Sharp rise in number of landlords seeking to recover rental debt

There has been a significant increase in the number of landlords seeking to recover lost rent, according to Landlord Action.

The eviction and housing law specialists has seen a sharp rise in landlords requesting to use their debt recovery service.

Instructions for the last year, April 2021 to March 2022, were up 180% compared to the pre-pandemic year, April 2019 to March 2020.

The circumstances of a tenant falling into arrears can be tricky to navigate, especially if the tenant has fallen into financial difficulty, as was the case for many tenants throughout the pandemic.

However, landlords and letting agents have found that some tenants used the restrictions placed on landlords over the last two years to avoid paying their rent, even when they had the means to do so.

According to Landlord Action, the restrictions also mean that the value of rent arrears are now higher than ever.

Whereas in the past there was a tendency for some landlords to seek possession but write arrears off as a bad experience, under the assumption that recovering the debt would be too difficult, many landlords can no longer afford to write off such large sums of money.

Responding to the English Housing Survey 2020-21, 4% of private renters reported being in rent arrears. With an estimated 13 million people in the UK renting from a private landlord, this suggests approximately 52,000 were in rent arrears between 2020 and 2021.

Paul Shamplina, founder of Landlord Action and commercial officer at the Hamilton Fraser Group, commented: “We currently have hundreds of live debt recovery cases, ranging from a few thousand pounds right up to one where the arrears have reached £200,000.

“Admittedly, this is an extremely rare case, but what many of our cases have in common is that the tenants had the means to pay. For example, one case is against a practising doctor who owes £42,000.”

Once a judge has granted possession, they will then look at the arrears schedule to see what the landlord is owed. As part of the judgement, the judge will order that the tenant pay the arrears owed which will include costs incurred by the landlord for bringing the claim and interest in an amount the court sees fit. The tenant will then be issued with a County Court Judgement (CCJ).

If, however, the tenant does not pay the money that is owed, the landlord can then move to enforcement by instructing a debt recovery company, like Landlord Action. The Money Judgment is not registered as a CCJ on the Register of

CCJ’s Court Orders and Fines until the landlord attempts to enforce the judgement.

Shamplina added: “If there are substantial arrears and the tenant is employed with a steady level of income, therefore has the means to pay, but has simply stopped paying, it is worth pursuing the money that is legally and rightfully owed to the landlord.

“There are many ways to enforce an outstanding debt such as appointing a High Court Bailiff who can seize goods, apply for a Third-Party Debt Order (freeze bank account) or apply for an order for an attachment of earnings. If a landlord wishes to seize goods on the eviction date this can only be done if a High Court Bailiff is appointed.”

SOURCE: Property Industry Eye | APRIL 29, 2022 | MARC DA SILVA