Landlord Action sees 11% rise in instructions against defaulting tenants

Landlord Action, a company specialising in tenant eviction, are starting to see the effects that rising unemployment and the increased cost of living are having on the rental sector as their number of instructions against defaulting tenants has risen by 11% year on year.

A recent report from Templeton LPA suggested that although cases of severe rental arrears are up 13%, the impact of this has yet to filter through to landlords, with total buy-to-let mortgage arrears cases falling by 12% in the last year. However, Paul Shamplina, Founder of Landlord Action, believes that landlords are in fact feeling the increasing pressure on their finances as a result of defaulting tenants, but are simply less tolerant than they might previously have been which explains the rise in instructions seen by Landlord Action.

Paul comments “Tenants are stuck in a catch twenty-two situation.  Lending criteria requiring large deposits has locked many out of making a purchase and yet, high demand and low supply of rental properties is pushing rents to record highs. As a result 8,700 more tenants compared to this time last year are over two months in arrears according to Templeton, and this figure is rapidly climbing. Unfortunately, where landlords may have once been more lenient, they can no longer afford to be, especially with the knowledge that they could readily rent to someone else who can afford the payments.”

According to Landlord Action, this rise has also been contributed to by amateur landlords who would rather rush the process in order to avoid void periods in their rental income. “Time and time again we reiterate the importance of thorough referencing procedures, but far too many landlords would still rather pre-empt having to evict a bad tenant than pay out or wait for the correct due diligence and this lack of attention has seen court orders to evict tenants increase by 9% in the last year.

The full impact of public sector spending cuts are still to be seen, but landlords renting to Local Housing Allowance (LHA) tenants have already expressed concern over tenants not being able to meet payments since the new caps came into force in April. Landlord Action has already seen evidence of some landlords taking action to protect themselves and avoid falling behind with mortgage payments. Paul adds “As anticipated earlier in the year when caps to LHA benefits were announced, we have seen a sharp rise in the number of landlords serving Section 21 two month notices on their LHA tenants and issuing accelerated possession proceedings.”

A Section 21 allows landlords to terminate the tenancy at the end of its fixed term and give no reason for eviction.

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