May we have more diligence please? In spite of the current economic climate and reports suggesting that landlords are losing confidence in the buy-to-let market, the private rented housing sector remains an important aspect of the housing market with the private rented sector accounting for 12% of England’s housing stock (2.6 million homes); an increase of 4% on 2006 figures. [Source: Survey of English Housing – Communities and Local Government]
The ‘experts’ through the media continue to prophesise gloom and doom with long term falling house prices; negative equity on mortgaged properties; mortgage foreclosures on the increase along with unemployment. What will the impact be on the private rented sector as the recession continues? Common sense tells me that a natural consequence will be that more tenants will default with their rental payments by reason of circumstances beyond their control, such as redundancy, and property investment landlords will consider purchasing ‘buy-to-let’ knocked-down priced properties to add to their property portfolios in readiness for property values to increase.
However careful landlords may be with the vetting of prospective tenants, there will be many tenants who will breach their tenancy agreement which is likely to result in the landlord not receiving their rent which they rely on to service their mortgage commitments. For many landlords it is re-assuring to have the benefit of rental guarantee and legal expense) insurance from the outset of the tenancy in the event of tenant default. Indeed, for most letting agents, landlords are positively encouraged to take out such cover as part of the letting agent’s standard service towards their client landlords.
But what if the landlord elects not too? Can landlords afford not to take out such insurance cover? When a tenant defaults or fails to vacate a property, where can a landlord go for a professional, speedy and competitively priced solution? Whereas they may be referred to their letting agent’s appointed solicitors or their insurers’ appointed solicitors, landlords need not necessarily appoint solicitors but, instead, place instructions with organisations who proffer tenant eviction services for a fixed fee. This seems to be a growing business within the lettings industry. There are many providers and an initial web-site search identifies scores of businesses offering high success rates without the need for landlords to appoint solicitors. In reality, these organisations have arrangements with firms of solicitors for the court issue and representation stages of the eviction process with their fees being deducted from the all inclusive fixed fee paid upfront by the landlord to the service provider with a standard of service that might fall short of the landlords’ expectations. In other words, ‘you get what you pay for’.
Having represented uninsured landlords in Court I have been disappointed by the number of ‘inexcusable’ errors which have appeared in the initial statutory notices (and court process) resulting in the S8 HA 1988 Notices of Seeking Possession being incorrect and worse, fatally flawed resulting in the court possession action either being ‘lost’ or the Court granting leave to dispense with the S8 HA 1988 Notice precluding the landlord from relying on the statutory grounds for possession.
Simple errors which should have been picked-up by the service providers and if not by them, by the service providers’ appointed solicitors. Errors such as misspelling of names; failing to incorporate all parties in to the court proceedings; citing an incorrect monthly rental and failing to show a correct accumulative arrears total. 
Whereas these instances may be few and far between when taking in to consideration the volume of matters actioned, it is still of little comfort to the landlord who now suffers unnecessary delay in obtaining vacant possession and is likely to be financially prejudiced with little prospect of there being a financial recovery from the tenant at the end of the day.
Greater care needs to be taken by the service providers and their appointed solicitors to check the information initially provided by the landlord and/or the managing agent and to cross reference information with the tenancy agreement and associated documents notwithstanding any declarations signed by the landlord confirming the information form to be correct. How easy it is for the uninitiated landlord to state that the rental is four weekly (as oppose to monthly) because they receive 4 weekly housing benefit rental payments from their local authority.
A simple misunderstanding on the part of the landlord which can have consequences if not picked-up by the service provider or appointed solicitors and no redress by reason of the declaration signed by him.
With the growth in tenant eviction service providers it begs the question why firms of solicitors who proffer residential re-possession landlord and tenant services appear unable to provide a service at a similar non-contentious competitive rate. The answer may be that they consider such work not to be ‘economically viable’ meaning that it would not generate as big a profit as they would like. Isn’t any profit better than no profit at all? With the decline in conveyancing transactions and firm’s ‘bread and butter’ money, perhaps they should consider the viability of ‘standard’ possession work. For as long as landlords elect to use third party service providers, they need to satisfy themselves that their interests are properly protected and the matter will proceed without avoidable hiccups. For this they should use providers with a solid industry background.
Mike Summerhayes, Director of Legal Services – LetSafe (UK) Limited - providers of tenant assessment services for Letting Agents and Private Landlords as a well as a comprehensive range of Legal Protection Products for landlords and landlord eviction services.
Article originaly published in the August 2008 edition of "Agreement" magazine the official ARLA publication
(Association of Residential Letting Agents)
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