How to recover rent arrears debt?

How to recover rent arrears debt?

9:24 AM, 26th June 2023, About 8 months ago 27

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Hello, do former tenants owe you money? Here’s how we deal with this:

For many years we could not find any debt recovery companies to take on the challenge of trying to recover debts from our former tenants. As most of our tenants were in receipt of benefits at the time of their occupation with us, the debt collections companies just did not want to take on these cases.

A few were willing, but only if we paid them large sums in advance with no guarantee of a successful recovery of the debt. Then, a few years ago we found a company who were willing to take on our cases on a ‘no win, no fee’ basis, i.e. they would only charge us a 15% commission on any debt they ACTUALLY collected.

Over the past few years we have gradually developed a much more streamlined process for rent arrears/damage costs debt recovery, with all the costs eventually being paid by the debtor (not by us). I am going to share the basic outline of the process with you, as I feel that tenants should pay the rent they agree, and they should be held responsible for any deliberate damage they cause.

  • Step 1: Complete a Debt Recovery Instruction form. This will provide the debt collection company with the information they need.
  • Step 2: The debt recovery company will carry out a trace, to ascertain the current address of the debtor. If the trace is successful, there is a fee of £54 (this can be re-charged to the former tenant, if your AST allows for the debt recovery costs to be charged to the tenant). If the trace is unsuccessful, there is no fee and the process does not go any further (put on hold and try again at a later date).
  • Step 3: The debt recovery company sends out up to three debt collection letters, followed by a Letter Before Claim. There is no charge to the landlord for this process, unless it results in payment by the debtor, at which point the debt collection company will deduct their 15% commission. (This fee (commission) can be re-charged to the tenant if your AST allows for this).
  • Step 4: The debt collection company will prepare and issue a county court claim on behalf of the landlord. There is a charge of £80+VAT for doing this, plus the court fee (variable depending on size of the debt). Again, this fee can be recharged to the tenant, assuming the AST allows for this. This should result in a County Court Judgment (CCJ) against the former tenant for the original debt owed, plus all charges incurred.
  • Step 5: This is where the debt (if over £600) is Transferred Up to the High Court for a Writ of Enforcement, but before this can happen the debt collection company will issue the landlord with an invoice for £71 for the court fee. This should result in obtaining a High Court Writ of Enforcement against the former tenant, for the full debt plus statutory interest plus the £71 court fee. A Notice of Enforcement will then be sent to the former tenant.
  • Step 6: High Court Enforcement Officers (HCEOs) aka High Court Bailiffs/Sheriffs will visit the former tenant to recover the debt owed to the landlord, plus their enforcement costs. IF, after a minimum of 3 visits, the HCEO cannot recover the debt, the landlord will have to pay a ‘Compliance Fee’ of £90.

As you can see, the process passes on the costs to the former tenant, so that the landlord does not have to bear the cost of the debt recovery, so long as a recovery is eventually successful.

At all points along the process, the former tenant is able to offer to make a payment plan, but the further into the process the more costly it will be to them.

If you would like further details, or the template instruction form, then please message me direct.

Thank you,

Robert


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Comments

Small Portfolio Landlord

10:07 AM, 26th June 2023, About 8 months ago

Hi Robert
I'd be very interested to know a little more and see the template, but can't see a way to contact you directly?
Richard

David

10:09 AM, 26th June 2023, About 8 months ago

Hi Robert,
Very interested in your process, not sure hom to DM you though?

Ibe Ubani

10:12 AM, 26th June 2023, About 8 months ago

Hello Robert,

I will like further details regarding how to recover rent arrears debt.
Thanks
Ibe
07533 265913
ibeubani2000@yahoo.com

Robert M

10:29 AM, 26th June 2023, About 8 months ago

You are welcome to contact me via email if you would like a copy of the more detailed version of the process, plus the instruction form to send to the debt recovery company (complete with the contact details for the debt recovery company that we use). My email address is: robert.mellors@choicehousingltd.org

colinwri

10:30 AM, 26th June 2023, About 8 months ago

Hi Robert, also cannot find a was to DM message you and interested in more information on this process.

Paul Fisher

10:34 AM, 26th June 2023, About 8 months ago

Hello Robert
I also would like details of the debt collection company, and any further details, and the template instruction form please.
Thanks
Connie

BRACKS Mead

10:37 AM, 26th June 2023, About 8 months ago

Reply to the comment left by Robert M at 26/06/2023 - 10:29
thanks. have.messaged you also

Richard Watters

11:22 AM, 26th June 2023, About 8 months ago

Reply to the comment left by KARRINA MAWSON at 26/06/2023 - 10:37
This sounds good. However in the past I've taken HB tenants to court, and won, but as they have no meaningful assets actually getting anything paid is very difficult. If you know them to be this type of person is it still worth doing?

Robert M

11:55 AM, 26th June 2023, About 8 months ago

Reply to the comment left by Richard Watters at 26/06/2023 - 11:22
As stated in the process I've outlined, there are costs incurred at various stages of the process, so if the eventual outcome is no collection then those costs may not be recoverable, but if recovery is successful then all those costs become part of what the debtor has to repay, in which case it is cost neutral to the landlord. What may occur is that the (low income/low assets) debtor enters into a monthly payment plan so as not to lose the assets they do have (even if relatively low value items), and to avoid having bailiffs/HCEOs knocking at the door.

Neil MacDonald

12:06 PM, 26th June 2023, About 8 months ago

Do you cover debt recovery for Scotland.

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