What should you do if you can’t pay your rent or mortgage?

The cost of living crisis is making it difficult for many people to pay their bills, including housing costs. Private sector rents have increased by an average 9% over the year to February 2024^[1], and rising interest rates mean higher mortgage payments for many people.

If you find you can’t pay your bills, you may immediately worry about losing your home – but knowing your legal rights and resources can help you navigate this difficult time.

If you rent your home, your rights depend on the type of tenancy you have. If you rent from a private landlord in England (rules differ in Scotland and Wales), you will almost certainly have an assured shorthold tenancy^[2] which means that your rent is the amount you agreed with your landlord. You may have agreed a fixed term or it may be periodic, rolling over from month to month. Whichever type you have, your landlord cannot immediately evict you if you miss a payment.

Most people on a fixed-term tenancy have a written agreement with a start and end date. If you miss a payment and there are more than two months remaining on your tenancy, your landlord must go through a longer court process. This involves giving you a section 8 notice^[3] and then applying to the court for a “possession order”^[4] to allow them to take back the property. If you are more than two months behind with your rent, the court will usually make an outright possession order, which often sets a possession date for two weeks after the order is made.

If you have less than two months’ rent unpaid by the time of the hearing, the court has more flexibility. For example, if you agree in court that you will pay all the rent owed, the court can decide not to make the possession order, or make a suspended order^[5]. You must then pay off the arrears.

If your tenancy rolls over from month to month, and you have been there for four months or more, the legal process is usually faster. Your landlord can evict you using a section 21 notice^[6] but you can stay until the date given in the notice. And you can ask the council for help^[7] to find a new place to live as soon as you get a section 21 notice. If you have lived there for less than four months, your landlord cannot use section 21 – they must give you a section 8 notice instead.

Most landlords do not want to evict tenants with a good track record. It costs time and money to find a new one, and they may be willing to give you extra time to pay. Get in touch with them as soon as possible.

In Scotland, you have stronger rights if you get into housing debt^[8], and in Wales your rights depend on when you started renting^[9].

The housing charity, Shelter England, has straightforward advice about getting help with rent^[10], and the government website explains the legal process if your landlord^[11] wants to start the process of evicting you. You do not have to leave your home immediately, legally you can wait until you receive a court order requiring you to leave^[12]. But staying may mean building up more rent arrears which you will still have to pay off.

Like most landlords, mortgage lenders don’t want to repossess people’s homes unless it is absolutely necessary.

The process and help available differs slightly depending on whether you live in England^[13], Wales^[14] or Scotland^[15]. Regardless of location, the first thing you should do is talk to your lender.

If you are having difficulty paying your mortgage and you receive some types of welfare benefits, you can apply for help to pay the interest on up to £200,000 of your mortgage. Support for Mortgage Interest^[16] is a government loan which you are expected to repay with interest when you sell. This only applies to people on some types of benefits.

If you miss a mortgage payment, lenders must comply with a pre-action protocol^[17] which includes making reasonable efforts to come to an arrangement for you to repay the arrears. Repossession should only be a last resort.

In 2023, the UK’s biggest mortgage lenders agreed to follow a set of standards known as the Mortgage Charter^[18]. The charter suggests actions such as increasing the mortgage length to reduce payments, offering a switch to interest-only payments and temporary payment holidays for those who are in financial difficulty.

A lender must get a court order before they can take possession of your home, but the court may delay this depending on circumstances. In England and Wales^[20], the court has to be sure that you can pay your normal instalments and any arrears within a reasonable period (the remaining length of the mortgage). Usually, the judge will work out how much you need to pay in addition to your normal mortgage payments to clear the arrears.

A possession order will be suspended as long as you can keep up with those payments. If you cannot convince the court that you can pay within a reasonable period, then the court is likely to make an outright possession order, but give you a delay of 14 or 28 days to find somewhere else to live.

In some cases, it may be worth considering selling your home rather than being repossessed^[21]. You may be able to get help from your local council if you are at risk of becoming homeless^[22].

Anyone who is at risk of losing their home can get free legal advice on housing, debt, and welfare benefits through the Housing Loss Prevention Advice Service^[23], which also provides free emergency legal advice and representation in most courts on the day of possession hearings. Shelter also provides advice on how to deal with missed mortgage payments^[24].

References

1. ^{^} average 9% over the year to February 2024 (commonslibrary.parliament.uk)
2. ^{^} assured shorthold tenancy (www.gov.uk)
3. ^{^} section 8 notice (england.shelter.org.uk)
4. ^{^} “possession order” (england.shelter.org.uk)
5. ^{^} suspended order (england.shelter.org.uk)
6. ^{^} section 21 notice (england.shelter.org.uk)
7. ^{^} ask the council for help (england.shelter.org.uk)
8. ^{^} housing debt (scotland.shelter.org.uk)
9. ^{^} when you started renting (nationaldebtline.org)
10. ^{^} getting help with rent (england.shelter.org.uk)
11. ^{^} landlord (www.gov.uk)
12. ^{^} requiring you to leave (england.shelter.org.uk)
13. ^{^} in England (england.shelter.org.uk)
14. ^{^} Wales (sheltercymru.org.uk)
15. ^{^} Scotland (scotland.shelter.org.uk)
16. ^{^} Support for Mortgage Interest (www.gov.uk)
17. ^{^} pre-action protocol (www.justice.gov.uk)
18. ^{^} Mortgage Charter (www.gov.uk)
19. ^{^} Fizkes/Shutterstock (www.shutterstock.com)
20. ^{^} England and Wales (www.legislation.gov.uk)
21. ^{^} selling your home rather than being repossessed (england.shelter.org.uk)
22. ^{^} homeless (england.shelter.org.uk)
23. ^{^} Housing Loss Prevention Advice Service (england.shelter.org.uk)
24. ^{^} how to deal with missed mortgage payments (england.shelter.org.uk)