Surely I am not the only landlord worried about new EPC requirements?9:44 AM, 17th February 2021
About A week ago 125
High Court Enforcement Officers (HCEOs) can support residential landlords through the eviction of tenants and the recovery of rent arrears.
Whilst our eviction services are a fast, effective and successful means of repossessing the property, so it can be re-let quickly, enforcement for rent arrears against former tenants can often be a difficult and challenging process.
It is important to know the hurdles enforcement agents can face with residential rent arrears before going down this route, so you can make a decision based on the commercial facts and the specifics of your case.
It’s all about the assets
When enforcing a County Court Judgment (CCJ), the High Court Enforcement Agent (HCEO) will be acting under a writ of control which instructs them to take control of (seize) goods for sale at auction (or occasionally by private treaty).
Where the debtor is a home owner, there are normally more available assets – and assets of a greater value – that can be seized, thus improving the likelihood of successful enforcement, although success is never guaranteed.
However, the likelihood of a successful enforcement of a CCJ for rent arrears against a residential tenant can be lower due to a number of factors, including:
• Vehicles – often the largest asset, but may either be on finance, meaning it cannot be taken, or may be of such a low value that the removal costs will exceed what might be raised at auction
• The debtor may be deemed vulnerable, in which case the HCEO must act with consideration. In some cases, this may mean withdrawing from enforcement
• The tenant may be on some form of state benefit. Whilst this does not always mean you will not get paid, it is less likely, particularly if they are also supporting a family
• If the tenant already has an attachment of earnings order against them, then the HCEO is not permitted to continue with enforcement action
• The tenant can simply move on and be hard to trace, which can happen if they are in financial difficulties, or perhaps never intended to pay
In many cases, though, the threat of seizure can be enough for the tenant to find the money, often by asking friends and family to help out, or will enter into a payment arrangement. But those tenants who have been in this situation before may not be swayed, perhaps because they know it will cost more to remove than the goods are worth.
Once the Enforcement Agent (EA) has made an attendance they can ascertain the likelihood of receiving none, some or all of the debt. If the debtor offers to enter into a payment arrangement then it is important to seek the EA’s opinion on whether the offer is satisfactory or not. I appreciate that for many it is a matter of principle, however the reality is that many of these ex-tenants simply do not have the money to pay the debt in full, therefore I would always say that receiving at least some of the money is better than receiving none at all.
Why we can’t force entry
We are often asked why we can’t force entry to the property, but no enforcement agent is legally permitted to force entry to residential premises. The only time he may do so is when revisiting the premises to inspect or remove the goods after a controlled goods agreement has been signed.
Why we don’t take anything and everything
We are also sometimes asked why we don’t take everything away, regardless of value, so that the landlord gets some “redress”.
In terms of redress, the National Standards for Enforcement Agents, published by the Lord Chancellor’s Department, state that:
“High Court Enforcement Officers will carry out their duties in a professional, calm and dignified manner. They are required to dress appropriately and act with discretion and fairness.”
Removing goods to simply cover the costs of removal is also unlawful in accordance with the regulations. An HCEO could face legal action if the goods removed were done so in ‘spite’ and do not make any contribution towards the sums owed.
Is it throwing good money after bad?
As I mentioned earlier, it comes down to a commercial decision as to whether you try High Court enforcement, based on your assessment of how likely you think it will result in payment. Rent arrears can be high, often £2,500 and above, and the cost of High Court enforcement is relatively low – a court fee which is currently £60 and a compliance fee if the enforcement is unsuccessful, which is £75 plus VAT.
Since April 2014, the sums recovered have to be split pro-rata in accordance with the Taking Control of Goods (Fees) Regulations 2014. So if only a proportion of the arrears are recovered, you will get your fair share.
There are other options available to you, which may be worth considering to see if they will better fit your circumstances:
• Attachment of earnings order (AEO)
• Third party debt order
• Charging order
For an AEO, the tenant has to be in paid employment and you are not permitted to use any other forms of enforcement. If the tenant is in a very low paid job, you may find that the judge orders him to pay a very low monthly amount. If they lose their job, payment stops until they find another one, and you have to apply to have the order reinstated. You may not use any other form of enforcement once the AEO is awarded.
With a third party debt order, the sum owed is taken from the nominated bank account, as long as the money is in the account at the point at which the order is enforced. If there isn’t any, you have to start again.
A charging order places an order over owned property – either a property now owned by the former tenant, or one owned by their guarantor. This means that you will be paid when the property is sold. You can ask for the property to be sold immediately, but it is pretty rare for a court to agree to this. You can have a charging order in place and undertake enforcement action.
Guarantors and references
I appreciated that this is a little like bolting the stable door after the horse has gone, but thorough vetting can help prevent payment problems and obtaining a guarantor gives you another option for recovery of the debt.
As well as always running reference checks on your prospective tenants, we recommend doing the same for guarantors. In our recent webinar Mark Alexander also suggested visiting the prospective tenant in their current home so that you can see how well they keep it. You might also want to check out any guarantor’s home as well.
If you have a guarantor, you will sue them as well as the tenant. Enforcement is more likely to be successful against a guarantor and you can also consider obtaining a charging order over their property.
I know it can be frustrating, and I do think the balance is tipped more in the tenant/debtor’s favour, but we are bound by the law and cannot operate outside this.
My advice would be to judge each case on its merits before deciding how to proceed and recognizing those times where, unfortunately, it is better just to walk away.
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