Problems with mediation and proposed plans to enforce it in the PRS

Whilst researching for my latest article ‘Government’s destructive path‘I asked specialist litigation solicitor, and Partner at Helix Law, Alex Cook, what he thinks about the Government proposing to introduce a new ‘pre-action protocol’ to the private rented sector.

I already had some knowledge of ‘post-eviction’ mediation, which led me to believe that this would be a terrible new development for landlords, heaped on top of already lengthy and cripplingly expensive eviction procedures. This was before the Government imposed an eviction ban on private landlords, which it is even looking to extend.

Alex Cook had the following to say:

“I’m a big fan of mediation in commercial disputes and use it a lot. I am an accredited civil and commercial mediator myself, but where it really works is in bigger disputes where the parties have skin in the game. Honestly, in housing cases I just can’t see this working. What is the tenant’s downside? What leverage is available? That’s really the problem overall now. The tenant can sit tight and the landlord can do nothing.

“This is why so many possession claims run through the courts, most of them issued by housing associations! (c. 65%). The tenant receives legal aid (so there is no cost to them) and typically the tenant has no assets, so there is no financial ‘cost’ of a County Court Judgement for them even if they lose.

“On the other hand, the landlord can’t recover their legal costs EVEN IF THEY WIN! And during the whole process, they have to find the mortgage payments, cover the cost of eviction and so on. So the net result is that bringing in another time-consuming protocol will make the whole thing more expensive, and will drag out the process further.

“In addition, if a tenant promises to leave this is actually not legally enforceable and so in housing cases the only way it might be settled is if say the tenant’s lawyers can persuade the landlord to allow the tenant another chance etc. This drags the whole thing out longer and will snare up the courts further if/when the tenant defaults. I fear we’ll all be back in court again.

“My experience is that most landlords go to serious lengths to try to work with a tenant before even serving a notice, let alone issuing a claim. Most try to communicate and try to find a resolution. Claims are the last resort as the statistics show. Conversely many tenants put their heads in the sand completely or actively invite a claim (often because local authorities advise this – it can mean the non-paying tenant jumps to the front of the queue for social housing, which is also unfair to others paying their rent who may have spent years waiting to get a social home).

“So to think a tenant at mediation is likely to suddenly say ‘let’s enter into a payment plan’ and then honour it lacks credibility in my mind. If you add in the scrapping of Section 21s, the combined impact is that effectively tenants’ security of tenure is being extended through the back door.

“Landlords will need to be able to carry no rents for many months (even years) before being able to evict. What about the landlord’s access to justice? What about their human rights? And their mortgage liabilities?

“More broadly, the private rented sector should form part of the housing solution. Imposing another process on landlords dealing with non-paying tenants will turn off landlords and encourage sales. This will exacerbate the housing crisis as it will result in fewer rental properties being available.

“For the same reasons I expect rents to rise to compensate landlords for the (much) greater risks they will be taking, also due to supply of rental properties being reduced. For all these reasons this is completely back to front thinking.

“Give landlords the confidence to invest in PRS housing; make evictions EASIER and quicker, not harder; enforce downsides to tenants if they breach an Assured Shorthold Tenancy or an agreement to leave.

“Where firms/solicitors/Shelter and so on receive legal aid and the case is lost they shouldn’t be paid. Finally require local authorities to actively offer alternative housing before the stage at which bailiffs are instructed.”

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