Rent arrears payment plan agreement template

A rent arrears payment plan is a written agreement in which your tenant pays off unpaid rent in instalments on top of their normal rent. Our template is interest-free, has no charges and allows at most 12 instalments within 12 months, because plans outside those limits can count as regulated credit. Speak to a solicitor before agreeing anything longer.

Why this payment plan has limits

Under UK financial services rules, letting someone pay a debt in instalments can amount to credit. If it does, a plan with an individual tenant could be a regulated credit agreement. The main exclusion covers repayment:

• in no more than 12 instalments,
• within 12 months,
• with no interest and no charges.

This template is built to stay inside those limits. It has no interest, no late-payment fees, no admin charges, a maximum of 12 instalments, and a final payment date no later than 12 months after the agreement.

Watch out: if you want a longer plan, more instalments, or any interest or fees, speak to a solicitor before you agree it. Don't stretch this template to fit.

When a payment plan makes sense

A plan works best when the tenant is engaging and can afford something on top of the rent. It also helps you later:

• On the discretionary grounds (Grounds 10 and 11), the court considers whether a possession order is reasonable, including the tenant's engagement and any payment proposals, and the landlord's conduct.
• On Ground 8, the tenant must owe at least 3 months' rent (monthly rent) or 13 weeks' rent (weekly or fortnightly rent) both when you serve the notice and at the hearing. A plan that brings the arrears below that level means Ground 8 can't succeed.

A plan doesn't cancel the arrears. If it fails, the arrears are still owed and the usual Section 8 grounds remain available. Read our payment plans guide for when to offer one.

Rent arrears payment plan template

RENT ARREARS PAYMENT PLAN

Landlord: [full name]
Landlord's address for serving notices (England or Wales): [address]
Tenant(s): [full name of every tenant named on the tenancy agreement]
Property: [property address]
Date of this agreement: [date]

1. Arrears. The tenant(s) owe rent arrears of £[total] as at [date],
   as shown in the attached rent statement.

2. Normal rent. The tenant(s) will continue to pay the normal rent of
   £[amount] per [month/week] in full on [rent day], in addition to the
   instalments below.

3. Instalments. The arrears will be paid in [number, no more than 12]
   instalments:

   Instalment 1: £[amount] on [date]
   Instalment 2: £[amount] on [date]
   [continue, up to a maximum of 12 instalments]

   The final instalment is due on [date], which is no later than
   12 months after the date of this agreement. The instalments add up
   to the total arrears in clause 1.

4. No interest or charges. No interest, fees or other charges of any
   kind will be added to the arrears under this agreement.

5. How to pay. Payments go to [account name], sort code [sort code],
   account number [account number], reference [reference].

6. Paying early. The tenant(s) may pay off the balance early at any
   time, at no cost.

7. Missed payments. If an instalment or a rent payment is missed, the
   landlord will contact the tenant(s) in writing. The unpaid arrears
   remain owed, and no interest or charges will be added.

8. Changes. Any change to this plan must be agreed in writing by the
   landlord and every tenant. Any changed plan must still have no
   interest or charges, and be repaid in no more than 12 instalments
   within 12 months of the date of this agreement.

9. The tenancy. This agreement does not change the tenancy agreement
   or the rent.

Signed (landlord): ____________________   Date: __________
Signed (tenant):   ____________________   Date: __________
Signed (tenant):   ____________________   Date: __________

How to fill it in

1. Agree the total. Use a rent statement that shows each rent payment due, each payment received and the running balance. Count only rent that is lawfully due.
2. Set the instalments. No more than 12, all within 12 months of the agreement. Make sure they add up exactly to the total.
3. Keep the rent separate. The normal rent stays due in full on the usual day.
4. Include your address for service. Rent is treated as not due until the tenant has an address in England or Wales for serving notices on you.
5. Get every tenant to sign. On a joint tenancy, all tenants are responsible for the rent. Give each a signed copy.
6. Track payments. Update the rent statement after each instalment.

What to leave out

• Interest of any kind, including "only if a payment is late".
• Fees or charges: admin fees, late-payment fees, arrangement fees.
• More than 12 instalments, or a final date more than 12 months away.
• "The whole balance becomes due plus costs" clauses that add charges.
• Threats. Don't write that you'll change the locks or remove the tenant if a payment is missed. Only a court can end the tenancy, and harassment can lead to prosecution or a civil penalty of up to £40,000.

Breathing space and debt advice

If the tenant enters a Debt Respite Scheme breathing space, the rules change while it lasts. You must not:

• contact the tenant about the debt;
• add interest, fees or charges;
• serve a notice relying on Grounds 8, 10 or 11, or start a possession claim on one.

The tenant's normal rent stays payable during a breathing space: it is not a payment holiday. Read our guide to breathing space.

What to do next

• If the plan fails and arrears keep building, our Section 8 builder helps you pick the right arrears grounds and fills in Form 3A with the dates checked. Read Section 8 for rent arrears first.
• Send a rent arrears letter before proposing a plan, so the figures are in writing, or browse the other landlord letter templates.