What to do when your tenant loses their job

Losing your job is stressful for anyone, but for tenants and landlords, learning of a job loss can be particularly difficult. For landlords, it’s a fine balance between acknowledging your tenants’ difficulties and worrying about whether they’ll end up defaulting on their rent payments.

To help you navigate the ups and downs, we look at how to maintain a good relationship with your tenant and what steps you can take to minimise the risk of missed rent. We’ll also explore your legal options, should it prove necessary.

Can you evict a tenant for losing their job?

No, you cannot evict a tenant because they’ve lost their job, but you can evict them if they fall into rent arrears.

A government survey found that while just 5% of private renters had been in arrears, more than one quarter (29%) reported finding it difficult to pay their rent.

This is supported by ONS data that reveals private tenants in England spend just over 36% of their income on rent, up from 33.1% in 2023. This exceeds the government’s ‘affordability threshold’, which measures how affordable it is to rent a home. Currently, the affordability threshold is set at 30%, which means many tenants are finding it less affordable to rent private homes.

Your step-by-step action plan if a tenant loses their job

If your tenant does unfortunately lose their job, you can help ease stress and diffuse tension by:

Keeping communication open and friendly

If your tenant approaches you with news of a job loss, it’s beneficial for all of you to be open and honest about your relative situations. Your tenant is likely to be under immense stress (financially and emotionally), so it’s worth taking a sensitive but pragmatic approach.

As well as understanding their situation, you can also share with them the importance of rental income to you – for example, keeping up with your mortgage payments.

If you had previously been considering a rent increase, or if their rent is due for review, raising it without consulting them could add strain on them and your relationship.

Signposting tenants to financial support

Job hunting can take time, so it can be worth letting your tenant know about any financial support they could be entitled to. This could include:

Government support – this includes Universal Credit (UC), the new Jobseeker’s Allowance, and the Discretionary Housing Payment. Tenants can check what support they can get directly at GOV.UK.
Household Support Fund – this scheme is managed by local councils and designed for anyone who is vulnerable or who cannot pay for essentials. Tenants do not have to be receiving other government support to qualify, but eligibility varies by location.
Cold Weather Payment – these payments are automatically made if someone already receives certain benefits, but it’s worth highlighting that this is the case. If your tenant has a child under five, they should also contact Jobcentre Plus.
Grants for energy bills – as well as general guidance, Citizens Advice sets out available support for tenants on pre-payment meters and for homes that don’t use gas or electricity. Tenants can find out more at Citizens Advice, grants and benefits to help you pay energy bills.

Tenants can also find general information on debt and money from Citizens Advice, and support with debt from the charity StepChange.  

Considering a temporary payment plan

If you feel your tenant is particularly struggling (for example, if they also have a family to support or are caring for someone vulnerable), you could consider a temporary rent payment plan.

Any plan you agree on should be put in writing as a formal contract between all parties. For example, you might agree to reduce rental payments for a certain number of months. When your tenant finds a new job, they’ll then pay a slightly higher rent each month to make up the difference. Your temporary contract should be clear about time frames and specific rental costs.

Helping tenants manage their outgoings

This can be a good opportunity to ensure your rental property is as energy-efficient as possible. At a very basic level, this could mean:

Using LED light bulbs.

Installing a smart meter, if available (this won’t cut bills, but it can show tenants where money is being spent).

Ensuring tenants are using appliances properly.

Checking the property is well ventilated (to avoid future issues such as damp and mould).

Comparing energy bills with immediate neighbours; if they’re wildly different, it could be worth speaking to the energy provider as to why that might be.

Dealing with faults and maintenance issues quickly.

Insulating the property, for example, with draught excluders.

You can also help by improving your property's EPC rating and increasing its energy efficiency, which can lower long-term bills. Some energy efficiency changes are small (such as using LED lights), but others may mean more major work, including upgrading to double or triple-glazing.  

Protecting your rental investment with insurance and your legal options

If you can’t keep communication going and the situation takes a wrong turn, you can protect your assets and income by:

Checking your insurance cover

You can protect your income with rent guarantee insurance; these policies cover the cost of rent if your tenant defaults, while you start the eviction process.

Rent guarantee cover can vary between insurers, so it’s worth checking the terms. Policies from Alan Boswell Group cover up to £2,500 per month and up to 75% of rental income for three months after a legal eviction. If you’re considering a policy, it’s good to know that rent guarantee insurance from us also includes legal expenses cover.

Please note that if your tenant has already defaulted on the rent before you take out rent guarantee insurance, the policy will not cover the rent. Rent guarantee insurance should be taken out as a preventive measure at the start of the tenancy, to be used in case of arrears in the future.

If you have landlord legal expenses insurance, you can use this to cover the cost of legal action and court proceedings if you need to make a claim against your tenants. This could include pursuing them for unpaid rent or for covering eviction costs.

Legal expenses cover from Alan Boswell Group also provides you with access to a 24/7 legal advice helpline, so you don’t have to worry about where to go for support. We can also cover the cost of replacing locks after a legal eviction and pay for storage for tenants’ belongings.

Managing rent arrears

If your tenant has missed a rental payment, they are technically in rent arrears, and you can issue a Section 8 notice for eviction, but only when they are:

Two or more months behind in rent (if they pay rent monthly).

Eight weeks behind in rent (if they pay rent weekly or fortnightly).

Three months behind in rent (if they pay quarterly or annually).

Taking the legal route with a Section 8 notice

If your tenant meets the threshold for eviction, you can issue a Section 8 notice.

There are clear rules for issuing a Section 8 notice, and it’s essential to follow the correct procedure; if not, then the notice won’t be valid. Before you do this, you’ll need to regularly remind tenants of the reasons why they’re breaking tenancy rules (in this instance, not paying rent).

When you’re ready to issue the notice, you must do this in a certain way (your tenancy agreement may specify how). This could mean giving the notice to tenants in person, sending it by post, or putting it through their letterbox.

If your tenants don’t leave by the date listed in the Section 8 notice, you’ll need to start a repossession claim and take them to court. For more information, read our guide to Section 8 and issuing a notice correctly.

Currently, you can also still issue a Section 21 ‘no-fault eviction’ notice, but this will change as the Renters’ Rights Bill has received Royal Assent and, once implemented, Section 21 notices will be banned.

If you have rent guarantee insurance, the policy will normally issue the legal proceedings for you, and you should ensure that you are aware of what you need to do when you want to repossess your property.

Supporting tenants and protecting your assets

Being a landlord is tough, but building good relationships with your tenants can go a long way to making life a little easier, especially if they come to you with news of a job loss. As a landlord, your priority should be maintaining open communication with tenants and finding a temporary solution that works for everyone.

If this approach doesn’t work, you may be forced to look at your legal options. If your policy includes rent guarantee insurance and/or landlord legal expenses, you should speak to your insurer in the first instance for support and guidance.

Need help with your insurance?

If you’re looking for ways to protect your rental investment, speak to a member of our team. We can explore your options in detail and find an insurance package that suits your needs and budget.