Agreeing a rent arrears payment plan

To agree a payment plan for rent arrears, set a fixed amount the tenant pays on top of the normal rent until the arrears are cleared, put it in writing and have both sides sign it. Keep it interest-free, with no fees or charges, and repaid in no more than 12 instalments within 12 months. Plans outside those limits can be treated as regulated credit for an individual tenant, so take advice before you go beyond them.

This page covers landlords in England. For the wider steps, see the rent arrears guide.

Why agree a payment plan for rent arrears?

• Money comes in sooner. A court claim takes months, and a judgment is only worth something if the tenant can pay.
• It shows the court you tried. Form N119 asks for the "steps taken to recover the arrears", and on discretionary grounds such as Ground 10 the judge weighs the tenant's payment proposals and your own conduct.
• It is what a court often orders anyway. On discretionary grounds, a typical outcome is a suspended possession order with conditions to pay the rent plus an amount off the arrears.

A plan works best when the tenant has a temporary problem and is talking to you. It works badly when nothing is being paid and nobody is engaging.

The limits to keep to

Rent itself is not credit, but an agreement to let a tenant pay off arrears over time can be. For an individual tenant it could then be a regulated credit agreement, unless an exclusion applies. The main exclusion fits an ordinary arrears plan if you keep to all three limits:

Keep the plan	Why
Interest-free	Charging interest takes the plan outside the exclusion
Free of fees or charges	No arrangement fees, admin fees or late-payment charges under the plan
To no more than 12 instalments, paid within 12 months	Longer plans or more instalments fall outside the exclusion

If you want a plan with different terms, get advice on the Financial Conduct Authority rules first. We are not a law firm, and this page sets out the safe limits, not a ruling on your plan.

How to work out a realistic plan

1. Get the arrears figure right. Use your rent schedule: dates due, payments and running balance.
2. Ask about the tenant's income and outgoings. A short financial statement helps both of you see what is affordable. The Pre-Action Protocol for Debt Claims uses a Standard Financial Statement for this.
3. Divide the arrears over no more than 12 months. If the result is more than the tenant can pay, shorten your expectations, not the limits.
4. Set fixed dates, ideally the same day as the rent.
5. Write it down and both sign it.

Worked example

Rent is £900 a month, due on the 1st. The arrears are £1,800 on 25 October 2026.

	Amount
Arrears to clear	£1,800
Instalments	12, from 1 November 2026 to 1 October 2027
Instalment	£150 a month
Total due each month	£900 rent + £150 = £1,050
Interest or charges	None

Twelve instalments of £150 clear £1,800, inside 12 months. If the tenant can only manage £100 a month, that would take 18 months, which is outside the limits; you might agree £100 for a shorter period and review it, or take advice.

Check how much counts towards the Ground 8 threshold at each stage with the rent arrears calculator.

What to put in the written agreement

• The names of all the tenants and the property address.
• The arrears figure and the date it was worked out.
• The instalment amount, the dates and how to pay.
• That the normal rent continues to be paid on time as well.
• That no interest, fees or charges are added.
• What you will each do if a payment is missed, such as getting in touch within a few days.
• Signatures and dates from you and each tenant.

The payment plan agreement template has wording you can adapt. Send a short covering letter with it, such as the rent arrears letter.

How a plan affects a Section 8 claim

• Ground 8. The arrears must be at least 3 months' rent (monthly) or 13 weeks' rent (weekly or fortnightly) when you serve the notice and at the hearing. If the plan brings them below the threshold by the hearing, Ground 8 fails.
• Ground 10. This still works if rent was in arrears when you served the notice and some is still unpaid when you start the claim.
• Ground 11. A history of persistent late payment can be relied on even if the arrears are cleared.
• The 12-month limit. If you have already served Form 3A, you must start any claim within 12 months of service. Keep that date in your diary while the plan runs.
• At court, the judge will look at whether a plan was offered and kept. On discretionary grounds, section 9 of the Housing Act 1988 lets the court set its own payment conditions.

Payment plans during a Breathing Space

If the tenant enters a Breathing Space, you must not contact them about the arrears or add interest, fees or charges while it lasts, and any recovery action is barred. Ongoing rent is still payable. Pause chasing plan instalments and pick the plan up again when the breathing space ends. See Breathing Space and rent arrears.

Common mistakes

• Adding a late fee or interest to the plan.
• More than 12 instalments, or a plan longer than 12 months.
• A plan the tenant can't afford, which fails in the first month.
• Agreeing it only by phone, with nothing in writing.
• Not updating the rent schedule as payments arrive.
• Leaving a joint tenant out of the agreement.

What to do next

Use the payment plan agreement template to write it up. If the plan fails and the arrears keep growing, the Section 8 notice works out the dates for Grounds 8, 10 and 11 and fills in Form 3A. For the first steps, see tenant not paying rent.