8:43 AM, 18th September 2012, About 11 years ago 18
This article is largely based on possession claims brought by social landlords but I ask you, the PRS landlord reader, to think about the import of what this might mean for possible future repossessions in an environment where I just read today, the amount of homeless families in B&B accommodation has risen 50% this year.
I spend a large portion of my working day in court dealing with possession claims. I also train housing officers on the county court eviction procedures so they can take action against their tenants for rent arrears and anti-social behaviour and minimise their chances of a wasted journey when their paperwork or procedures are ill drafted.
The feedback I get from course delegates right across the country is on the frustration they feel in knowing that their case is properly drafted but they still get a knock back from the courts on both possession and warrant applications when tenants default on the terms of the suspended possession order.
I have previously explained this away on individual judge’s eccentricities and to an extent this is true but what I am also noticing is a fairly consistent approach to possession applications in a way that I haven’t seen before.
My sister, who is a housing officer for a Hampshire based housing association told me recently of a case she inherited where the tenant had defaulted 26 times on the terms of a suspended possession order and yet the judge repeatedly refused to grant a warrant, saying that the landlords, as a socially responsible organisation had to find an alternative to throwing people out.
Her experiences were brought back to me last week when I got involved in a case of a housing association tenant who had £11,000 rent arrears. The information as it came to me was that a warrant had finally been issued because they had breached the terms of a suspended order set in April 2012.
My immediate thought was that with a rent of £411 a month there were clearly much more than 2 month’s arrears, so why did the judge suspend the order?
I phoned the housing officer to discuss and she said it is routine for them. Judges just will not grant outright possession in any cases, taking the view that as social landlords they had to find an alternative to repossession.
I asked if they had appealed against the judge’s flagrant disregard of their lack of discretion in Ground 8 claims where there are more than 2 months arrears, but the defeated HO said there was no point. They use ground 8 but only ever get Suspended Possession Orders.
For those of you who may not know (regular readers can skip this paragraph) Ground 8 is a ground that a landlord can use where there are more than 2 month’s rent arrears. If proven the judge has no discretion, they have to grant a possession order. Often a judge will adjourn where there are housing benefit problems to be sorted or other outstanding issues, giving the tenant a bit of time to get things sorted but they generally shouldn’t be granting Suspended Possession Orders.
On the feedback I am getting from housing organisations and trainees it seems to be becoming a growing trend. Being a seasoned housing observer I have to wonder why that is.
Back to my first paragraph.
Homelessness applications have risen 38% in the last year or so and B&B placements 50% this year alone. Judges don’t exist in a bubble. They know what is happening in housing. What I hear regularly when defending people in mortgage repossession cases is judges saying “We aren’t in the business of taking people’s homes away and if there is a chance of saving the home we must give it to them”. It’s becoming almost a script that I can’t help feeling they hone in their tea breaks together.
Is this thinking transferring to possession applications for social landlords? Could it also extend to PRS landlords if homelessness applications continue to rise? Are judges tougher on social landlords than PRS ones in this respect?
I don’t know the answer to this.
Applications for possession based on rent arrears are rising in the PRS, particularly in London where rents are now 70% of average take home pay (9 months ago I recall it was 60%) Many small buy to let amateurs don’t have the requisite cash flow to help them through difficult patches. Rent arrears means they can’t pay the mortgage, and if judges extend this view how will it affect the PRS and the housing stock that councils are increasingly coming to rely on?
Admittedly this is me thinking ahead, so don’t panic. It may be that DJs restrict their reluctance to grant outright possession solely to social landlords. Having said that, none but the most determined of self-interested parties would not consider how councils and housing association will cope if this grows.
When Universal credit comes in next year, part of the strategy is that housing benefit payments will go straight to landlords, as it does in the PRS right now, but social landlords can’t simply avoid benefit tenants like PRS landlords can.
This element of the scheme is currently being tested in pilot and pathfinder schemes in different areas and the government’s reported good news is that in week one there was an 80% success rate. Well whoopee do. My local council’s ALMO have a rent collection rate of 96%. Every 4% drop represents £1.5 million on their annual budget. An 80% collection rate would most probably bankrupt the organisation, as it would many others. If DJs continue to refuse to evict for rent arrears what will happen?
At the very least that loss of income would seriously hamper their ability to respond to new housing minister Mark Prisk’s war cry today that social landlords should start investing in PRS properties
Once again government just doesn’t seem to have thought this through and the district judges seem to be playing the wild card.
It’s anecdotal evidence at the moment but is becoming fairly consistent anecdotal evidence that I don’t think is being measured anywhere but front line housing workers see it all the time.
I don’t know any DJs on such a personal level to ask them what is going on but I would love to know.
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8:16 AM, 19th September 2012, About 11 years ago
Ben’s article as usual informative and interesting,
The warning lights went on when I read “When
Universal credit comes in next year, part of the strategy is that housing
benefit payments will go straight to landlords”. This is fraught with danger because as I understand
it the person who the money is paid to is responsible for any wrong doings and
in the event it can be claimed back direct. Imagine the scenario you are receiving
the benefit direct and the claimant decides to work and is not declaring it, he
is caught and taken to book my understanding is that as the recipient direct I
am responsible for re-paying the money received as a false claim not the Guy
that has committed the wrong doing. Looks like the old adage has been turned on
its back and should be “heads you lose, tails you lose.
Mark Alexander - Founder of Property118
8:33 AM, 19th September 2012, About 11 years ago
I think there must have been a typo in Ben's article when he said "part of the strategy is that housing
benefit payments will go straight to landlords” - that's not correct, I think he meant tenants, NOT landlords. That one word changes the article massively and makes your comments invalid.
Under the circumstances you have outlined on a tenant on benefits working Tony, my understanding is that payments to Landlords are NOT recoverable. Hopefully Ben will confirm this.
The problem is that payments will NOT be paid to Landlords, as is currently the norm for PRS landlords now unless tenants are two or more months payments in arrears.
If payments are made directly to tenants and their budgeting skills are not good the landlord doesn't get paid.
At the moment, this only effects PRS landlords as the current system is bias against them. PRS landlords want equality.
In a strange way, under the Universal Credit system, equality will be restored. However, it's a bit like two kids complaining they have an unequal amount of sweeties and the parent eating all of the extra sweets that one kid has to even up the balance. There are now two unhappy kiddies!
Both the PRS and the social landlords need direct payments.
I think the point that Ben is making is that District Judges are refusing to grant possession to social landlords and that under the Universal Credit scheme this will not be viable. PRS landlords are thinking "welcome to our world".
In short, the Universal Credit system is an approaching Tsunami, we all know it's coming but we have nowhere to go and the judges are not helping anybody, they could but they are not, and we don't know why.
Ben has talked this week about the strange acts and interpretations of District Judges affecting social landlords, Mary Latham raised similar questions about section 21 notices in the PRS last week.
It is indeed worrying times for both PRS and social landlords but not for the reasons you have posted in your comments in my opinion Tony.
19:56 PM, 19th September 2012, About 11 years ago
It would appear that DJ are ignoring the Housing Law.
Section 8 and Section 21 are mandatory terms requiring the DJ to grant possession.
It is NOT within their purview to do anything other than grant possession.
If DJ are allowed to regard these mandatory requirements as diecretionary the whole tenet of lenders being able to obtain possession based on either Section 8 and Section 21 goes out the window.
These 2 notices are the fundamental foundation that the BTL is built on.
No lender will lend on BTL rental property if he cannot be assured that the tenant can be removed by recourse to Section 8 or 21.
No LL will allow a DJ to put off a LL possessing their property just because a DJ feels like it.
Even doing it the legal way it took me once 10 months to evict a non-rent paying tenant.
If I was not assured that ultimately I would via recourse to the law be able to repossess my property althernative action would have to be taken.
No small LL will allow themselves to be possibly bankrupted and homeless themselves because some stupid DJ refuses to comply with Housing Law, in this case Section 21 or Section 8
I am afraid there would be removals of tenants by whatever means.
If a non-rent paying tenant wants to take it further then let them try..
Any case would be thrown out of court.
I would like to see how many cases of LL being locked up for supposed wrongful eviction.
I believe Section 8 and 21 have preventede a lot of supposed wrongful evictions taking place.
LL have by and large used the legal process; remove that from them and tenants will be removed.
I would have removed mine months ago come what may.
She now owes £5000 with no intention or ability to currently pay those arrears.
Legal process following Section 21 will be proceeding.
There should be no way that Section 21 possession will not be granted.
IT IS MANDATORY.
What is so difficultr for a DJ to understand.
23:05 PM, 19th September 2012, About 11 years ago
Yeah sorry Mark you are absolutely right. I meant payments direct to social landlords, But then again, as administrator it is your job to edit so I blame you J
Its an extraordinary development and I can only presume that this is being replicated in more than the 3 south London courts that I work in, Bromley, Woolwich and Lambeth.
As Paul points out, what do you do when the judges just ignore the statutes they operate under? because they certainly aren’t doing it in ignorance, they know exactly what they are doing and what that means to the social landlord applicant. Which is why I think there is method in their
On a completely different tip, and I think the logic is related, I read today that the Coop Bank are going to be turning down un-discharged bankrupts from opening basic accounts, a service they have previously offered. They are being roundly criticised but if you read their statement they seem to be doing so as a way of getting government to intervene to get other banks to offer accounts with universal credit on the horizon. I think the Coop are acting in a political way, as I think the judges are in refusing outright orders.
Judges and banks don’t go on strike but they can raise mayhem in their own way, and more power to them to be honest, just read between the lines. This is why I think what judges are doing is very radical, but not many seem to be picking this up.
0:12 AM, 20th September 2012, About 11 years ago
Sorry I just did it again didnt I? hahaha Payments direct to tenants AAAARRRRGGGGHHHHH
2:29 AM, 20th September 2012, About 11 years ago
I can see your point Ben about the political point that these judges make regarding social LL.
They may have bottomless pits of money to cover rent arrears for their miscreant tenants.
As the Housing crisis continues and the effects of UC kick in with inevitable results of PRS booting out UC claimants; will a DJ making a political point start preventing private LL from exercising their rights under Section 8 and 21.
If this occurred you would have absolute anarchy.
You would have tenants not bothering to pay rent as they would know DJ were not enforcing Section 8 and 21, there would be mass bankruptcies of LL, lenders would not be able to repossess.
Bank balance sheets would nosedive, they would have to go to govt for a bail out
There would be massive effects on the PRS and housing sectorwith LL desperate to offload property if they can with a existing tenant.
In fact there are more ramifications that I can think of at the moment.
Surely the govt cannot allow DJ to behave in this way and someone has to take these cases to the Supreme Court to have these judgements overturned with the the Supreme Court giving direction that ALL Section 8 and 21 applications MUST be granted with a reasonable period for the tenant to comply with a possession order of no more than 28 days.
If nothing is done then the County Courts will be very quiet as LL won't bother with the Legal process, we will just evict the tenants and sod the legal process.
There is no way that LL will allow themselves to be denied the justice of the law and let some non-rent paying tenant s--bag tenant possibly devastate their business and livelihood.
Mark Alexander - Founder of Property118
3:35 AM, 20th September 2012, About 11 years ago
WOW! That's a proper conspiracy theory. If you'd have said this in your article the editor might have come up a far better title!!! HAHAHA
6:44 AM, 20th September 2012, About 11 years ago
On the money Paul, the possible ramifications are huge.
Dont get me wrong. I'm not prognosticating a catastrophe, just musing on where judges might be going with this. I doubt any DJ is intent on bringing down the system and I freely admit it may be a bit of a South East London bubble.
In my 3 courts we are talking maybe 20 DJs in total. In many more rural areas it can be a single DJ refusing possession claims, you wont get a consistent snapshot, but I am unique in that I also train council and housing association teams right across the UK and the feedback I get is quite consistent. DJs arent happy granting outright possession to social landlords.
The point of article is whether or not there is a plan behind it?
Judges would never admit to it but they are a well informed and intelligent bunch who, like everyone else has their opinions You have to wonder what they chat about in their tea breaks, even if they would never fess up to the likes of you and me.
We need an anonymous DJ to post a reply here. What are you up to? ya little tinkers!
Mark Alexander - Founder of Property118
7:44 AM, 20th September 2012, About 11 years ago
One of the lawyers I work with also sits as a District Judge in London. I'll tip him off about this thread and see what happens. You may have lit a blue touch paper here Ben.
8:48 AM, 20th September 2012, About 11 years ago
And sorry Paul, I meant to reply to your notion of social landlords having bottomless pits of money. They really dont. As I said in the arfticle, for my local ALMO (Arms Length Management Organsiation) every 4% drop in rent recovery acounts for £1.5 million a year. They cant afford to have judges suspend cases where the tenant cant pay.
Social landlords operate like any other business, if they cant recoup on debts they go under.
Government think that social landlords should be investing in building PRS properties at a market rent. Business growth plans, like any other sector, relies on income. If DJs refuse possession on rent arrears, like my client with a ludicrous £11,000, they wont be able to do what government suggests and so the whole house of cards collapses.
As I say, DJs know what they are doing, my question is "Why"?