Rent Arrears: What to do when a tenant owes you money

Every landlord will have trouble making sure tenants pay their rent at some time. This guide explains how to keep track of the payments and what to do when a tenant in rent arrears.

Keep good records

Pile of old documents in colorful cardboard folders signifying records kept by landlords for rent arrears

Admin is a tedious but necessary job for landlords.

One day, that pile of paperwork gathering dust in the corner will likely provide the evidence you need to recoup unpaid rent or evict a tenant.

It would help your case if you kept a log showing:

  • The date rent is due
  • The time the payment covers
  • How much the tenant should pay
  • What they paid
  • When the tenant paid
  • Any amount outstanding

Get into the routine of sending a periodic rent statement to your tenant so they can see the state of their account.

Sending a statement is ideal for shared rentals as the tenants can see who has paid their rent – and who hasn’t.

If you have to apply to a court to repossess the property, the judge will expect to see a comprehensive rent statement as part of your evidence.

What is a tenant is in rent arrears?

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If a tenant hasn’t paid the rent fully and on time, you need to find out why.

Your objective is to get the money. Failing that, you may have to go to court to evict the tenant.

The proper way to do this is to work on a plan that offers the tenant an opportunity to pay the rent.

The plan has several steps

Step 1 – Formal Demand

Don’t just wait and hope the tenant will pay. Instead, after no more than seven days, send a formal demand for the money owed in writing.

If the home is rented on a joint tenancy or with a guarantor, write to them as well.

Explain to the joint tenants that they are legally ‘joint and severally’ liable to pay any arrears even if they feel they have paid what they regard as their share of the rent.

Tell any guarantor that the rent is in arrears and they are liable for any debt under the agreement they signed.

Step 2 – Reminder of Formal Demand

After 14 days, send a reminder to the tenant(s) and guarantor.

Step 3 – Court Warning

After 21 days, send a final demand that warns you intend to take legal action to recover the money. Your letter should ask for immediate payment of any arrears and an assurance from the tenant that they will pay future rent fully and on time. You should explain if the rent stays in arrears for two months, you will consider making an application to the court to take the property back. Keep copies of all correspondence you send and any replies. Some landlords send the letters by signed-for post or recorded delivery to prove the tenant received them.

If you are unsure of what to write, here is a template letter:


Send a copy to each person named on the tenancy agreement and any guarantor. If you have not received the outstanding rent by the time the next month’s rent is due, you have a right to make an application to a court to regain your property.

Serving a Section 8 or Section 21 notice to quit

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Section 8 and Section 21 refer to the Housing Act 1998 clauses that let a landlord evict tenants in England and Wales.

In simple terms:

  • A Section 8 notice is how landlords take back a property from renters in breach of a tenancy agreement
  • A Section 21 notice is how landlords regain possession of a property by ending a tenancy agreement

Many landlords opt for a Section 21 notice because they do not have to prove breach of contract.

However, this route means you cannot recoup any unpaid rent.

You must use the latest official form from one of these links.

  • A certification of service form (N215) to show you gave the notice to quit to your tenant. A court will need this form if your tenant has not left by the date specified on the notice to quit.

You must carefully complete the form with the correct names and dates. If you don’t, a court may reject the notice, and you must start the process again, losing time and money.

The government website has notes on how to complete a Section 21 notice and a guide to the conditions to satisfy to issue a valid Section 8 or Section 21 notice.

You should take legal advice if you are unsure which notice to serve.

How to deal with a tenant in rent arrears FAQ

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How much notice do I have to give a tenant with rent arrears?

Currently, the length of notice depends on the government’s coronavirus rules.

In England, the notice period when serving notice under Section 8 or Section 21 after June 21, 2021, is four months.

In Wales, the notice period for serving both forms is six months.

What happens if the tenant leaves before the notice ends?

Nothing. You do not have to go to court and can gain possession of the property

Why can’t I reclaim rent arrears under a Section 21 notice?

Because under Section 21, you are telling the tenant you wish to end the tenancy through no fault of theirs. Section 221 allows landlords to take back a home even if the renter has not broken the terms of a tenancy agreement.

My tenant pays rent in cash – should I give a receipt?

Yes. You should give a receipt as a good business practice and keep a copy in your records. However, it’s a good idea to ask your tenant to pay through a bank so you can both track the money.

I rent through a letting agent – will they serve a Section 21 notice for me?

Generally, letting agents will complete and serve the notice for you or refer you to a solicitor.

Can I set up a repayment plan with the tenant in arrears?

You and your tenant can agree a schedule to repay the rent arrears. You should ensure the repayments are affordable and unlikely to get the tenant into further financial difficulties. Put the terms in writing and both sign and date the document.

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