Landlords - Protections from non-payment of rent

By Katie Kearns

We hear that the private rental sector is booming, as buyers struggle to obtain mortgages or raise deposits required to secure a mortgage on properties.

However, in the current financial climate, Landlords may also have their own difficulties as tenants may miss rental payments.

We have seen a rise in the number of Landlords reporting defaults in rent, which whilst ultimately can lead to eviction, may leave a Landlord with a debt, as a Landlord is only able to claim unpaid rent up to the date of eviction and not until the end of the tenancy.

If a few simple steps are taken a Landlord can minimise the potential for losses caused by defaulting tenants.  In particular, we suggest:-


1.         Deposit

If a deposit is taken at the outset of the tenancy it will minimise the loss, if a tenant absconds or fails to pay rent in accordance with the tenancy agreement.

If a deposit is taken it must be protected within a Government Authorised Tenancy Deposit Scheme within fourteen days of receipt.  In fact, it is now vital that deposits are held in a Government Authorised Tenancy Scheme, as if possession proceedings are ultimately required and a Section 21 Notice needs to be served, the Landlord must give details of where the deposit is held. Also, if the deposit is not protected correctly then tenants may claim a penalty of three times the deposit sum, where Landlords or agents have failed to comply with this requirement.


2.         Tenancy Agreement

It pays to have a properly drafted Tenancy Agreement detailing all the tenants' obligations and the deductions that can be made from any deposit.

Furthermore, it is sensible to try and obtain a guarantor to guarantee any default in rental payments.  A properly drafted Guarantee Agreement is a simple document which can provide adequate protection for a Landlord in the case of tenants' default.

If tenants do default in payment of rent, then it is in the Landlord's interest to act promptly to try and resolve the position and takings the steps outlined above, should have the effect of minimising possible losses. Sarginsons Law LLP has years of experience in drafting Tenancy Agreements and also securing possession of the property, should problems occur.

Please contact Katie Kearns or Gerard Davis on 024 7655 3181 to discuss these matters.