Fiona Gaskell – partner and dispute resolution solicitor at Clough and Willis – on why a one size fits all approach to rent arrears has become a massive injustice for landlords.
When the Government imposed a stay upon possession proceedings at the beginning of the pandemic in March 2020 there were thousands of possession cases ongoing in the Courts and many of those will have been based on the tenant’s failure to pay rent and the landlord trying to recover the property because of rent arrears. The decision to suspend possession proceedings was clearly based on a policy which did not want to see large numbers of people being evicted from their homes at a time when the country was in a state of chaos and there would be even greater difficulties than usual in rehousing any tenants who had been evicted. A situation that no one could really argue with.
However, the result was that all of those cases lay dormant. When the Government decided that it would allow old cases to be pursued, landlords were required to serve Reactivation Notices containing information about the effect that the Coronavirus pandemic had had on the tenant. The Courts were positively encouraging landlords and tenants to reach agreement and to try, in cases based on rent arrears, to reach an agreement whereby the rent arrears could be paid off in addition to the usual monthly or weekly rent over a period of time. To assist landlords, those who had buy to let mortgages were advised that their lenders would not take action if they were unable to make mortgage payments during this time. As any landlord knows there are an awful lot more expenses in maintaining a property than simply paying the mortgage and those expenses simply continued e.g., buildings insurance, maintenance and upkeep of the property, cost of annual inspections.
Where possession proceedings had already been issued, the relationship between landlord and tenant had already broken down. The vast majority of landlords are always reluctant to issue proceedings and will have tried to reach agreements with their tenants about the payment of arrears long before they issue proceedings. It is generally only in the cases where no agreement can be reached with the tenant that landlords will issue proceedings. The reason for this is the costs of the proceedings, the likelihood that the landlord will not only not see any rent arrears already accrued but will not receive any rental payment whilst the proceedings are ongoing and difficulties then of having an empty property and having to find a new tenant. The freezing of ongoing possession proceedings made all of those problems worse than they normally were.
During this time, many landlords contacted us to advise that following the freeze on the commencement or continuation of possession proceedings tenants simply stopped paying any rent at all, even where that rent was actually provided by way of benefits.
This has caused great hardship to landlords, particularly those who do not operate as a business but simply have one or two properties which in some cases they may have inherited or may have been the family home from a previous relationship and the property has simply been kept as an asset which will hopefully increase.
In some instances, the income from the rented property is their pension. One of our clients, an elderly lady, was already owed more than six months’ rent arrears when she consulted us, and we issued proceedings early in 2020. By the time this matter finally got to the Court earlier this year the rent arrears were the equivalent of 20 months’ rent. When rent arrears reach that sort of level there is no prospect of a tenant ever clearing those arrears and the landlord has little option other than to write them off. This is not an isolated incident and we have heard many similar stories from clients during the pandemic and are now receiving instructions from them to pursue possession proceedings based on rent arrears for amounts which are the equivalent of six months’ rent arrears or more, which would nor generally be the case prior to the pandemic.
The Court has a huge backlog of cases to deal with and quite properly is determined that these hearings will be dealt with in person so that the parties can be present and so that the tenants may be able to seek legal advice from the many advisers who attend such hearings from organisations such as Citizens Advice and Shelter. Inevitably, however, it is much more difficult to list such matters for hearing quickly when the Courts are still subject to Coronavirus restrictions and a limited number of cases can be dealt with at any one time.
In short, all of this disproportionately affects landlords who are kept out of their money and their property.
