Landlord possession claims increase as rent arrears are at their highest level for four years. The Government’s quarterly court statistics show that in the second quarter of 2012 there were 25,422 landlord possession claims that led to an order being made.
Since 2010 orders made in England and Wales are up by 8% with Gloucestershire and Hampshire being hardest hit with both suffering increases of 29%. Figures from Templeton LPA show there are now 99,000 tenants in arrears of two months plus, which is the highest level since 2008 and a 15% increase on last year.
Michael Portman, Managing Director of LetRisks commented:
“We have seen a sharp increase in demand for rent guarantee insurance as landlords and agents look to find ways to protect their rental income. It is clear that this problem is not going to go away and we expect tenant arrears cases to continue climbing during the remainder of this year.
“The double-dip recession is putting huge pressure on the nation’s pockets. Rising fuel and food, unemployment and increased rents is putting tenants in difficulty.”
“Many tenants have fallen on bad times and have no financial resources to clear arrears debt has led many agents and landlords to pursue possession only, foregoing any attempts to secure rent arrears through the courts.”
“For many Landlords and agents, they face better odds securing new tenant rental income than they do securing rent arrears from an existing tenant.”
“My advice to landlords and agents is make sure that they consider the strength of the tenant when letting the property by taking out full references and to consider specific insurance through a specialist company for loss of rent if the tenant defaults and the cost of legal expenses.”
LetRisks has compiled 10 tips to help minimise the risk and disruption for landlords and agents:
- If the rent is late, don’t delay action.
- Let your landlord know immediately what you are doing if the rent is outstanding, and manage their expectations
- Chasing the rent arrears – Establish a firm rent chasing timetable including letters before legal action, telephone scripts, serving notices etc, and make sure that that all staff are aware of these procedures.
- Get the right tenant – work with a good tenant referencing partner and don’t cut corners in the checking procedures.
- Is the Tenancy Deposit correctly placed? The changes in legislation under the Localism Bill take effect in April, and we have heard of solicitors acting for tenants on a no win-no fee basis to catch out landlords and agents if they haven’t complied with the regulations.
- Guarantors agreements – Ensure that you maintain up to date contact details for Guarantors so that you can copy them in on all correspondence you send to the tenants regarding their late/overdue rent. This helps apply additional pressure to the tenants to pay.
- Is your procedure for serving Section 21 notices compliant? Last year it was reported that 70 per cent of notices were thrown out of court because they were wrong. More landlords are relying on the accelerated procedure to regain possession. If the notices are incorrectly served, there will be delays and additional costs that the landlord may seek to recoup from their agent.
- Know your landlord – Ask if there are any mortgage or other outgoings at the start of the tenancy and their attitude to risk if the tenant was to default. It takes approximately 8 weeks from a possession claim being issued to an order being made – can your landlord afford this situation? A Legal Expenses and Rent insurance policy from a specialist supplier may be the solution. If you are concerned about whether you can discuss insurance policies with your landlord please contact us first.
- Know your tenant – maintain contact with the tenant, to establish why the rent is late or unpaid. It will improve your chances of a successful outcome.
- Making an insurance claim – contact the insurers at the earliest opportunity and follow their claims procedures.