Number of landlords seeking to recover rental debt rises by 180 per cent

Landlord Action, one of the UK’s best known 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 per cent 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 2020-21¹, four per cent 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.

One landlord, Philip Robinson, had tenants who stopped paying rent in October 2019, four months prior to the national lockdown. They remained in situ throughout the pandemic but would not communicate with him or the letting agent.  They finally left without surrendering the keys or informing him that they had vacated. Having caused significant damage, Philip decided to pursue the tenants’ arrears through Landlord Action’s debt recovery service. In October 2021, the team recovered £14,950.

Philip Robinson says “I have always been very fair and taken my tenants’ personal circumstances into account, but this tenant ran a company which had £250,000 in the bank. They abused the restrictions put in place by the Government which were designed to help those in need. The tenants purchased a property, renovated it and managed to pay the mortgage, all whilst living in my property for free. If more tenants like this knew there would be repercussions, such as a County Court Judgement, I believe they would cooperate much earlier in the proceedings.”

Paul Shamplina, founder of Landlord Action and commercial officer at the Hamilton Fraser Group, comments: “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.

Paul adds:“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.”

¹ English Housing Survey

Written by Julie Hanson

Julie is passionate about property – development, investment and portfolio planning. Along with husband Alec, Julie is actively building a property portfolio while helping others to do the same.

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