Why Negotiate With a Tenant Who Isn’t Paying Rent?

When I tell people I am a mediator and I spend my time helping landlords and property investors to resolve disputes, the first question I get asked is always- “what’s the weirdest thing you’ve mediated on?”

The second question is usually “why would I mediate with a tenant who isn’t paying?” I never struggle to answer this question because the answer is, why wouldn’t you?

Since 25th July 2023 mediation has been a mandatory requirement for small claims court claims, with judges sending parties off to the courts appointed mediation service to try to reach a solution- this saves time and allows the parties to reach outcomes that the court system may not be able to allow due to the legislative restrictions.

All good business have a support team

• Accountant
• Solicitor
• Broker 

So why not mediator, larger corporate firms all have mediation services as standard which are called upon long before legal action is even mentioned- why? Because it makes good business sense.

Landlords and property investors run a business, you have accountants, brokers and solicitors, so why not a trusted mediation service.

A tenant who is behind on paying rent is already breaching one agreement, i.e., the tenancy, so relying on them to follow through on another one brings to mind the old saying, “Fool me once, shame on you; fool me twice, shame on me,” right?

Maybe not. Statistics show that resolving a single dispute outside of court, as opposed to going to trial, is the most business rational choice from an economic perspective. 

This is due to the length of time the court process can take coupled with cost, add in the unpredictability of court and the sheer inefficiency of eviction courts. Extrapolate that to all of your disputes, whether you own 1 BTL or 10,000, and you see a drastic decline in expenses related to dispute resolution.

Start with the upfront cost. The average cost of an eviction is £1,500-£5000, not calculating your time (consulting with your solicitor, going to court, and so on). That amount also does not include the cost of bad reviews to your business.

Compare that to the lower cost of mediation, which can be as low as £300 and has a higher success rate.

One final consideration, strictly in terms of costs, is the likelihood of collecting the past-due rent. In court, a judge orders your tenant pay a certain amount by a certain date. The tenant has lost the case and carries no ownership of the resolution; this makes collection of that judgment unlikely.

On the other hand, with landlord-tenant mediation, resolutions are crafted—and agreed to—by both sides. Your tenant helped build the resolution and thus has an inherent incentive in it being followed: ownership. 

No additional solicitor fees, no chasing down your tenant, and you can move on with managing your property.

In addition, you have maintained the professional tenant-landlord relationship which has reduced stress and may lead to future business.

Add mediation to your support team today - you know it makes sense