The cost of living crisis could affect the ability of some tenants to pay their rent. We’ve put together a guide to help you manage this scenario, from assessing your tenants' financial situation to arranging a payment plan, including free templates.
Concerns around the ability of tenants to pay their rent during the pandemic spurred the government to set out guidance on how to mediate around rent arrears. Now in the midst of an energy and cost of living crisis fuelling the rising cost of living, agents and landlords are still encouraged to discuss and understand your tenants' circumstances before taking a claim to the courts.
We’ve outlined some of the steps you can take to manage this scenario, which includes downloadable and editable templates that you can use in your communications with your tenants and landlords.
Reach out to your tenants and get an understanding of their financial situation
A good relationship with your tenants is going to be more important than ever if you have to manage a situation where they can’t pay part or all of their rent. If you have a tenant who has fallen into arrears, you should reach out to them in the first instance and let them know that you’re there to help. Landlords and agents are advised to only consider seeking possession of a property through the courts "when you have tried all other means of resolving your situation".
Even if your tenant hasn't given an indication that they're struggling financially, you may wish to contact them preemptively in light of the rising cost of living, to ask them to get in touch with you as soon as possible if they think they will have difficulty paying their rent. This means that it won't come as a surprise at a later stage when the situation has worsened.
If any of your tenants indicate that they think paying rent could become an issue, follow up by sending them a rent relief questionnaire to get a better understanding of their current financial situation. This information will give you the best opportunity to build a viable payment plan together if needed, as well as providing you with evidence that you took steps early to help your tenants.
Download the rent relief email templates
Download the rent relief assessment questionnaire template
Help your tenants take steps to obtain viable financial assistance
Your tenants might be able to access other financial support before it’s necessary to arrange a rent payment plan with them, which means it’s important that you have a good understanding of the government support that’s in place so you can show them other ways to get help. To help with energy bills, there are various forms of support available, from energy bill and council tax rebates to the warm home discount scheme and winter fuel payments.
If your tenants are unable to work because they are isolating and are not covered by their employer’s sick pay, they could still be eligible for Statutory Sick Pay (SSP), which covers every day that they’re in isolation. Other options include the ‘new style’ Jobseeker’s Allowance and the ‘new style’ Employment and Support Allowance, for those who have a disability or health condition that affects how much they can work. Both of these can be applied for online.
Arrange and agree to a rent payment plan
If you’ve done everything you can to understand your tenants’ financial situation and show them where they can get financial assistance and they’re still unable to pay part or all of their rent, you will need to take steps to arrange and agree to a payment plan with them. The government’s guidance suggests that payment plans could include “reaching a temporary agreement not to seek possession action for a period of time and instead accept a lower level of rent, or agree to a plan to pay off arrears at a later date”. It’s important that you make sure that your tenants understand their liabilities before they agree to a payment plan to ensure that the plan is a realistic one, which is why engaging with them as early as possible and getting a good understanding of their financial situation as soon as you can is vital.
Download payment plan email templates for tenants and landlords
Download the payment plan agreement template
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