Landlord possession claims continue to rise
The government’s latest Court statistics show that there were 103,329 landlord claims in 2012 that led to an order for possession being made and it is estimated that between 67 and 80% of claims led to a possession order.
The number of cases of private landlords applying for possession using the accelerated procedure is up by 85% over the last three years, indicating the difficulties in chasing rent from defaulting tenants.
Non-payment, late or partial payment of rent remains the biggest worry for landlords. Good letting agents are tending to highlight the risks to landlords more, and are putting procedures in place to help protect themselves and the landlord against the nonpayment of rent.
According to the latest Tenant Arrears Tracker by chartered surveyors Templeton LPA the number of tenants in severe financial difficulty actually fell in the last quarter of 2012 the lowest figure since the final quarter of 2011, but they warn that property owners and letting agents need to be more vigilant when screening potential tenants, since it is easier to avoid arrears than it is to recover them.
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Michael Portman, Managing Director of LetRisks said that it is clear that with the continuing difficult economic situation and job losses in certain parts of the UK, some tenants are finding it hard to make ends meet.
‘With rents rising by up to 11% in some areas, tenants are faced with rising rental and living costs. For some, the pressure is too great and they fall into arrears with their rent,’ he explained.
‘The continuing rise in possession orders is a sign that the situation is getting worse. Letting agents need to advise landlords on how they can reduce the risk to landlords. One simple way is legal expenses and rent insurance which gives landlords piece of mind and more importantly insurance cover, arrears and legal costs of evicting the tenant,’ he added.
LetRisks believes that agents should advise landlords that the tenant’s circumstances could change and discuss whether, if the tenant was to default, the landlord can afford the legal costs and loss of rent for six months or possibly longer.
It also advises landlords that if the rent it late they should not delay talking to the tenant and a tenant should let their landlord know immediately if they have problems.
Landlords who need to chase a tenant for overdue rent should establish a firm rent chasing timetable including letters, telephone scripts, and emails.
The firm is also reminding landlords about changes in legislation under the Localism Bill which will take effect in April. It has 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.
If legal action is needed landlords should make sure their procedure for serving Section 21 notices is compliant. Last year it was reported that 70% 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.