How to Recover Rent Arrears from Residential and Commercial Tenants

December 2017

Recovery of Rent Arrears by Residential and Commercial Landlords  

Whether you have a large property investment portfolio or a single rental property, as a landlord you rely on regular rent payments to keep your property rental business afloat. Landlords therefore need to take swift and decisive action when rent is paid late or not paid at all.

Our Rent Arrears documents have recently been updated and expanded. They include Letter of Claim templates that comply with the new Pre-Action Protocol for Debt Claims. Below we look at the new Protocol and how it affects residential and commercial landlords.

What is the Pre-Action Protocol for Debt Claims?

The Protocol sets out the steps a creditor and debtor (in this case the landlord and tenant) should take before commencing proceedings for debt recovery (here, recovery of rent arrears). If these steps are followed it means that, before the matter arrives at court, the parties will have exchanged sufficient information to understand each other’s position and make decisions about how to proceed.

When Does the Protocol Apply?

The Protocol applies where a landlord wishes to bring court proceedings for recovery of rent arrears against an individual tenant, as opposed to a corporate tenant. So most residential tenancies are covered by the Protocol, but not company lets. Commercial landlords are affected if their tenant is a sole trader.

What Does the Protocol Require?

The Protocol requires a landlord, before starting court proceedings, to provide certain information to the tenant. This information is presented in a Letter of Claim. The tenant must reply within 30 days using a pro-forma Reply Form.

The parties are then required to provide copies of relevant documentation and attempt to settle the matter without involving the court. If the matter does proceed to court, the landlord must give the tenant 14 days’ notice of their intention to start proceedings.

What About Section 8 Notices?

Residential landlords can still serve a Section 8 Notice Seeking Possession on the ground of the tenant’s rent arrears. A Letter of Claim under the Protocol should be sent to the tenant shortly after the arrears arise. A Section 8 Notice can be served when the rent arrears have reached the required level (two months where rent is paid monthly).

What About Other Remedies for Commercial Landlords?

The Protocol does not affect landlords’ ability to seek forfeiture of the lease, to use Commercial Rent Arrears Recovery (CRAR) or to serve a statutory demand. These are not debt claims so are not covered by the Protocol.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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