"Rent Holiday" asked for by tenant

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  • teerev
    replied
    Our agent is already primed to keep an eye on the Insolvency Register but we both feel that the possibility of bankruptcy for our tenant has now been avoided.

    The lady in question is retired, 67 years old and has some mobility problems so the work issue does not arise with her.

    Through unfortunate circumstance we seem to have ended up with three benefits tenants, one gentleman was working but is now on disability benefits and already on direct payments although he is hoping to get back to work again. The other one is just going on to direct payments, he was working when he first rented from us but has been diagnosed with serious heart problems and is unlikely to ever be able to work again.

    That's more than our fair share of benefits people but all of our other tenants are solid working people and seem likely to be with us in the long term.

    Leave a comment:


  • Perplexed
    replied
    That sounds OK, but make sure she really does not go bankrupt by regularly checking the Individual Insolvency Register (IIR) - link here: https://www.insolvencydirect.bis.gov.uk/eiir/

    I know Isuggested it, largely through a lack of alternatives, but you do need to be aware that there is one problem with the council paying the rent direct to the agent or landlord, and that is that if the tenant is found to be working or there have beenoverpayments, the council can claw it all back from the landlord. So watch out.

    I hope it all works out for you.

    Leave a comment:


  • teerev
    replied
    I thought it might be polite to provide an update on this situation after all of the excellent advice.

    Our letting agent has had a couple of conversations with this tenant and given her much help and advice, she has now realised that she does not need to go bankrupt and is rearranging her finances right now to pay her debts off over an extended period.

    To give her some time to do this we have agreed that she can pay two months rent on her next rent day and she has agreed to ask the Local Authority to pay her rent direct to our agent from then on which should help to minimize our risk in the future.

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  • Perplexed
    replied
    This is a very unfair predicament to put a LL in.

    A LL is not responsible for the consequences of a T's poor financial decisions.

    I would immediately contact the council supplying evidence of what the tenant is asking of you, and ask the council to pay her housing benefit to you direct. Chances are, they will class her as 'vulnerable' and pay direct, though I have no idea how long the switch will take as I don't take HB tenants.

    What T does about her own debts is T's problem.

    Personally I would get rid of this T as quickly as possible, before her debts became my losses.

    Leave a comment:


  • Ericthelobster
    replied
    I agree it's a sticky one. Don't know what I'd do myself in the circumstances; however whatever you decide, I would suggest you have everything very clearly stated in writing, and make it clear that this is a one-off offer and that she is in no doubt that you will evict without further ado if she doesn't adhere precisely to the agreement. And if she doesn't, then do exactly that whatever the excuses.

    Leave a comment:


  • jta
    replied
    teerev,

    You're too nice, I mean it. Rent is rent. Come back and tell us what has happened in three months from now please.

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  • teerev
    replied
    An update on this situation.

    I have just met with our letting agent and we agree that our tenant knows that we are good natured and reasonable and was trying it on by asking for three months "Rent Holiday", so we have agreed on the putting forward the following plan to her.

    We will give our tenant a one month "Rent Holiday".

    She will agree a repayment plan for this with our agent, we would be happy with something like £50.00 per month or give her a couple of months delay and then a larger sum to still repay the total within 12 months.

    Our tenant agrees to instruct the Local Authority to pay her rent covered by her benefits direct to our agent.

    Her 6 month tenancy agreement has just finished so will not be renewed.

    Our agent will issue a section 21 notice which will they will roll on and only invoke if her rent top up and arrears are not paid on time.

    Hopefully that should be enough help for her and at the same time limit our exposure to serious loss.

    Leave a comment:


  • jpkeates
    replied
    I'd be personally tempted to help the tenant.
    This is going to be more and more common as times remain tough.

    I'd suggest one or two month's "holiday" to help the tenant get back on their feet and then a period of lower rent, with the understanding that the arrears are to be paid back by the end of next year (or sometime).

    Some years ago my building society agreed to a much lower mortgage payment for 6 months, which (along with a new credit card) just about saved my financial bacon.
    Sometimes you just need a break to get back on top of things.

    You might very well get your fingers burned, but at least the tenant is trying to be constructive, and hasn't just taken the option of not paying a month's rent.

    Leave a comment:


  • Darth Wookie
    replied
    If it's less than 15k debt then she would be best advised to seek a Debt Relief Order. They are only about £95.
    Harlow District Council v Hall [2006] EWCA Civ 156 gives some useful guidance on the treatment of rent as a debt, where an arrangement to pay may be an acceptable breach of an order if the lesser of two evils is retain the family home. The insolvency service have also made it quite clear that where a repayment plan is within the financial means of the tenant (i.e. within the £50 excess that a DRO allows), they would not dismiss the DRO or consider it a serious breach. They recognise that the cost of an eviction, rehousing, void loss etc is a lot more expensive to creditors and the state than Mrs Miggins paying up to £50pcm towards an arrear.
    I wopuldn't give a rent holiday, however I'd accept it a little later if your own circumstances allow. No more than two months though.

    Leave a comment:


  • Lawcruncher
    replied
    jta is thinking along the right lines.

    What the tenant seems to be looking for is to clear the credit card debts ASAP. If she is looking to do a deal she ought to be looking to do it with the credit card companies. If the OP is willing to help out I think that rather than allow rent to stop altogether it should be reduced so that he still has something coming in and so that the catch up will not get away from the tenant once she has cleared the credit card debt. At least the tenant is not putting her head in the sand as so many do who get into debt.

    Leave a comment:


  • andybenw
    replied
    Can't this lady get an 'IVA' where she could still pay the rent in full and have a reduced liability for her credit card debt. As others have said I would be advising this woman of shelters advice that rent is her priority debt. The trouble coukd be is if you refuse point blank with no reasoning etc she could decide to take her 'rent holiday' unilaterally, and she will certainly not be able to be removed within her 3 month time frame to become bankrupt.

    Leave a comment:


  • mariner
    replied
    I agree, even Shelter say rent is a priority debt. If you want to help, assist by helping her to ensure she is claiming all available benefits/allowances and better debt management advice. £750 bankruptcy fee could pay a chunk of her outstanding CC debt and does a pensioner need a perfect credit rating, which would be more seriously affected by bankruptcy than CC debt. Giving her a 'rent holiay' to pay the fee may adversely rebound on you.

    Leave a comment:


  • emwithme
    replied
    Do not do it.

    She would not have been told this by the CAB (in fact, all debt charities that I've experienced* are very "hot" on telling people to make sure their rent is paid up to date when they go bankrupt because they would run the risk of becoming intentionally homeless at the point where it would be very difficult to get alternative accommodation). She would have been told not to jeopardise her home!

    Also - any debt that is extant at the time of the bankruptcy goes into the bankruptcy. She would not be allowed to pay you back any arrears because it would be seen as prioritising one creditor (you) over the others.

    *I have had some serious debt issues for most of my adult life - stupid decisions when I was 18 affecting the next nearly 20 years - culminating in bankruptcy a few years ago. I must admit that my rent was ALWAYS paid on time and in full during this...

    Leave a comment:


  • teerev
    replied
    Thanks very much for the comments and advice so far, you can see why I'm not sure of the best way to deal with this can't you.

    Just to answer some of the questions and add a little further information.
    Yes, our letting agent has the deposit lodged in a secure scheme so I'm sure that would be returned to us in case of default.

    We know and have good relationships with all of our tenants as our business office is in part of our main letting site where we have three shops and six flats, we also deal with any maintenance issues directly so they all talk to us on occasion.

    We don't deal with tenants directly on financial matters as we found out to our cost long ago that it was best to keep that sort of thing done at arms length through an agent, we do of course work closely with our agent and ultimately we make the final decisions.

    This lady spoke to me directly about her financial situation a week or so ago and it was obvious that bankruptcy was a far better option for her at her age than the alternative of debt management which could have taken her years to clear her debts and as a friend I gave her that advice, unfortunately for us whatever she does puts us in a difficult position.

    Her rent due day is today and she put the "Rent Holiday" idea forward to us this morning, I asked her to go the the letting agent with it to keep them between us and her financially and to make sure that everything is logged by them in case it all goes bad.

    They have already emailed me her proposals and I'm going to talk to them in the morning, my first thought was that three months was far too long, I was thinking along the lines of Hippogriff with a months rent and that along the artfuldodgers S21 idea may be the way forward, I'll update further after talking to our agent.

    Leave a comment:


  • elniinio
    replied
    I don't know what I would do in this situation. I think artful has the best advice as far as serving pre-emptive s21 Asap. I would add that it's worth thinking about possible outcomes if you say no. T could simply stop paying rent and it would take you more than 3 rent periods to evict her, plus you'd incur costs. Even if you used s8 and got a money order, if she is declared bankrupt that will be worth nothing. It's a tough one to call, good luck.

    Leave a comment:

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