Fast track eviction proceedure for rent arrears – some suggestions

FastTrainThere has been a fair amount in the press recently about landlord and tenant law, what with debates in the commons and Ed Milliband’s speech and all.

While doing my ‘bigger picture‘ series last year I changed my mind about a number of things and came to some conclusions.  For example – longer fixed terms:

  • Some tenants want them but others don’t – so they should not be imposed on all tenants ‘willy nilly’
  • It is unfair to expect landlords and lenders to commit to longer fixed terms if there is no quick eviction procedure for tenants in arrears of rent

It is desirable though, that some tenants be able to have longer fixed terms – for example families with children at school and older tenants who want stability and security in their home.  It is also better for society if people are able to put down roots in their community – which they can’t do if they are at risk of being moved on every six months.

The eviction procedure problem

At present it can take up to six months or more to evict a tenant for rent arrears.  If there is a genuine dispute about the arrears (for example if the property is in disrepair) then this may be fair enough.  It takes time to resolve such disputes properly.

However if there is NO dispute, it is grossly unfair on landlords to force them to continue to house non paying tenants free of charge – sometimes for many months.

Add to the time it takes to get a possession order, the four to ten weeks it can take to actually evict tenants from the property via the bailiffs after the order has been made, and you can have arrears figures running into many thousands of pounds.  In my experience it is rare for landlords to recover unpaid rent from defaulting tenants after they have been evicted.

The procedure for eviction for rent arrears is also uncertain – it is vulnerable to tenants putting in flimsy defences which, if accepted by the Judge (and it may often be hard from them to completely disregard a defence which might be arguable) can increase the time it takes to obtain a possession order by several months.

In short – the rent arrears procedure is time consuming and uncertain – even for clear cases

The only certain route to eviction (and the only certain way to evict unsatisfactory tenants) is the section 21 procedure – which is ONLY available to landlords after the fixed term has ended.

Which means it is against a landlord’s interests to give any fixed term of more than six months, or a year at most.

Lenders are never going to agree to longer fixed term under these circumstances.

So my view now is that if we want longer fixed terms to be available for tenants, urgent attention should be given to the court eviction procedure.

Suggested amendments to the eviction procedure

One solution is to introduce a new more certain eviction procedure for undisputed rent arrears cases.  Here are some suggestions

1. The current accelerated procedure where orders are made without a hearing based on the paperwork submitted, should be extended to standard rent arrears claims where the rent arrears are eight weeks / two months worth or more

2. The landlord should be required to provide the court with a copy of the current tenancy agreement plus a schedule of rent arrears which should be certified by a statement of truth

3. If there is no defence from the tenant, a 14 day order should be made by the Judge as a matter of course

4. Landlords should be allowed to instruct the court bailiff immediately the court order is made (or perhaps even send the fee and form in with the application for possession to be dealt with if the order is made), the bailiffs appointment to be not less than two weeks after the order is made

5. The tenant should be entitled to defend the claim provided either the rent arrears in dispute are paid to the landlord or paid into court (or maybe if the court does not want this administration, the banks could provide this as a service) to abide the event,

OR provided they are able to prove that they have paid an equivalent sum out in respect of repair work to the property which falls under the landlords statutory repairing obligations.

6. If the tenant is able to fulfil these requirements, the case should be set down for hearing and proceed as normal.

This should speed things up considerably and the landlord might be able to get the tenant out within two months.  As there would be fewer hearings it would also involve less court time, which could be a big bonus for the courts.

Longer fixed terms

Assuming there is a fast track rent arrears eviction procedure, I would suggest that tenants who have been in occupation for a specific period of time, say 12 months, with no rent arrears, be entitled to ‘buy’ a longer fixed term from their landlord with a premium payment (which are allowed under the Housing Act 1988).

The premium payment could be prescribed by some formula related perhaps to the rent, the length of the fixed term being bought and the retail price index.  There is no need for it to be for thousands of pounds as in long leases – it could be something like £250-500.

This would allow tenants to buy a fixed term of say two to five years. Which would give them security of tenure, for example during their child’s schooling.

However tenants who did not want a longer fixed term (and there are many tenants who don’t), would not be forced into them.  They could just continue as now.

These are just ideas and there may be problems in practice, but I don’t see why something like this  shouldn’t work.  What do you think?

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19 Responses to Fast track eviction proceedure for rent arrears – some suggestions

  1. What about the rent arrears in dispute being paid to the deposit production organization? And there being no defense unless the rent had been paid in within 30 days of when it should have been paid to the landlord. The deposit production organization could also be given powers to do the repairs.

    Also make it a criminal offence for the tenant not to leave with all their belongings when the court order expires, with the police having the responsibility to enforce the order.

    Maybe it should also be criminal offences for the tenant not keeping the court informed of their current address and employment until they have paid of the dept including before the court has decided the outcome of a case.

    I think a landlord should be able to override a fixed term the tenant had brought if they need to move back into a former home or sell a property, but not be allowed to rent out the property within 6 months of doing so. (This need not be cost free)

    Also what if a tenant is damaging the property or messing up other people’s lives, this is very hard to prove, but there needs to be a way to remove the tenant.

  2. I’m in agreement with most of that Tessa.

    But if the whole eviction process was speeded up, then I think a 14 day possession order is too quick. I also doubt the bailiffs would be able to cope.

    I’m all for longer tenancies.

    In your proposal, I assume the tenant would be free to move on anytime during the fixed term but at the expense of losing the premium?

    A months rent would seem an appropriate premium level for that.

    Flexibility to move is highly valued but it obviously needs to be fair to all sides.

    Strangely, I have offered longer fixed tenancies in the past (with no rent increase or ‘renewal’ fees) but tenants invariably prefered to go onto periodic. They had no plans to move, were happy and settled, usually with children in local schools. It doesn’t make sense to me- maybe they were just content to know I wanted long term tenants.

    How would you prevent unwilling landlords evicting tenants they suspected of intending to take up the entitlement? Or discriminating in favour of transient tenants in the first place?

    -Perhaps the way ahead is to make it so attractive that landlords want longer fixed term tenants.

  3. While I don’t have a problem with the idea of long term leases I do forsee a couple of problems with your idea.
    Accidental or one property landlords may want/need their properties back. Say the landlord is only a landlord due to a job move & can’t sell, then in say 18-36 months when the property market improves (?) he will want the property back so he can sell & move on with his life. Same goes if working abroad etc. In these circumstances the landlord may feel the need to evict after 12 months & re-let. Not great news for either tenant or landlord.

  4. @Ian, I think you are taking it all a bit too far there! Or was it tongue in cheek?

    @HB There is no perfect answer and whatever is done, someone will disagree with it, or think it is unfair to them.

    If tenants signed up for the longer fixed term, they would be tied to that unless the landlord agreed to let them go early. As now for 6/12 month terms they cannot unilaterally end it early (well they can move out but legally they are still liable for the rent).

    Unless I suppose there was a break clause. But then the landlord would have one too and that would take away the tenants security of tenure for the fixed term!

    If they wanted to be flexible they should not sign up to the long fixed term.

  5. @Sue Maybe landlords could have the right to refuse to grant a long lease if their circumstances came within criteria which could be set? For example if they only had the one property and had formerly lived in it or were intending to live in it as their home later.

  6. We were discussing this on another forum after the Miliband speech and I suggested the following:-

    Make not passing on HB to a LL a criminal offence.

    Make people who run up debts to LLs that they can never repay do community service at a rate of 1 hour for every £5 of debt.

    Allow tenants on long tenancies to take on repairing and decorating responsibilities.

    Allow tapered tax breaks to LLs offering long tenancies.

    Sort out the nightmare of a tenant abandoning a property.

    Do not let a property be re-let for a period of say 1 year after it has been subject to a S21 (this needs to be combined with making eviction for serious breaches of the terms of the tenancy agreement mandatory)

    Speed up the court process so a LL never loses more than 3 months rent when a tenant stops paying.

    I suspect many S21 cases are brought because it is a sure way to remove a problem tenant, why would a long term LL evict a good tenant?

  7. Personally I don’t agree with criminal sanctions for debt issues. That is not what the criminal justice system is for.

    From my experience probably 80-90% of section 21 claims are brought because of rent arrears.

  8. Sue,
    I kind of agree. Something along those lines already exists in mandatory ground 1 (owner occupier).

    Tessa,
    I agree, it’s not possible to please everyone.

    But you would 99% agreement on your main points,
    i.e that it should be possible to evict non payers quickly and that longer tenancies are needed.
    The devil is in the detail.

    IME, in general, tenants are not willing to sacrifice flexibility for long term security (obviously they would prefer both!).
    Maybe my sample was not typical, happy to be proved wrong.

  9. I think part of the problem is that at present a S21 is too cheap and easy for a landlord if the tenants are well behaved and/or have money so care about the civil legal processes. However a S21 takes too long and is very costly for a landlord if the tenants don’t behave and don’t have money therefore have nothing to fear from the civil legal process. (Most landlords always have something to fear from the civil legal process, as they have income and assets.)

    I tent to see long term tenancies as very one sided in real life, as it is close to impossible for a landlord to hold a tenant to them, but a tenant can hold a landlord to them.

    I would personally like to see avoiding paying dept being a criminal offence, e.g. someone that goes into hiding to avoid a CGJ or chooses to use their money on a new TV rather than paying a CGJ. At present we are getting to the stage that landlords will refuse to rent to anyone without a home owning guarantor.

  10. Hi Tessa

    I wholeheartedly agree with the various issues you have raised and as you know The GOOD Landlords Campaign even has a solution to offering good tenants some assurances that a landlord will pay them compensation is they are served notice within an agreed timescale. This does not affect a landlords right to serve notice and does not, therefore impact upon a lenders security.

    I’m not certain of your policy on posting links so I will not do that. However, if you, or your readers, would like further information and to read the legal opinion regarding The GOOD Landlords Campaign solution this can easily be found via a Google search for “Deed of Assurance”.

    Regards

    Mark Alexander

  11. PS – I do charge a premium when offering a Deed of Assurance. They are particularly popular with the “grey market” and also, as you have suggested, families with children of school age.

  12. “From my experience probably 80-90% of section 21 claims are brought because of rent arrears.”

    I reckon there is also a significant proportion of s21 claims linked to low level ASB, which is very difficult to evict on. Without s21 it would be nigh on impossible, as is currently the case in the public sector.

    So added together, how many s21′s are genuinely from no fault of the tenant? Less than 10%?

    This belies the oft trotted out line that landlords evict on a whim. As Daveg points out;

    why would a long term LL evict a good tenant?

  13. Ian,

    I disagree that debt issues should be a criminal offence (although I expect the payday loans companies would love a return to debtors prisons!).

    The current system is onerous enough. A CCJ (County Court Judgement) can really screw up your life for at least 6 years, even when satisfied (after more than one month).

    The fault lies with landlords not claiming debts (i.e only using s21) and then not enforcing the judgements. Unless a landlord enforces the judgement it doesn’t go on the CCJ register and rogue tenants can carry on repeating their behaviour.

    The excuse that having already lost thousands, throwing away another couple of hundred is money wasted doesn’t wash. If every landlord claimed for debts and enforced CCJ’s we wouldn’t have this problem.

    It also has a knock on effect of increasing the cost of doing business, thereby pushing up the rents for decent, honest tenants. Landlords have a moral duty to enforce CCJ’s.

    I would also like to see all CCJ’s automatically entered on the register- even s21 claims can have costs attached.

  14. @HB Welcome – I totally agree that it likely that less than 10% of s21′s are served due to rent arrears. However, that’s not what Shelter hear. They may get a couple of dozen people giving them instances of a Section 21 being served because they will not agree to a rent increase but to Shelter the perception of the problem is always likely to be bigger than the reality as they only get to deal with problems day in day out.

  15. Hello Mark,

    I think it’s a good idea, it won’t suit all situations but it’s another option.

    What premium (as a %age of rent) do you personally charge and what take up rate have you had (as a %age of tenants with the option of periodic or another fixed term AST- assuming you don’t charge renewal fees)?

    p.s In your 2.22 reply, I think you muddled up your first sentence but I get your point! I’ll refrain from commenting on shelter but I think we are in agreement.

    Ian,
    Just read your comment on Mark’s site about all landlords should take action against defaulting tenants- it seems we are very much in agreement (apart from making it a criminal offence)!

  16. @ HB welcome – I tend to play it by ear. My general modus operandi is to advertise my properties about 10% below market rents for comparable properties. This produces a high number of enquiries. I use all advertising portals and have found a way to use them all and get tenant referencing for free. I then arrange block viewing on a Saturday at 15 minute intervals. Organised chaos as nobody is ever bang on time but that does demonstrate a high level of demand. I ask searching questions and I’m particularly looking for tenants who have a good reason to want to let from me long term. Ideally I will find more than one ideal candidate and that gives me an option to introduce the Deed of Assurance concept and also to ask the tenants to make a bid for the property and the Deed of assurance. In other words, I don’t have a formula, save perhaps for market forces. best yet has been £100 over market rent and £250 in exchange for a Deed of Assurance whereby I would pay compensation equal to 6 months rent if I choose to to serve notice where within 5 years, subject of course to the tenant having complied with all conditions of the AST.

    I only offer 6 month AST’s and I allow them to revert to statutory periodic thereafter as this provides me with maximum protection and flexibility.

  17. As to the number of s21 when a tenant will not agree to rent going up etc., as the tenant is most likely to move out before the s21 is enforced, and may even find somewhere else before the s21 is served, I think the threat of a s21 is more of an issue then the number of “no fault” s21 that are actually used.

    Also a lot of agents serve an s21 as soon as a tenant moves in, so they can force the tenant to pay an admin fee every 6 months for a new AST.

    I like the concept of “Deed of Assurance” but I can’t see them catching on as it takes away a lot of “hidden” income sources an agent has.

    @HB Welcome
    You can’t get a CGJ on an ex tenant if you don’t know where they live, likewise you can’t get an attachment of earning on an ex tenant you are trying to enforce a CGJ on if you can not find them. Hence my ideal that not keeping the court inform of the contact address should be a crime.

    CGJ are also meaningless against someone that expects never to have a job.

  18. Ian,

    You can get a CCJ on an ex-tenant, even if you don’t know where they live or you can’t find them.
    -Though I would suggest your initial tenant checks may be suspect if you can’t.

    However, if you have exhausted every avenue, tracing agents, work, family etc, then you can serve the claim at the rental property address.

    Even if they have done a Lord Lucan or disappeared abroad, you have drastically reduced their chances of coming back to the UK and stitching someone else up.

    “CCJ are also meaningless against someone that expects never to have a job.”

    That comes back your initial tenant checking. If you are taking on tenants like that in the first place, you should be experienced in that area and take appropriate precautions.

    If you are refering to some poor sod whose world has just collapsed, then chances are they will get their life back on track within the 6 years timescale.
    -If they don’t, they have suffered enough IMO, and you will have had your pound of flesh.

    Incidentally, how would your proposal of criminalising debtors, that never expect to have a job, make things any better?

  19. Mark,
    Thanks for that, very interesting. It’s not going to suit all situations but worth keeping in mind for the future. Cheers!




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About the post author:

Tessa Shepperson

Tessa is a lawyer specialising in residential landlord and tenant law. She runs the Landlord Law website (now in its 12th year) and is a director of Easy Law Training Ltd and Your Law Store. Tessa also sits on the Property Redress Scheme Council. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google



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