A fine mess: when tenants don’t pay their last month’s rent

A fine mess: when tenants don’t pay their last month’s rent

A tenant refusing to pay their last month’s rent is a perennial property problem. They do it because they’re worried about getting their deposit back. So they tell the landlord to keep their deposit in return for waiving the final rental payment. 

This seems like a fair exchange from a tenant’s perspective. After all, a deposit is usually five weeks’ rent. The landlord therefore, in theory, retains a fair amount that includes a little extra for cleaning and wear and tear. What’s not to like?  

If only things were that simple in practice. Some tenants refuse to pay their last month’s rent yet leave behind a trail of wanton destruction that the deposit simply won’t cover. This leaves landlords in a hole and out of pocket.

Meanwhile, responsible tenants sometimes fall foul of lying landlords. They pay their last month’s rent, leave the property in immaculate condition, but find that their unscrupulous landlord tries to retain the deposit anyway. 

So what’s the solution? We try to navigate this stickiest of wickets below…

What the law says

The current regulations are based on the Tenant Fees Act of 2019, which reduced the financial burden on tenants and prevented unfair charges. It capped deposits at 5 weeks’ rent for tenants paying under £50,000 per year, and 6 weeks’ rent for those paying more. 

The law dictates that deposits must always be held in a government-backed Tenant Deposit Scheme (TDS). This ensures that landlords can’t simply withhold deposits willy-nilly. Instead the tenant has to agree to whatever the landlord retains.

If there’s a dispute, then the impartial TDS adjudicates a fair outcome. Landlords can’t touch the deposit until the problem is resolved, and they must return the deposit within 10 days once a settlement is agreed. 

The tenants view…

Tenants often fear that landlords use the deposit to top up their earnings and fund upgrades to their property. Consequently, they expect landlords to be incredibly picky at the end of a tenancy in order to keep as much money as possible. 

Although most landlords are on the level, the tenant has no way of knowing this. Therefore, they skip their last month’s rent in the quest for certainty. They can then put their unpaid rent towards the deposit on their next rental. 

It’s important to remember that some tenants, particularly vulnerable ones, might not be able to afford a deposit on a new tenancy if their previous deposit was retained. What’s more, they realise that there’s little that landlords can do to stop them. 

The landlord’s view…

Sadly, there’s not a fat lot landlords can do in these circumstances. If they accept the situation, and retain the deposit in lieu of the final rental payment, they will have little in reserve for cleaning and repairs. They’ll also forfeit their ability to use the TDS’s dispute resolution service. Drat.

Landlords’ only real option, therefore, is to pursue the tenant for monies owed. They can seek a County Court Judgement (CCJ) to crush the tenant’s credit rating. However, it’s very hard to pursue tenants that have moved out and ‘done a runner’. Taking legal action requires a forwarding address. What’s more, legal action won’t be effective if the tenant simply doesn’t have the money.

There is one rather cunning alternative, though. If the tenant has a job, landlords can apply for an attachment of earnings order after securing a CCJ. Then they can use the tenant’s workplace as the forwarding address. This is very time-consuming though. 

Light at the end of the tunnel? 

A way through this particularly tricky tunnel may be the advent of zero deposits. This solution makes life more affordable for tenants whilst simultaneously protecting landlords. But how does it work?

Basically, tenants pay a lower upfront cost of one week’s rent (not quite ‘zero’ but close to it) followed by a set up fee of about £50. Then there’s just an additional small recurring annual fee. If the property is damaged at the end of the tenancy, then tenants simply pay the landlord directly. The TDS will, once again, adjudicate in the event of a dispute. 

Tenants love this solution because their upfront fees are limited and they’re not on the hook, waiting for unscrupulous landlords to reel in their deposit, at the end of the tenancy. The result? There’s simply no need to withhold their last month’s rent. 

Landlords, on the other hand, also like the solution because they’re guaranteed six week’s security – more than the usual five weeks – plus they don’t pay a penny. The tenant covers the costs.

Furthermore, landlords love the way that zero deposits speed up the beginning and end of every tenancy. Void periods are shortened and tenants are still liable for the damage they cause. 

It’s all about trust

There are only so many things agents can do to solve the last month’s rent conundrum. There will always be devious landlords and there will always be irresponsible tenants. However, disputes can be minimised if trust is established at the outset and maintained throughout the tenancy. 

It all starts by finding suitable tenants who pay their rent on time and treat the landlord’s property well. Tenant referencing is key to this. Meanwhile, landlords should also be encouraged to set a fair rent and fix problems quickly when they arise. 

Communication is key. If landlords and tenants like each other, and understand each other, then there’s no reason to fear the worst or second-guess their intentions. Landlord and tenant can then trust the process, expect the full rent to be paid, and anticipate the safe return of that precious deposit.

Then everyone lives happily ever after. 

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