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Private tenant evictions soar, Rent Arrears rise again

August 22, 2012 | Landlord News  

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Since 2009 there has been a 70% rise in court orders to evict private tenants. The findings have been unveiled by Crisis, a homelessness charity. Their analysis of figures from the Ministry of Justice revealed that 36,211 landlords in the last 12 months were granted a court order to evict their tenants, an increase of 12% on the previous year, and a massive 70% higher than the 21,351 court orders granted three years ago.

Duncan Shrubsole, director of policy at Crisis, said, “Sadly it is no surprise that we are seeing tens of thousands of private tenants facing eviction.

“They face a dreadful combination of high unemployment and underemployment, draconian cuts to housing benefit and soaring rents. Our concern is that many of these people will have nowhere to turn, and end up falling victim to homelessness. In fact the Government’s own statistics point to this already happening.”

“We are calling on the Government to rethink cuts to housing benefit that will inevitably leave increasing numbers of people unable to pay the rent. We are also in desperate need of more social and affordable housing in order to rein in the soaring rental market.”

Between 2009 and 2011, the number of people who approached their council as homeless resulting from the end of an Assured Shorthold Tenancy or because rent arrears went up by 42% to close to 10,000 households.

Speaking of rent arrears, they have risen for a second consecutive month, with 9.3% rent late or unpaid. This follows hot on the heels of rents hitting a record high in July, which pushed annual rental inflation across the UK to 2.9%. Tenant finances look pretty grim, with total unpaid rent amounting to £295m in July, up from £289m late or unpaid the previous month.

The latest buy-to-let index from LSL Property Services shows that the average national rent is currently £725 per month, an increase of 1% on the previous month, and beating the record high set in October 2011, which stood at £720.

Rent rose in eight of ten regions in England and Wales on a monthly basis. The South-East was the fastest riser, increasing by 2.2%. The next largest increase was in the West Midlands, rising by 1.8%. The East of England and the South-West bucked the trend, with rents dropping in these regions by 0.4%.

London hit a new high yet again following a 1% rise to £1,057, breaking its own record for the third consecutive month.

David Brown, commercial director of LSL Property Services, said, “The backlog of frustrated first-time buyers in the private rented sector showed no sign of clearing in July – in fact, it is still growing. As lending to those without substantial deposits remains depressed, demand for rented accommodation can only go one way in the long-term – providing further upwards momentum for rents.


“The rental market is also entering its summer peak, as recent graduates and those with new jobs begin to look for new accommodation. With more tenants on the move, alongside long-term underlying demand, fierce competition for properties is enabling landlords to increase rental prices to new highs.”

“With the economy still in recession, and rents climbing to a new record high, the minority of tenants experiencing difficulty in meeting the monthly rent cheque on time is steadily climbing.


“However, this has not yet fed through into increased mortgage arrears for landlords, with the number of buy-to-let mortgages over three months in arrears actually falling compared to last year.”

After two years as chief executive of the Tenancy Deposit Scheme, Steve Harriot is stepping down to become chief executive of CDS, a co-operative housing association in South London, effectively coming full circle, as this is where he began his career in housing back in 1985. He shall remain on the TDS board in a non-executive capacity.

Having joined the TDS in September 2010, he is credited along with its chairman Martin Partington for his instrumental role in turning it’s fortunes around. When they came on board, the TDS was in dire straits, teetering on the verge of collapse resulting from a number of disputes that had soared way beyond expectation, and the increased costs to angry members.

Harriot was pivotal in the reorganisation of the scheme, which turned out to be successful, leaving them now in the current position of re-tendering for another government contract to run a tenancy deposit scheme in England and Wales.

Taking on Harriot’s role as interim chief executive will be Nick Hankey, who has been director of resources at the TDS since last September.

ARLA was behind the launch of TDS; their managing director, Ian Potter, spoke highly of Harriot’s contribution, saying, “Under Steve’s leadership TDS had made a great leap forward in terms of being much more member focused. He has built an effective team which is well placed to meet the future challenges.”

Harriott said, “TDS is a great organisation, delivering value for money tenancy deposit protection and adjudication services. The team here have worked very hard to make real and lasting improvements to the quality of what we do and I am in no doubt that the team will go from strength to strength.

“I am delighted to be remaining on the board of TDS until a permanent chief executive is appointed and will continue to play a role in TDS’s continuing future success.”

From next month onward, squatting will be a criminal offence, thanks to new legislation. Although the move sounds beneficial, there is some uncertainty as to how effective it will be for lenders and landlords.

This is the government’s first step in updating the law dealing with squatters. After reviewing their options, the Ministry of Justice decided it would be best to introduce new legislation rather than amend existing legislation. Homelessness charities have been vocal in their support for squatters’ rights, alleging that the criminalisation of squatters unfairly targets one of the most vulnerable sections of society.

As things are, the standard procedure for a landlord dealing with squatters in residential properties is to undertake civil possession proceedings in the County Court. An eviction date can often take around two months to obtain, depending on how busy the local court is. The faster alternative, ideal for more urgent cases, applicable if the squatters haven’t been in the property very long, is to apply for an Interim Possession Order. Although quicker, it includes two more hearings and extra documentation and, as a result, can end up rather costly for the landlord.

Therefore, criminalising squatting will have the positive impact of sealing the haemorrhage of cash landlords have to spend on legal fees, as it would be a matter for the police. But this doesn’t necessarily mean that the eviction process will be any quicker; with the handling of the matter in the hands of the police and the Crown Prosecution Service, landlords will not be in a position to hurry things along.

Landlords should carry out a thorough vetting process, regardless, making detailed tenancy agreements essential. However, with a tenancy agreement in place, the police are less likely to become involved; the usual civil route will need to be followed.

Given the strain on police numbers and resources as a result of the governments austerity measures, just how much of a priority will police time be devoted to dealing with squatters when they have so much else on their plate? Still another valid query remains: Will the new legislation prove to be an effective deterrent for would-be squatters?

Perhaps we may find that, despite this new legislation, it may be easier for landlords to go through the civil routes except in the most straightforward open-and-shut cases.

 

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