65% of ARLA landlords report tenants in arrears of rent

A new report from ARLA gives the unsurprising result that many more tenants are finding it difficult to pay their rent. With the massive number of people being made redundant and the general downturn in the economy this is hardly surprising The question is, what do you to about it? Here are my top tips

If you are a tenant:

• Apply for housing benefit if you think you are eligible. It takes time for the application to go through and rent is paid in arrears so you need to get on with this
  
• Keep your landlord informed. If you cannot afford to pay all your rent, pay as much as you can so your landlord can see that you are trying.
  
• If you are in a muddle, seek advice. You will find a list of debt advisors here.

If you are a landlord:

• Monitor carefully rent payments due to you, and contact tenants promptly if they fail to pay
  
• Attempt to reach agreement with tenants, it may even be worth reducing the rent (better a reduced rent with a known good tenant than a void)
  
• However make sure that letters requesting payment and possession notices are sent out in good time, as sometimes eviction is the only answer, particularly if the tenant is looking to be re-housed by the local authority.

Landlords may be interested in my article on different approaches to dealing with rent arrears, and my Rent Arrears Action Plan.

Rent increases in periodic tenancies

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

Most landlords know that after the fixed term of a tenancy has ended, if it is an assured or an assured shorthold tenancy, section 5 of the Housing Act 1988 intervenes and provides for a new 'periodic' tenancy to be created. This tenancy runs from month to month (if rent is paid monthly) or from week to week (if rent is paid weekly), and the section provides that it will be subject to the same terms and conditions as the preceding fixed term tenancy.

So that landlords are not stuck with the same rent forever, the act also provides for a special procedure, for these periodic tenancies, for increasing rent. This is set out in section 13. Landlords need to serve a special notice (which must be in the proper form) proposing a new rent. Tenants can challenge this and ask for it to be reviewed by the "Rent Assessment Committee" (part of the Residential Property Tribunal Service). If the rent is not challenged within one month, the proposed rent in the notice becomes the new rent.

But what is the situation where the tenancy agreement already includes a rent review clause? This situation was considered by the High Court in a recent case London District Properties Management Ltd v. Goolamy. Here Mr and Mrs Goolamy's tenancy agreement contained a rent review clause providing for rent to be increased annually by 5%. However the landlords had served a notice under s13 proposing a much higher increase. Which rent increase procedure would apply?

The Rent Assessment Committee held that they had no jurisdiction to review the rent as the clause in the tenancy agreement continued under s5. The Landlord appealed to the High Court.

The High Court allowed the appeal. They pointed out that at the start of section 13 two types of periodic tenancies are mentioned. Statutory periodic tenancies and all other periodic tenancies. With the statutory periodic tenancies, the section 13 procedures take precedence. With the other periodic tenancies, the contractual rent increase procedure (if any) takes precedence. So as this was a statutory periodic tenancy, the landlord could use the section 13 procedure. The case was therefore sent back to the Rent Assessment Committee to review the rent.

So landlords can use the s13 notice procedure when their tenancies run on under statute, even if their tenancy agreements include a rent review clause. Unless of course this case is appealed and the decision overturned.