What to do when you have Rent Arrears

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Rent arrears in Scotland are what is known as a priority debt. This is because the consequence of not paying your rent can be quite severe, in that your landlord may raise a court action against you and ask either a Court or Tribunal to issue an eviction order.

How this is done depends largely on whether your landlord is a private landlord or a social landlord, such as a local authority or a housing association.

Rent arrears can arise for a variety of different reasons, and it is important to understand why you are accruing rent arrears, as there may be steps that you can take to prevent them getting worse.

Steps to take when you have Rent Arrears

There are a number of steps you should take when you have rent arrears, or you are worried you are not going to be able to pay your rent and may end up with them.

Ensure you are Getting all the Benefits you are Entitled To

You can do this by completing a benefit check online or getting advice from your local advice agency.

Complete a Budget

The best way to understand your finances is to complete a budget showing all your income and expenditure.

Write to your Landlord

Ignoring a problem is never a solution. Many landlords will be happy to work with you if they know you are engaging with them and trying to tackle the problem.

Propose a Repayment Plan to your Landlord

Ultimately, rent arrears need to be paid, if you want to avoid your landlord taking legal action. The best way to do this is through an affordable repayment plan.

Understanding why you are in Rent Arrears?

The reasons you are getting into arrears is important.

It may be because you, or someone in your household has recently lost their job or experienced a drop in their income. If this is the case, you should explore what benefits you may be entitled to, as this may provide you with additional financial support that can help you pay your rent.

If you are in a private residential tenancy, it may be because the amount you are entitled to for your housing costs through the benefit system, is capped. That is the Government will not pay the full amount of rent that you are required to pay.

This can be because the maximum benefit you are entitled to is capped and may not be sufficient to cover your full rent. This can happen when you rent in the private sector tenancy, because the maximum rent the Government will pay depends on where you live and the number of bedrooms you require.

You can find out more about what is the maximum amount the Government will pay by visiting this Scottish Government webpage for 2020-21. The figures are updated every year and show the maximum you can claim towards your housing cost if you live in Scotland.

Your benefits may also be capped. This could be because the amount of benefits you are entitled to receive is capped.  The best way to discover if you are affected by a benefit cap is to use the online benefit calculator.

Another reason you may be accruing rent arrears is because you are having deductions made from your benefits. This could be because you have debts that are being deducted from your benefits or you have other people living with you who are not treated as being dependent on you for support.

Alternatively, it could be because you are not receiving full help with your housing costs as you have more bedrooms than you need (bedroom tax).

Discretionary Housing Payments

You may be able to apply to your local authority for additional help if you do have a shortfall in your rent each month.  Local Authorities can make what is known as a Discretionary Housing Payment. DHPs are not meant to be long term and are usually just made for a temporary period, although the Scottish Government has committed to mitigating the effects of the bedroom tax using Discretionary Housing Payments.

Writing to your Landlord

When you have rent arrears, or anticipate you are about to go into rent arrears, you should notify your landlord immediately. This will usually help them understand you are not just willfully refusing to pay them and are working to rectify the problem.

A template letter you can use, is below.

Dear (Landlord’s Name/Sir or Madam)

I am writing as I am currently in arrears with my rent and want you to know that I am taking steps to address this.

The reasons I am in arrears is because [*delete as appropriate]:

*I am not entitled to full help in paying my rent because of the Local Housing Allowance Rates;

*I have recently lost my job/suffered a fall income and I cannot afford to pay my rent;

*I am subject to a benefit cap and I am not entitled to help with the full cost of my rent;

I ask that you be patient with me and do not take any action at present. I can assure you [*delete as appropriate] *I am currently seeking advice [find your local advice agency here] and will be back in touch shortly with proposals as to how I intend to meet my rent in full and pay off any arrears;  *I have made an application for Universal Credit and I believe I will be entitled to help with my housing costs once an award is made. I will then make proposals to you as to how I intend to repay my arrears.

Yours sincerely

Asking your Landlord to Reduce how much you pay in Rent

Where you are in private rent accommodation and the amount your landlord is charging you in rent is more than you are entitled to because of the Local Housing Allowance, you can also write to your landlord and ask they consider reducing the amount of rent you are due to pay. This may seem unlikely, but some landlords will be happy to do so, on a temporary basis, or even permanently, if they are guaranteed they will get their rent each month and keep you as a tenant.

Dear (Landlord’s Name/Sir or Madam)

I am writing as I am currently not able to pay the full contractual rent that is required under our current tenancy agreement.

I have recently been made *unemployed/ lost my job/ experienced drop in my household income because… and have had to apply for Universal Credit to obtain assistance with my housing costs [*delete as appropriate].

It appears that the maximum amount that Universal Credit will pay is £xxx.xx each month.  This means each month I will be short £xxx.xx [the difference between what you should be paying and what Universal Credit will pay].

I would like to ask that you consider reducing the rent I have to pay each month to £xxx.xx  [state the amount you can afford to pay] as I will struggle to make up the difference without experiencing financial difficulties.

I can assure you that I propose this reduction to be temporary and once my situation improves, I will resume normal monthly payments.

Yours sincerely

Making an Offer of Payment to your Landlord

When you are making an offer to your landlord, the first thing you want to make sure is you can pay your normal monthly rent first.

The reason this is important, is if you cannot pay your monthly rent, then your arrears are only going to increase.

The priority, therefore, is first get to a place where you are no longer accruing rent arrears. Once you have done that you can then make an offer towards your arrears. This is best done by sending you landlord an income and expenditure that shows what you have coming in and what you have going out and what your disposable income is. This is the difference between your income and expenditure.

You can then make them an offer to your rent arrears from this disposable income.

So if you have a monthly rent charge of £500 and you do an income and expenditure that shows you have £1,500 income per month and expenditure of £1,300 per month, then the £1,300 should include you £500 rent per month. You will then have disposable income of £200 per month (£1,500-£1,300).

If your arrears are £800, you would then make an offer to pay this from your disposable income of £200.

You do not need offer your full disposable income towards your rent arrears each month, although you may choose to. You may, however, have other priority debts that must be paid, such as Council Tax Arrears. You also may want to keep some of your disposable income to pay towards other non-priority debts you have.  This is a type of debt management, so reading our page on Debt Management may help you understand how to make your offer.

You may, for example, offer £100 per month towards your arrears, which means you will pay your £500 per month towards your normal rent and another £100 towards your arrears. This is £600 in total and will mean your rent arrears will be cleared off in 8 months (£800 divided by £100).

This may, however, not be enough and your landlord may want the arrears paid off sooner. In which case, you may want to increase your offer. So, if you want to pay the arrears off in 6 months, you will offer payments of £500 per month towards your rent, each month, plus £133 per month (£800 divided by 6).

The more you offer to your landlord will reduce your disposable income, so this may impact on your ability to pay off other debts.

What if your Landlord Refuse your Offer?

When a Landlord refuses your offer towards your rent arrears, you can offer more, but sometimes you will not be able to, or what you can offer will not be acceptable to them.

This does not mean your Landlord can just evict you.

For any Landlord to evict you, they will need to obtain an Order from a Tribunal or a Court. How, they do this will depend on what kind of tenancy you have and who your landlord is.

There are, therefore, different rules for Private Landlords and Registered Social Landlords. Equally, there are different rules when you live in the same property as your landlord (known as a Resident Landlord) and share communal living space with them (such as a kitchen, bathroom etc.). In such situations your Landlord may be able to evict you without a Court or Tribunal Order but should provide you with a reasonable amount of notice.

You should seek specialist housing advice if you are in this situation.

Pre-Action Requirements

Social Landlords are usually Local Authorities and Registered Housing Associations. The type of tenancy you will normally have is a Scottish Secured Tenancy, or sometimes a Scottish Short Secure Tenancy.

If your landlord wants to evict you for rent arrears, they must take several different steps first. These involve giving you a notice that they intend to raise legal action against you, but before they can even do this, they must satisfy what are known as Pre-Action Requirements.

Below is a Summary of what the Pre-Action Requirements are:

  • Your Landlord must give clear information about the tenancy agreement and the unpaid rent or other financial obligations.
  • They must make reasonable efforts to give help and advice on eligibility for housing benefit and other types of financial assistance.
  • They must give information about sources of help and advice with the management of debt.
  • They must make reasonable efforts to agree with the tenant a reasonable plan for future payments.
  • They must consider the likely result of any application for housing benefit that has not yet been decided.
  • They must consider other steps the tenant is taking which are likely to result in payment within a reasonable time.
  • They must consider whether the tenant is complying with the terms of an agreed plan for future payments; and
  • Finally, they must encourage the tenant to contact their local authority (where the local authority is not the landlord).

Notice of Intention to Raise Action – Social Landlords

Once a Social Landlord decides that they have completed all the Pre-Action Requirements and that they want to raise a Court Action against you to obtain an Eviction Order, they must then give you notice of their intentions.

This is called a Notice of Proceedings.

At present, because of the Covid 19 Crisis, Landlords must give 6 months’ notice of their intentions to begin proceedings. Previously it was 4 weeks.

They must also contact your Local Authority and inform them that they are raising an action to recover possession of the property.

Notice to Leave – Private Landlords

Private Landlords also must serve a Notice to Leave when they intend to raise an action to evict you. This is known as a Notice to Leave.

At present, because of the Coronavirus Crisis, where the grounds they are proceeding on is rent arrears, they must give you six months’ notice. This is only a temporary change to the normal requirement to give 28 days notice.

They must also give notice to your Local Authority that they intend to begin proceedings to evict you.

If you receive a Notice of Proceedings from a Social Landlord or a Notice to Leave from a Private Landlord, you should seek advice.

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