Sharp rise in rental arrears as 300,000 tenants fail to pay on time

Honouring the rental agreement is treating everyone fairly. Anything else disadvantages one party to the agreement.

Well I have just one that has not paid this month, she has until the 25th to pay then the eviction process will begin .

• 03 June 2020 15:13 PM

Start all the paperwork that you can - NOW!
I bet you will not get paid on 25th!

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• Charlie Cooper
• 03 June 2020 19:19 PM

How about cut the tenant some slack? How would you feel in the same situation? I have 3 properties 1 hasn’t paid I’ve seen proof of redundancy and a furlough that’s enough for me.

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• Andrew townshend
• 03 June 2020 19:35 PM

Well I have just been paid 2/3 of the rent due with a promise of the balance due by Tuesday, so good on her so far

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Your lucky I've got one who hasn't paid for three months and has very little communication with the letting agents I use.Plus he makes excuses for me to carry out the EPC which is overdue.This tenant is also on a periodic contract and has only 5 months left on tenancy.Now I have to resort to paying a repossession firm.

• Jahan Khan
• 03 June 2020 11:01 AM

Hi Dawn an Epc is still valid with an existing tenant. If the tenant is on a periodic contract that means the fixed term has run out. Your agent should really be doing more. What is the tenants reason to not pay?

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• 03 June 2020 15:21 PM

Move on it very fast. Tell your tenant you will be doing it. Start the paperwork ASAP.
Follow it with a CCJ as soon as you can, as that will give your tenant a real problem.

Inform your Letting Agent and all other Letting Agents in the area that this tenant is a crook and non payer. Put it in the local classifieds too.

Keep chasing and chasing......You do NOT need to the EPC every years. Only the GAs Certificate is needed annually.

Good luck...but keep on their heads...It is your right to get your house back or the money.

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Actually just covid19 and his supposedly on going illness.I am residing in Rome Italy and that's why I paid for a so- called full management.All I was getting from them is I can't do anything.So I've contacted possession friend as my agents aren't that worried about me loosing money.Thanks for you help.

I think you need to do much more research, the people doing the research are not LL's just more people in suits. I know its far worse than 1 in 5 or in my case 4 in 5 wont cover it, only 2 lots up to date one lot NHS workers & other on Benefit, all others pay reduced amount I suspect in some cases because of Government interference, some are paying 50% of the rent, others paying nothing needless to say its now serious arrears about £17k & rising fast. I think the self-employed are the worst hit as work stopped over night. I think they will get used to the idea of not paying full rent a slippery slope indeed and some have said to me you'll be alright they have this mad idea that I will be getting Government money as if. I think your Digital Academics for Telegraph Money needs to think again.

Charlie.....cut them some slack? What slack do you get from the government?
Do you really think they will pay back the arrears? Dream on.....

They signed a joint agreement with you. They should now abide by that commitment.

No quarter should be held

Sorry.......Life is tough, very tough and you need to take care of No. 1

Surely it should be the case that tenants ensure the LL has the opportunity to operate as an effective business!?

So what tenants should do is invite the LL round to discuss matters.
Or do it over a video call.
So the tenant fully declares all their current circumstances.

The tenant may be able to make some of the rent etc.
It will be for the LL to make a business decision on whether he wishes to retain a tenant who after all remains liable for expensive things like Council Tax and utility standing charges.

If the tenant vacates then IMMEDIATELY the LL is liable.

So tenants should offer to vacate IMMEDIATELY but leave it for the LL to decide if they wish to retain the tenant.
Quite a few LL will wish to retain tenants as there will be few new tenants currently.

I think perhaps tenants should state they will remain but leave IMMEDIATELY the LL has sourced a replacement.
That gives the opportunity for the tenant to source another LL if indeed their LL does wish them to leave.
In the vast majority of cases tenants will be able to pay something which would probably be far preferable than just vacating leaving the LL liable for all the empty property costs.

Lets us say a LL has 5 properties with the tenants all offering to vacate IMMEDIATELY.
The LL agrees and now has 5 lots of

Council tax
Tv licence
Utility standing charges
Broadband

To pay.
Not an inconsiderable amount.
I doubt there are many tenants currently seeking new LL.
So perhaps in the overall scheme of things for many LL it makes business sense to retain tenants even if not receiving the full contractual rent.

The point being that invariably the tenant might resume normal work and then arrange with the LL to catch up on rent arrears.

I seriously doubt even if the tenants offered to vacate that LL wholesale would accept such an offer.

LL are far more pragmatic than that and the idea that LL would engage in mass requests for tenants to vacate is for the birds.

Most of the tenants currently rent defaulting wouldn't under normal circumstances be rent defaulting.
LL are practical people who would much prefer to discuss with tenants their situation and wouldn't normally respond with a knee jerk reaction to require the tenant to vacate.
But it should be for the LL to determine whether they wish to retain a tenant and NOT for a tenant to force the situation by refusing to vacate if required by the LL.

EVEN if the tenant isn't paying rent they are acting as a sort of property guardian and if the LL is unable to source new tenants leaving the rent defaulting tenant in place could be the wisest business decision for the LL.

Obviously every tenancy will be different and LL would need to take full regard of each tenants particular curcimstances.

So quite frankly even if tenants offered to vacate I doubt that many LL would want that to occur.
There are many sides in owning a rental property.
Being paid rent is just one of them albeit a very significant one!!

But I say to tenants do the honourable thing and offer to vacate if the LL after discussion doesn't wish to retain you.
My contention would be that many tenants would pleasantly surprised that in the majority of cases their LL wouldn't wish them to vacate.
Just give the LL the opportunity to make a business decision.

• m d
• 08 August 2020 16:19 PM

"So tenants should offer to vacate IMMEDIATELY but leave it for the LL to decide if they wish to retain the tenant...I think perhaps tenants should state they will remain but leave IMMEDIATELY the LL has sourced a replacement"

How about no? The tennant is likely in a world of **** financially, and they aren't going to put themselves in deeper to bail out your precarious business model. If they have another property to go to, they will without concern for your CT problems etc. If they don't then tough, use the courts. A business has to price risk and contingency into it's model. The absence of an instant eviction option for landlords should come as no surprise to you, and you shouldn't expect sympathy for this oversight!

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• Andrew townshend
• 08 August 2020 16:48 PM

@ md, yes risk, that is why most of us will not risk housing tenants on benefits, single mums and the under 25s, as in any business we are mindful of risk and are getting more and more careful of who we rent to, better an empty property than one with a freckless tenant in it.

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• m d
• 08 August 2020 17:10 PM

@Andrew that is fair enough, when in compliance with the law. A bad tennant is certainly worse than no tennant, but only a business with financial contingency can afford the short term cashflow implications of that kind of long term thinking.

The DSS issue is more nuanced though, as many employed tennants will be finding themselves claiming over the next year.

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• m d
• 08 August 2020 17:21 PM

@paul. I wish you well in exiting the BTL sector. I actually admire someone that can admitt they entered into a six (or seven?) figure business (using leverage to boot?) based upon a niave assumption of the law concerning the business. 3 months was always a best case scenario for regaining posession, and could be multiples of that for a tenant that goes the distance with the court process and uses the legal protections available to them to best advantage at each stage.

The real issue is that recent LLs have bid rental properties up to prices (and hence down to yields) that are just not viable with adequate contingency. 3% yield less 1% IO mortgage is dancing on a razor's edge if you have a non-payer or full refurb. The good BTL game peaked over a decade ago, and now we have a sector full of get-rich-quick chancers chasing one last burst of capital gains. People have been told that a heavily regulated people centric industry could be hands off and predictable, which is ludicrous if you think about it!

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m d

How quaint your ideas are.
BTL simply wouldn't be viable if eviction risks of years were factored into the business model.

Most BTL LL have priced their business model for BTL on being able to get rid of rent defaulting tenants after about 3 months.

Clearly this has been somewhat naive in light of the complete dysfunction of the eviction process.
This dysfunction is scheduled to become even worse.
It is the principal reason I am getting out of BTL.

Inability to recover a property from a rent defaulting tenant destroys the BTL business model.
Which is why I have determined to leave the PRS.

I will hopefully be converting to a lodger LL where eviction is easy.

Making eviction even more difficult will lead to more LL leaving the AST sector.

It will be the tenants that suffer as they need LL.

Most LL like me DON'T need to be LL.
Being a lodger LL will bring about the same returns.

The only annoying thing now is everyone is moving out of London buying up all the 4 bed homes😞
You appreciate that 4 bed homes with 4 unrelated occupants won't require an HMO mandatory licence.
Though of course in those idiot Council areas where Additional licensing is required you wouldn't wish to be a lodger LL with a 4 bed property.

• m d
• 08 August 2020 17:28 PM

You appreciate that anything can change, legally speaking re licensing?

I also doubt many recent LLs would relish sharing a 4 bed house with three randoms, as a lifestyle choice. It would rather detract from the "white RR Evoque" look to be seen as living in a house share. This model also doesn't scale, unless you plan to "live"in a dozen different houses at once...

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m d (17.21) I would agree with you, any landlord working on a 3% yield is a fool as are those that are mortgaged up to the eye brows, most of us on here have been in the game a long time and own our properties debt free , a lot are also hands on, I do my own repairs, re decorating and clean ups between tenants, being a proper landlord is a job of work, too many out there think we sit at our computers watching the money flow into our bank accounts, come out for a day with me and see what I do

• m d
• 08 August 2020 17:49 PM

I always say my business (as a LL) is people first, regulation second, houses a distant third. Too many recent LLs think that should be in reverse order.

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@ m d

Finances permitting of course it is very easy to be a lodger LL owning multiple homes.
Live in it once per month and the occupants can never claim to be tenants.

I'm not a rich LL and will struggle even to attain one 4 bed home.

But I aspire to be one.
Govt will never introduce tenant regulations for lodgers.

Providing a lodger LL can afford multiple residential homes there is nothing preventing this.

Obviously affording multiple residential mortgages would be a bit of an issue.

But if you consider those LL with say 15 BTL properties they could convert to lodger lettings reducing to about 3 residential properties potentially all unencumbered.

I know this is what I would be doing if I had 15 BTL properties.
The industry average of 75% leverage is clearly totally dysfunctional.

The most it should be is 25% if you factor in LHA as the only income on a worse case scenario.

Basing BTL on market rents has been revealed as a dodgy business model due to the dysfunctional eviction process.

I contend BTL lending should be based on what the LHA rate is for that property.

That would provide excellent financial resilience.

Using this strategy would have restricted growth in the BTL market.

I know if this had been the case I would have needed far more 'skin in the game' and would consequently only been able to afford 2 BTL properties.

But with such large deposits required few LL would have been able to invest.

As you intimate many BTL LL haven't factored in extreme financial resilience.
In light of the eviction ban etc this can be seen as somewhat naive.
Few LL have considered every tenant as a feckless one which is what they should have done.
The dysfunctional eviction process supports such tenant fecklessness compounded by additional Govt actions preventing even this from processing.

As you suggest financial resilience will be something that LL will need to consider afresh.
Some will like me consider BTL no longer viable as eviction is to be made harder not easier.

For me becoming a lodger LL if possible will give me financial resilience.
Even with 4 occupiers I can sleep on the sofa once per month to ensure my lodgers remain lodgers.

The only slight hassle is effectively I become an HMO LL.
Though lodgers are far easier to manage as they have few rights.

For me providing they comply with the lodger agreement they won't be removed!!

Same as tenants really but tenants knowing they can't be got rid of easily take the p.

Lodgers can't do this as the live-in LL is in charge not the lodger.

I'm surprised Govt DOESN'T just make all lodger lettings tax free.
It would result in many BTL LL converting to lodger lettings.
This would result in many BTL properties being sold.

• m d
• 08 August 2020 18:11 PM

I agree with a lot of what you say. My mentor (back when an 'injection' badge on your car was aspirational) preached that 1% MONTHLY yield was the cut off for viability when buying. As prices rose I stretched that a little, but subsequent rises brought me back over that threshold. I haven't bought in nearly 20 years, and have been selling selectively for over 10 as long-term tennants left.

If your "one day a month" lodger scheme ever becomes popular I can readily imagine laws being brought in to counter it. I can also imagine police officers bouncing it back as a civil matter if asked to evict a lodger that asserts they have a tennancy, and that LL only stays occasionally. Remember an AST is created automatically under certain circumstances. I can also imagine council busybodies crying "illegal eviction", and looking to catch someone out with questions like "show me your drivers license if you say that you live here".

On a lighter note you would be like Uday Hussein, never sleeping in the same bed two nights running!

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m d
Providing Council tax and all other bilks are in the homeowner's name there is little chance of a lodger being able to claim tenant status.

There is no law that requires a residential occupier to be in attendance at the property for any number of days in a month.

It is really the residential insurance requirement that requires a LL be at his residential property at least once per month.

This usually specifies that any absence longer than 31 days needs to advised to the residential insurance provider.

But there will be few difficulties in getting rid of lodgers who claim to be tenants.
Easy to remove a lodger.
Locks changed while they are out.
Any attempt by the evicted lodger lodger to gain access is breaking and entering.
An arrestable offence!!

But for the about 1.5 million leveraged BTL LL I doubt many could convert to lodger LL
So many BTL will need to sell up.
Few will be able to achieve being a lodger LL

• m d
• 08 August 2020 18:37 PM

I imagine the council would start by visiting every property concerned where the same person is paying CT for multiple addresses and asking the people there "do you live here, and does Mr X?". When informed that they are lodgers, but that the CT bill payer only visits once per month, the council busybody would tell them all about ASTs/illegal evictions/etc and make sure that they "knew their rights" and had contact details for the council in case they have any problems.

"just change the locks" has the disadvantage of them just getting in and doing the same to you. Several lodgers' word against one of yours would also potentially be very persuasive, even if you were the one bloodied. Coppers tend to view people as either "honest" or "pulling a fast one", and actively dislike helping the latter group on principle. Your one night a month scheme wouldn't pass the sniff test.

A police officer would also likely decline involvement once you admit that the person lives there in exchange for rent, and that you don't actually stay there regularly. Of course one could lie, but if the officers asked the neighbours who did and didn't live there you could be the one lead off in shackles!

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M d

You are simply wrong
No council could enforce a homeowner who has multiple homes into being a normal LL.
Doesn't matter if the LL is rarely there.
There is no law that prevents anyone owning multiple residential homes where they stay once per month.

Doesn't matter what any lodger status.
They would still be a lodger with few rights.

There is simply no way that lodgers will ever be able to deprive an OO of their property rights.
Indeed residing in an OO property becomes trespass if the lodgers refuse to vacate after due notice.
That is a criminal offence as the lodger becomes a squatter.
LL are entitled to remove such lodgers.

• m d
• 08 August 2020 19:37 PM

I don't know you Paul, maybe your mother's maiden name was Kray or Capone. Otherwise you are going to be relying on rule of law to defend your property rights, just like the rest of us. Failing the sniff test when dealing with the police tends to make everything a civil matter. I can also clearly visualize a policeman looking at you with a selection of warm beds to go to by your own admission, and three tennants saying they have nowhere else to go. I imagine that would end up with you given a section 5 public order act instruction to disperse "to avoid disturbing the neighbours", and the tennants going to their beds in your house. Section 5 is police for "you didn't pass the sniff test so I won't help you, and I have had enough of you so go away".

You admit that you entered into BTL under the niave assumption that no court would deny a LL their property rights, and found that to be far from true. I suggest if you ever put your one-night-per-month scheme into practice that a similar learning curve would apply.

Squatting and illegally evicting someone on an AST are both criminal offenses, but officers wouldn't get involved with that sort of splitting hairs. They tend to solve problems and move on, and suggest Citizen's advice for your next step.

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M d you are simply wrong
No Police Officer could prevent an OO their property rights.

What you suggest could undermine the whole RFRA strategy.
I can assure you it will NEVER happen.

The law is very careful when it comes to residential properties.

To convert residential to tenancy rights is an extreme measure.
I can assure you that OO will never face their properties being converted to tenanted properties.

A live-in LL may have as many homes as they wish.
Not many can afford more than one.


A LL may have lodgers in each of their homes.
Of course only one property would attract the RFRA although that is uncertain as it has been mooted that occupation by a live-in LL OO could reside one day every tax year to ensure lodger income tax free status.

I would suggest that for most LL the most they could afford will be one other home.
The RFRA may be used for the other property where lodgers occupy.

No Council will be able to change the status of lodgers.

In practice few LL will be able to afford an additional residential home.

I might be able to if combined with a resi mortgage.
But this won't be easy for many LL.
Indeed with a resi mortgage there is usually a stricture of no more than 2 lodgers.
Based on the prices of 4 bed houses I doubt I could afford a 3 bed.
But even a 2 bed is tax free lodger income.
I visit once per month minimum.
In my case that would be about £1700 pcm after all bills.
No S24 etc.
So as a lodger LL even with 2 lodgers far more profitable than BTL.
I currently reside in a home where I will be taking on 4 lodgers who as couples will be paying £2000pcm.
I stay there once per month.
All bills in my name.
The fact that I rarely stay at the property as I stay as a 'guest' elsewhere most of the time DOESN'T convert my lodgers to tenants!!

• m d
• 08 August 2020 20:35 PM

You reference the rent-a-room scheme, I think. That is a tax matter. You mention mortgage and buildings insurance requirements. None of that is relevant to the crux of the matter.

You tell someone out and they say no, or leave but come back. You will either have to forceably remove them or force entry into your own property, or have the police do this for you. This will likely end up being assessed by a police officer or a council housing officer, once either you or the tennnant picks up the phone.

The council bod will be looking to avoid having to emergency house someone, and will be an expert on the automatic creation of an AST. The police will take their word as gospel on matters of law, and tell you that you will have to go civil if you disagree.

A police officer will have had training on illegal evictions, public order offences, and telling people that everything is a civil matter. They won't have a clue about the ins and outs of your scheme, but in the abscence of a council bod they will fall back on the sniff test and the narrow areas of relevant law they are familiar with. If you actually live there, have an actual room full of possesions there, have that address on your drivers license etc then they will see things one way. If you start being evasive, or admit to not actually living there then they will see it the other way.

Can you tell me about the RFRA strategy? I haven't heard the term before.

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m d

Nope you are wrong again.
There is no need for any possesdions to be at a home.
The live-in LL attends with an overnight bag or stays during the day.
Simply no way a Council or Police bod can convert a home into a letting property providing all bills are in the owners name.
Which all mine are!
A lodger can never be a tenant if the LL occupies the property even a sofa once per month.

You seem to have an idea that an OO rights over multiple residential properties can be overridden by a Council bod.
You are wrong no matter what you state.


Everyone knows about the RFRA

Essentially this allows live-LL to receive a maximum of £7500 rental income tax free from lodgers.
That is a total amount.

Of course if more lodger income is received then the LL would declare that on their tax return.

Few LL bother with this as it is inviting strangers into the family home!!

But it is a useful facility to enc

LL rights are habitually overiden by missinterpreted statute applied by council housing officers. Do you think that you would be the first LL trying to dodge AST protections by claiming the tennants are merely lodgers? There is nothing new under the sun, and that is hardly a devious gambit. I repeat: an AST is automatically created under certain circumstances, even if nothing is ever put to paper.

A civil court may eventually rule in your favour on the nuances of what constitutes living in a house with lodgers, but that will be a harder and more protracted legal road than a normal AST eviction. In the interim it will be a council housing officer or a police officer that attends the initial call. They won't conduct a full court hearing on the doorstep, but will use their judgement and (limited relevant) training.

I am still interested to hear about RFRA strategy, the only thing google brought up was a US religious freedom restoration act. I doubt christian bakers and gay themed cakes were what you were referring to.

Oh sorry

You should look at
The Room For Rent Allowance.

Probably on the HMRC site.

This explains all.
This facility has been in place for about 35 years.
Indeed spareroom is a business founded on lodgers!!

As for OO rights being trounced.
This would make national news if a Council ever attempted to convert lodgers into tenants at one of many residential homes a LL may occupy.

There are many OO who have multiple residential homes where they take in lodgers.
They have no fear of such properties being converted to tenant properties which would be fraud anyway as resi lenders DON'T permit tenants unless CTL permission has been granted.
There would also be breach of insurance conditions and consequently mortgage conditions.
A resi lender would be entitled to call in a resi loan if a Council insisted a resi property was in fact a tenancy and not one of the OO homes.

So will never happen.
The day a lodger is converted to a tenant because the LL is rarely there is the day that the RFR A scheme falls apart.
Will never happen!

There is no way that my lodger strategy can be undermined.

I fully intend to sell all my properties and convert to being a lodger LL.
I will rarely be at the property but it will be my PPR even if I am the other side of the world.

Absence of a live-in LL from a PPR DOESN'T convert lodgers to tenants and never will.
If that was the case then lodgers would all be removed from resi properties.

• m d
• 08 August 2020 22:04 PM

Which property would you be on the electoral register at? Obviously a housing officer would have access to that info, and would likely rely on it to determine if you were living at the address. Breaching buildings insurance or mortgage conditions wouldn't really preclude an AST being inferred to exist, as landlords regularly do such things.

The fact that residential mortgage lenders already have conditions limiting the number of lodgers shows that they consider the inadvertent creation of an AST a credible risk. I would also argue that the rent a room scheme was never intended to subvert an AST when a landlord rents a property out while not living in it, so enforcing the original intent wouldn't really damage the scheme. Ultimately we will have to agree to disagree.

The .gov website uses the term rent a room scheme, which I had obvs heard of, hence I hadn't encountered the RFRA anacronym.

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Electoral Roll registration has nothing to do with OO rights.

It is simply the case that a lodger may never become a tenant as long as the property is one of many homes for a LL.

There are few LL that can afford multiple resi properties.

But if they can they are entitled to as many lodgers as they want especially if unmortgaged.

Lenders normally state no more than 2 lodgers to prevent potential HMO status.
Nothing to do with fear of lodgers being converted to tenants.

There are now HMO Mandatory and Additional Licensing schemes which effectively prevent lodger numbers

This is why I state 4 bed properties are the maximum needed as it avoids the HMO Mandatory Licence which makes most properties unviable.
This is why many 5th occupants have been booted out to avoid HMO Licensing which cannot be achieved unless at considerable unworthwhile expense.

I believe that with mass unemployment many OO will see taking in lodgers as an excellent way to achieve tax free income.

Yes loss of privacy but needs must and all that!

It is a national scandal that so many spare rooms are available but underutilised.

Perhaps economics will force OO to take in lodgers.
A good thing in my book as it promotes workforce flexibility and mobility.

Indeed that is why the Govt originally introduced the RFRA.

Fewer rights hasn't prevented the lodger industry from flourishing.
I would contend exactly the opposite has occurred!

Lodgers are good for the economy.
I have never removed a lodger.
They all vacated on their own accord having given the requisite notice.

As AST LL downsize to multiple resi properties lodger renting will become far more popular.
The main reason being LL can get rid of rent defaulting lodgers easily.
It is the inability to do this with tenants that is causing myself and other LL to get out of the letting to tenants game.
It simply ISN'T worth the risk of being landed with a feckless tenant.
Getting rid of feckless lodgers is comparatively easy!!