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  • Buy-to-Let

    Rental arrears- what should I do?

    Dear all

    Ihave had a tenant who did not pay any rent for about 6 months accumulating 4K in debt. She refused to vacate. I approached court through section 8 route and court ordered her to vacate property plus pay rent arrears.

    Fortunately she has vacated property after all this, but rental arrears remain. I know that she works and gets monthly income.

    My instincts say I should forget about rent arrears and get on with it. But I would appreciate your views regarding what you guys would have done in my situations

    thx

    abhee

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    Its about getting the balance right for me

    There is the moral principle and the legal principle

    Then there is a time issue and a cost issue and a stress issue

    Then I take in  their circumstances both financially and socially

    I mix all that together in my mind and make a decision so my approach can often  appear inconsistent to others

    Its entirely logical to me though

    I have debts of 4K owed which I am not pursuing but debts of 4K that I am pursing

    Sometimes i will pursue a debt of £50 just because the circumstances make me mad

    I will expend more time and effort than some would on some debts but less time than others on other  debt

    I will more likely pursue a statutory agency like council / police / probation service than an individual

    I will more likely pursue if they don`t own up to it and try and hide away and obfuscate the matter in hand

    I am fortunate that I dont really need the money I am pursing but i like to see fairness.

    I have never gone to court though. I cut people slack and negotiate with them instead

    I come up with payment plans for them and that appeals to them.

    I have plans going back years

    I keep it low key so they dont close up and ignore me  . Most people can and will pay £10 a week

    If someone hasnt physically got £500 a court will  unlikely put them in prison

    The court  will also only  make a payment plan in the form of a court order

    So I just do the same  and just cut out the middle man

    So in your case I would trace her and write to her and give her options . Give her a deadline to decide

    Legitimate pressure initially but not overwhelming pressure

    Start light and gradually intensify

    People like clarity and alternatives. Use court as the last option not first

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    Jonathan Clarke. http://www.buytoletmk.com

    I've had this happen. We agreed with the tenant they would pay a certain amount each month. They did this for a while then stopped paying.

    We then pursued the rest via the small claims court. The tenant it turned out has done the same before but as the landlord hadn't pursued it it didn't show up in checks and they thought they could get away with it again. I feel as though I have a responsibility to other landlords now to put it on formal record and not just informal precisely for this reason. 

    Sadly some tenants ruin it for the others and mean we landlords can't always give them the benefit of the doubt or let them off as otherwise they will never learn and will rip someone else off. If I sound annoyed and bitter it is because I am!

    I also feel bitter against the agent who wrote a reference that was clearly false but by the time I tried to pursue that avenue they were no longer in business. I now ask for bank account proof that payment has been made regularly to the landlord via redacted bank statements.

    We live and learn.

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    Hopefully you have registered this duff tenant with LRS

    Next time perhaps use RGI to prevent such rent losses again!?

    Of course to achieve that you need to be far more selective.

    It may well be that your chosen tenant demographic have no chance of qualifying for RGI in which case you will have to take all the risks.

    Your choice.

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    You've 6 years to recover it, but start soon: And make sure she gets a CCJ so finds renting elsewhere (sensible landlords do credit checks) or getting credit tough (eg 'phone contract) - unless she pays in full.

    If she is working PAYE it's easy, it called "attachment of earnings" and the employer pays you so much a month:

    https://www.gov.uk/make-court-claim-for-...a-judgment

    And the employer finds out she is a rent cheat.  Look it up, do it.  Oh, and IIRC the debt goes up 8% pa...

    Hell, I'd fill in a few forms & post a few letters for £4k.

    The joy you will feel - if you ever get even only £5 off her - of happening to see her some time, giving her a cheery wave and hailing her, for all to hear, "thanks for the money madam!".  It will ruin her day, probably week hopefully month

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    Quick note to 3Nests who mentioned bank statements. Bank statements are a good way to go but ‘replacement bank statements’ can, with a little research, be purchased online. The only sure way to check payments is to ask the prospective tenant to print out their statements live in front of you to check. That cannot be forged.

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    Thanks for that tip Crossly. I do think it is a fine line between invasion of privacy and trust, but having been on the wrong side of trust in the past I would always go with the tenant who didn't mind a little more probing over those who were reluctant. I had one tenant once who came for a viewing armed with a resume of why he would make the ideal tenant, DIY training course certificates, bank statements, references from a religious minister etc etc. He was just so very keen bless him but just came across as too over keen to please.

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    Yes its an important point to pursue arrears to the bitter end. If everybody did so, rather than write it off, less would believe they could get away with it. As has already been mentioned, even if they don't have the readies, it will create problems for the tenant going forward, hopefully encouraging them to change their ways. I don't do residential anymore, but I did find using large deposits helped to minimise such issues, as well as an exhaustive vetting process.

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    Thank you all for replies


    the background of the tenant  is that she is single mum with 2 kids who earns about 12k per year.After giving careful thought to various available options-on this occasion I am going to write off the debt due to her personal circumstances. I feel fortunate enough to be able to do this.



    I have obtained a county court judgment against her, which hopefully will alert other landlords.


    One big learning point for me is to never to let property to single mum with kids again

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    Why won't you register her with LRS?

    It will stop other LRS LL from taking her on as a tenant.

    You also need to ensure that the Registry Trust has the CCJ recorded

    Not all County Courts do this automatically.

    They sometimes wait for you to request it is recorded.

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    I am not sure any need Paul Barrett - the CCJ will flag up to Landlord who completes basic checks, never mind advanced checks with LRS.

    It sounds like you have made up your decision and I am not sure it would differ from mine. It is a decision on probability on if you can recover the sums due - it is possible with an attachment of earnings but a court consider household expenses when doing so, it is unlikely to be anything significant.

    With your CCJ in place - you may one day wake up to a payment being made. As the Tenant sorts her life out, CCJ's hanging around prevents people from renting, getting a mortgage, credit cards and even working in financial services. You never know.

    I have wrote about managing rent arrears previously with comments from some experts too.

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    My posts are not financial advice but often me rambling - passing time on a coffee break.
    Our team at Bespoke Finance offers Limited Company Buy-to-Let and Cheap Life Insurance.

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