Southampton 02380 482 482
Winchester 01962 679 777

8th February 2017

Recovering rent arrears from residential tenants – Part 1 of 2

8th February 2017

Recovering rent arrears from residential tenants – Part 1 of 2

Nicola Davies

Posted: 8th February 2017

T: 023 8048 2212

E: Email Me

One of the main concerns landlords face after obtaining a possession order is how to go about recovering sums owed from former tenants once they have vacated without leaving a forwarding address. With court fees amounting to nearly £500, landlords can end up spending several thousand on legal fees plus months of rent arrears before a bailiff can be appointed. My next two blogs will cover two frequently asked questions by landlords:

  • What chance do I have of recovering the rent arrears; and
  • What enforcement steps you can take to recover sums owed to you.

Paris Smith’s Property Litigation team is regularly instructed by both private and commercial landlords to recover possession and outstanding debts from tenants who refuse to leave and refuse to pay. We are all too familiar with the plights of private landlords who rely upon rental income to pay the mortgage or commercial landlords needing to maintain a robust stance against arrears to deter other tenants from following the same path.

Q1 – What chance is there of recovering the money judgment from former tenants?

Tenants do not have an incentive to pay money judgments attached to possession orders once they vacate as, unlike straightforward money claims, they are not automatically recorded against their credit score as county court judgments “CCJs”. It is only upon taking enforcement action or applying for default judgment that the tenants suffer any damage to their credit record. This point is also relevant to landlords when undertaking those all important reference checks on new tenants.    

First check – Who’s liable?

Tenants will be jointly and severally liable for the rent arrears meaning you can recover all the sums due from only one of the tenants leaving them to chase the other for their share. This could prove valuable information if you find out one of the tenants (whether they were in occupation or not) is worth pursuing more than the other. 

Guarantors might be your first port of call as often they will be better able to pay the judgment debt. Check what the terms say in the tenancy agreement or deed of guarantee as often it says the guarantor is only liable if he has been given 14 days’ notice of the arrears not being paid. If this is the case fire off a letter straight away and if it is not too late add them to the possession proceedings so that you can secure a judgment against them.

Next check – Pre-sue report

The chance of recovery depends mostly on locating the tenant/guarantor and finding out if they have any assets and/or the ability to pay the judgment. Here we usually employ a specialist company to prepare a formal report for around £30 that summarises for us the finances of the debtor and often their whereabouts too.

In summary:

  • Tenant with assets that can be located = high chance of recovery
  • Tenant with no-assets that cannot be found = low success rate – You have 6 years to enforce the possession order and so you may prefer to wait to see if the tenant’s position changes and undertake another pre-sue report in a years time.

My next blog looks at what enforcement steps you can take to recover possession. You can read that blog here. For more information about landlord and tenant matters please email me.

Share This

2 Comments

  1. Sulaiman Mohammed

    Dear Sir /Madam
    I have problem with my tennant his not co-operative with my in order to sort his rent’s arrears.
    His housing benefit ended on 7th Junaury 2018 and he have done nothing about it.
    On the 13th Mach 2018 I wrote a letter to him asking him for outstanding to be paid on 31st Mach the latest or contact me to discuss this matter. He is failed to make the payment or even contact me to discuss this matter.
    I also advised him in the lettet the unpaid arrears could result in court being taking against him and he may become laible for legle costs.
    The outstanding rent is £2391.51 that’s coveres the period from 24th April 2017 to 31 March 2018. The outstanding rent occurred through the shortfall between the amount of the housing benefit paid and the amounts he should pay. It also cover the full rent for 7th Junaury to 31st Mach 2018.
    The Tennant Agreement will end on the 24th April 2018.
    I would like to know if you can help me to recover the outstanding rent, make him eviction my flat ASAP and how much that will cost me please.

    ManyThanks
    Sulaiman Mohammec

    Reply
    • Paris Smith

      Thank you for your enquiry Sulaiman. Someone from or Dispute Resolution team has been in touch with you. I hope you manage to resolve your dispute satisfactorily.

      Reply

Comment

Nicola Davies

Posted: 8th February 2017

T: 023 8048 2212

E: Email Me