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During the Tenancy (England) | England | Preventing Controlling and Recovering Rent Arrears (England)

Rent arrears agreements

20 Nov 2021 | 1 comment

The existing tenants have built up a sizeable rent arrears since they haven’t paid any rent for over 12 months which they advise is due to pandemic issues.  Agreement has been reached with the tenants that the base rent will continue unchanged but they will pay an amount towards the arrears which will also include a fixed sum towards interest each month.  Based on the current amount of interest outstanding it will take approximately 4 years to pay the interest and 8 years to pay the rent arrears.  Do you have a template agreement for the tenants to sign to confirm their agreement to this. The amount to be paid in respect of arrears will be reviewed and discussed every 3 months

In addition the tenants have asked for a new rental agreement which to set out all terms.  This has been set to 6 months and the intention is to use the other documents section to include a pdf of the signed rental arrears agreement so that when the tenants electronically sign the tenancy agreement. Do you agree that this is a good approach to record the intentions of all parties?

Answer

1 Comment

  1. guildy

    Firstly, what interest rate is being charged? The maximum legally allowed is 3% above the Bank of England base rate (so is very low indeed and hardly worth the effort of calculating).

    We don’t have a template for a payment plan, as it’s generally unique and specific to individual circumstances, but we may look to see if there’s anything we can add in the future. The wording just wants to be simple and outline exactly what’s been agreed.

    We personally wouldn’t give a new tenancy agreement. This is because if you need to seek possession based on the arrears in the future (which is highly possible), it could become tricky and complicated because if the tenant makes payments, are they paying rent for the new tenancy (and as such there would be no arrears) or, are they paying arrears for the old tenancy (in which case the new tenancy will be in arrears).

    It gets very confusing so if the tenancy is just left alone, it’s simple to follow.

    In respect of delivery of the agreement, we would personally keep this entirely separate from anything else. Just sending an email with the details and getting an “I agree” response will be perfectly acceptable.

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