any agreement is mutually agreed upon—any hint of coercion or harassment could result in legal action.

Finding Amicable Solutions

The last few months have been challenging for both landlords and tenants. In our experience, most landlords simply want to maintain their income flow while fulfilling their obligations. By fostering engagement and open discussions, amicable solutions can often be found that benefit both parties.