Non-payment of rent
Demand for rent
A tenant is obliged to pay rent under a lease or tenancy agreement. There is no requirement that the landlord demands payment of the rent from the tenant. However, a demand for rent can serve as a useful reminder to ensure that the tenant pays the rent in full and on time.
A landlord may only take enforcement proceedings under a lease or tenancy agreement after the rent has been formally demanded within the terms set out within the lease/tenancy agreement. A demand would not be needed if their tenancy agreement contains a clause confirming that the rent is to be paid regardless of whether it is formally demanded or not. There is a set procedure by which rent may be formally demanded.
It's good practice for a demand rent letter to be sent to advise a tenant that the rent is due.
Proceedings against the tenant
If the tenant fails to pay the rent, which they promise or contract to pay under the lease, the landlord can take the following actions:
The landlord may commence court action against the tenant for recovery of arrears of rent. It will depend on the amount of the arrears as to which court proceedings should be issued. The Landlord may do this if the tenant has already vacated the property. If the arrears are under £3,000 then the case can proceed via the small claims court. If the arrears amount to between £3,000 and £30,000 then the case will be heard in the county court. If the arrears exceed £30,000 the case must proceed in the High Court. Once a court order is obtained then the landlord can apply to the EJO for enforcement of that order.
Ejectment proceedings and arrears of rent
This action is to gain possession of the property and seek an order for rent arrears. Prior to ejectment proceedings being issued a Notice to Quit should be sent. This is a letter (for which there is no prescribed form) delivered to the tenant (ideally personally) advising them of the arrears of rent and that they are required to deliver up possession of the property (subject of course to this being permitted under the lease) on or before the effective date. The effective date quoted must be sufficient notice under the Private Tenancies NI Order, e.g. if the tenancy is less than 5 years in duration then it should provide for no less than 4 weeks' notice.
Provided a notice to quit was given to the tenant and the lease permits it, ejectment proceedings can be used for possession and arrears of rent under one set of proceedings. These proceedings will require attendance at court. If successful, the court will issue an order for eviction and judgment for the arrears. Should the tenant fail to comply with either part of the order, separate proceedings are required to have the court order enforced by the Enforcement of Judgments Office.
For more information see ourarticle
Once a notice to quit has been issued, the landlord should not accept any payments from the debtor without seeking legal advice as this may have implications on the right to recover or claim possession.
Bankruptcy and winding-up
If the tenant is an individual and the sum owed to the landlord is £5,000 or more, the landlord may consider serving a statutory demand on the tenant with a view to commence bankruptcy proceedings against them. If the tenant is a company and the sum owed is more than £750 the landlord could serve a statutory demand to show that the company is unable to pay its debts and if so proceed with liquidation proceedings against the company. However, the landlord has to bear in mind that the bankruptcy or liquidation of the tenant may reduce the chance of them getting paid in full since the landlord will become an ordinary unsecured creditor on the bankruptcy of the tenant.
Calling on the sub-tenant
If the premises have been sub-let, the head landlord can serve notice on the sub-tenant requiring them to pay their rent to the head landlord until the arrears are paid off. There are some conditions that the head landlord must fulfil before doing this, so legal advice is essential.