Rent Arrears

Rent Arrears

I have a tenant who is £1,325 in arrears having been unable to make the full rent payments during the pandemic. I accepted lower payments while he did not have his full income over the past year.
Now he is working again, he is paying the full rent but no arrears. I have been trying to get a payment plan in place for months but the tenant will not respond to the letting Agent.
The rent is £125 below market value and I have asked for an arrears payment of £125 PCM until the arrears have been paid.
It feels wrong allowing him to rent the flat below market value , take flexibility on rent payments in difficult times then leave the arrears outstanding. No communication and no responses when we try and agree a payment plan.
I am now looking to serve 2 months notice in August and take the flat back.
Just wondered if anyone had a similar experience and if serving notice is the best solution or should I wait until the tenant feels he can pay the arrears which may never happen.
Nick