Changing trends in renting are coming in thick and fast these days as landlords position and then reposition themselves to deal with the lack of action from government over the Covid arrears crisis.
Last year saw a huge increase in illegal evictions due at first to closure of the courts and suspension of possession applications, against a backdrop of rising arrears due to loss of income for so many people in low paid jobs in hospitality, restaurants, hotels etc, basically the kind of employment largely undertaken by the most vulnerable renters with few choices, forced to live under the worst type of landlord and agent.
Then in the summer we were seeing an unexpected trend in problem cases where the landlords were wanting to sell urgently to take advantage of the stamp duty window, originally due to expire at the end of March this year.
They couldn’t get possession in the normal way so were engaging in coercion, harassment, and outright illegal eviction to make sure they didn’t miss the windfall.
Lately Safer Renting have been noticing a spike that we are keeping a close eye on, where landlords are applying for money judgements against tenants in the small claims court without applying for possession.
I’m struggling to recall this ever happening before.
S21 has always been popular because possession can be obtained without the hassle of a court hearing or facing the prospect of expensive counterclaims for disrepair, failure to protect the deposit or the aforementioned harassment.
The common practice even when tenants are in arrears, being to just get possession and then put the debt down to business losses and move on but we are currently in a position where so many tenants are in serious arrears, north of £10,000 and with the stay on evictions making possession more difficult, that the landlords are employing different tactics and ignoring possession applications in favour of applications for money judgements in the small claims court.
Looking at it purely from a landlord’s perspective, if they find it difficult to get possession and the arrears are rising, its better to go for the money where they might not bother for £1,500 but not because they are securing a debt, that’s not what this tactic is being used for.
What we are seeing is that the landlord is using the threat of the money judgement to encourage the tenant to vacate in return for waiving the debt, so they do get vacant possession for a fraction of the cost of a standard possession order.
This isn’t always a one-way street. If the arrears are genuinely undefendable, then having them waived in return for the property keys offers a sensible compromise. Forget the morality of it or the overarching issue of the English government’s complete failure to genuinely and effectively address Covid related rent arrears, its about practicality and pragmatism.
The landlord loses thousands of pounds but gets their property back and the tenant loses the debt but also loses their home. In true compromise fashion nobody exactly loses but nobody exactly wins either.
Having said that, this is a simplistic example which is only effective if the tenant has the wherewithal to source alternative accommodation, which would be difficult not just in terms of cost of relocation, such as rent in advance and deposit but also lack of a supportive reference to enable them to procure a new home.
Leaving aside the numerous arguments on different aspects of homelessness duties in individual cases, not everyone is owed full duties by the local authority and where there is no defence to the money claim and the tenants cant relocate, the only way out of the debt is usually sofa surfing with friends and family
Having said that, private renting is often a messy business and disputes between landlord and tenant are rarely as clear cut as the primary example above.
Anyone can launch a money claim but whether the court will approve it is another matter. The offer to drop proceedings if the tenant vacates, relies in no small part on whether or not the renter thinks they can effectively defend the claim, which is a big gamble.
Firstly the arrears might not be as much as claimed by the landlord. Secondly, as well as disputing the amount or the very basis of the claim, there are often situations where the amount of the debt can be reduced by a counterclaim, for say disrepair or harassment but the small claims court procedure is not geared for matters arising from a range of fiendishly complex housing law breaches and you don’t get legal aid for defending small claims, so the tenant, if they want to fight against the claim, is forced to enter a defence and possible counterclaim that cant be heard in the small claims track, so the case would need to be transferred to multi-track, for a full hearing in county court, which adds delay and pushes the debt up.
Again legal aid isn’t available and when the counterclaim is being used to offset damages against the arrears there is no scope for a solicitor to do a conditional fee arrangement (No win, no fee) because with arrears of £10,000 there would likely be no money left from the claim to pay the solicitor’s fee.
So if they want to defend themselves against the money claim, the renter is forced to advance a complex case that is really in the realm of full blown litigation, completely on their own, knowing that if they lose, they end up with a crippling debt that will hang around their necks for years.
It’s no surprise that the landlord’s original offer to drop the money claim in return for the keys, is still an attractive option, even where to do so will result in an indeterminate future of sofa surfing and where sofa surfing just isn’t an option, the renter is screwed basically. Landed with a CCJ that they may never be able to clear and through no fault of their own.
These are the tactics and conundrums which could be largely resolved if A) legal aid were available to defend these money claims (flying pigs territory) or B) government would just come up with a plan to deal with Covid related arrears.
Whether it is interest free loans for tenants, dropping the debt, or Safer Renting’s preference, interest free loans for landlords. In the context of what I am talking about here it doesn’t matter what it is, as long as something is done.
While there is no plan, parties in dispute will cobble together any pragmatic solution that will address their problems and as is so often the case, the cure can be worse than the illness.
by Ben Reeve Lewis