Disclaimer:
This article provides general information only and does not constitute financial, legal, tax, or investment advice. Property investment involves risk. Always do your own research and seek personalised advice from qualified professionals before making investment decisions.
Key Takeaways
- Check the rent record promptly, contact the tenant, and record any agreed catch-up arrangement in writing.
- A landlord can use the Tenancy Services 14-day notice to remedy for rent arrears; the separate repeated-arrears process uses a 5-working-day threshold.
- If rent is at least 21 days in arrears, a landlord may apply to the Tenancy Tribunal for termination under section 55; it is not a landlord-issued termination notice.
- Keep detailed records of all arrears, payments, and communications with your tenant.
- The Tenancy Tribunal may make payment or termination orders when the statutory grounds and evidence are established.
- Use lawful, consistent application checks and keep accurate rent records; screening cannot guarantee future payment.
Rent arrears can quickly become a serious problem for landlords. Even a short period of unpaid rent affects your cash flow, and if the situation drags on, you could face significant financial losses. Knowing how to respond promptly and appropriately is essential.
Why Tenants Fall Behind
Understanding why tenants miss payments helps you respond appropriately. Common reasons include job loss, unexpected expenses, illness, relationship breakdown, or simple forgetfulness. Sometimes there are ongoing financial difficulties; other times it is a one-off event.
How you respond may depend on the tenant's history. A reliable tenant who misses one payment after two years is very different from a tenant who is consistently late within the first few months.
Immediate Steps When Rent Is Late
Do not wait and hope the tenant will sort it out. The longer you wait, the harder it becomes to recover arrears. Contact your tenant as soon as rent is overdue.
First Steps (Days 1 to 3):
- Day 1: Send a polite reminder via text or email
- Day 2 to 3: Follow up with a phone call if no response
- Document: Record every communication attempt and response
- Listen: Understand their situation before deciding on next steps
Many arrears situations are resolved at this stage. The tenant may have forgotten, had a bank issue, or experienced a temporary cash flow problem they can quickly fix.
The 14-Day Notice to Remedy
A landlord may issue a 14-day notice to remedy for unpaid rent. Do not confuse this with the repeated-arrears process, where rent must remain unpaid for at least 5 working days on each of three separate occasions within 90 days.
14-Day Notice Requirements:
- ☐ Must be in writing using the correct form
- ☐ State the exact amount of rent owed
- ☐ Specify the period the arrears relate to
- ☐ Give at least 14 days for the tenant to remedy
- ☐ Serve it correctly (in person, by post, or as agreed in the tenancy)
You can download the correct form from Tenancy Services. Using the wrong form or incorrect information can invalidate the notice, so take care to complete it accurately.
Tribunal Applications for Serious or Repeated Arrears
If rent is at least 21 days in arrears, section 55 allows a landlord to apply to the Tenancy Tribunal for termination. For a periodic tenancy, section 55(1)(aa) also provides a repeated-arrears route after three qualifying notices within 90 days.
Two Different Notices:
- 14-day notice to remedy: Requires the tenant to remedy the stated rent arrears within at least 14 days.
- Section 55 application: If rent is at least 21 days in arrears, the landlord may ask the Tenancy Tribunal to terminate the tenancy.
A landlord does not end the tenancy by serving a section 55 termination notice for 21 days of arrears. The landlord applies to the Tenancy Tribunal, which decides whether the statutory ground is established and what order to make.
The correct route depends on the facts and tenancy type. Check Tenancy Services guidance: remedy notices, 21-day arrears applications and repeated-arrears applications have different requirements and none guarantees termination.
Negotiating a Payment Plan
Sometimes tenants cannot pay the full arrears immediately but can catch up over time. A payment plan can work if the tenant is genuinely committed to clearing the debt.
Payment Plan Tips:
- Put the agreement in writing with specific amounts and dates
- Record the regular rent and the agreed additional catch-up amount
- Set realistic payments the tenant can actually afford
- State how missed catch-up payments will be handled through the lawful notice or dispute process
- Consider whether they can realistically afford the property going forward
Keep any payment plan realistic and in writing. If the plan fails, use the applicable notice, mediation or Tribunal process rather than assuming a particular outcome.
When to Apply to the Tenancy Tribunal
If the tenant does not pay within the 14-day notice period, or if they fail to stick to an agreed payment plan, you can apply to the Tenancy Tribunal.
The Tribunal may order payment of proven arrears and may terminate a tenancy when a statutory ground is established. Orders, costs and termination depend on the application, evidence and Tribunal decision.
Tribunal Application Checklist:
- Complete rental payment records showing all payments and arrears
- Copies of the tenancy agreement
- The 14-day notice to remedy (with proof of service)
- Records of all communication with the tenant
- Any payment plan agreements that were breached
Recovering Arrears After the Tenancy Ends
Bond deductions require the parties’ agreement or a Tenancy Tribunal order. A landlord can apply to the Tribunal for proven arrears, including an amount beyond the bond.
However, collecting money from former tenants can be difficult. Even with a Tribunal order, you may struggle to recover the funds if the tenant has no assets or income. This is why prevention and early action are so important.
Preventing Rent Arrears
Accurate rent records, clear payment terms and lawful, consistent application checks can help manage risk, but cannot guarantee that arrears will not occur.
Prevention Strategies:
- ☐ Conduct thorough reference checks with previous landlords
- ☐ Request only relevant application information and obtain consent for permitted checks
- ☐ Set clear payment terms in the tenancy agreement
- ☐ Offer automatic payment options to reduce forgotten payments
- ☐ Maintain good communication so tenants feel comfortable raising issues early
The Bottom Line
Check the rent record, communicate early, document agreements and follow the applicable legal process if informal resolution fails. The Tribunal can determine arrears and termination applications, but payment recovery and termination are not guaranteed.
Remember that many arrears situations involve tenants facing genuine hardship. A firm but fair approach often leads to better outcomes than aggressive tactics, both for recovering arrears and for maintaining a professional reputation as a landlord.