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Limiting January rent arrears – steps tenants, landlords and agents can take

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A envelope with a red "Past due" stamp on it

At the start of the new year, some tenants will be under increased financial pressure as the cost of Christmas and high energy bills hit home. Fortunately, a range of official support channels and technological aids exist to help weather the storm.

As the intermediary between tenants and landlords, agents are perfectly placed to guide tenants through the options available to them if they are struggling to pay the rent.

Rent support

A range of grants and benefits exist to help some tenants who cannot afford the rent.

Those eligible for Universal Credit can apply for a housing payment. This payment can be applied to help cover rent to private landlords, offering crucial financial support during challenging times. While it may not cover the entire rent, the Local Housing Allowance (LHA) will be increased for most properties in April 2024. The government estimates its LHA contribution to be worth £785 in housing payments per eligible household for the 2024/25 tax year.

For those already behind on rent, an Alternative Payment Arrangement (APA) allows housing payments to be sent directly to landlords. Tenants can apply for an APA, but landlords can also apply. Additionally, tenants can explore advances or hardship payments from their main Universal Credit payment.

All tenants can also apply for extra help from the local council. Known as a Discretionary Housing Payment, this assistance can be used to cover rent arrears.

Reducing other bills

Another tactic open to financially stressed tenants is to reduce their other bills, thereby freeing up money for priority items like the rent.

Tenants paying council tax can apply for Council Tax Reduction from their local council. Eligibility criteria vary based on income, household circumstances and residency status, and when met offer a potential reduction of up to 100% on their council tax bill.

Struggling tenants can also seek help with energy bills or existing debts from various energy suppliers. Many companies such as British Gas, EDF, E.ON, Octopus Energy, OVO Energy, and Scottish Power provide support through hardship funds. The Warm Home Discount Scheme offers a £150 discount on electricity bills for winter 2023 to 2024, with eligibility criteria based on income and location.

Depending on the tenant and their personal circumstances, they may also be able to apply for additional benefits, which can be checked on the Entitled To website. Local councils can also offer cost of living support for energy and water bills, food, and other essential items.

Options for landlords

As well as informing tenants of the support available, landlords can further help tenants take proactive measures to reduce tenant energy bills through initiatives like ECO4 Flex.

This grant focuses on improving energy efficiency for private tenants receiving benefits, which can reduce the tenant’s energy bill and improve the property. While tenants need to make the application, landlords can help with the paperwork and must grant permission for any building work to take place.

Steps agents can take

For their part, agents can share the available support options with tenants and landlords and take other steps to help.

Forewarned is forearmed, so it is advisable to use an automated online rent payment platform like PayProp that allows tenants to make rent payments 24/7 into the agency client account. As a result, agents are alerted the moment the rent is late.

Following up with tenants falling into arrears is also key. While this process has traditionally been a laborious one, technology from systems like PayProp allows agents to automate informative and 100% bank-accurate e-mail and text message reminders to tenants in arrears, to great effect. One client, Essex letting agency Griffin Residential, recovered £60,000 in tenant arrears for their landlords thanks to this technology, helping with portfolio growth and landlord retention.

Avoiding unnecessary evictions

Ultimately, if tenant arrears become more serious, the final step is a legal claim of the outstanding debt and/or eviction. Agents need to be prepared to support their landlords in court if a tenant challenges either.

PayProp's automated client accounting platform maintains a comprehensive and uneditable digital log of all user actions and transactions made on it. Every rent payment, invoice, default and e-mail or text reminder is meticulously recorded. This full audit trail is key evidence in proving a tenant’s pattern of missed or incomplete payments during any future eviction hearing or when seeking a County Court Judgement.

By sharing the available support options with tenants and keeping them informed of how much they owe, agents can navigate the challenges posed by rent arrears and avoid unnecessary evictions, while demonstrating to landlords their superior skills and resources for managing rent arrears.

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