The (unnecessarily) long and winding road….

This is the story of how a Court claim for recovery of rent debts needs to be handled, once repossession has been achieved. It is indeed a very long road, often with dead-ends and the need to retake different paths….but all necessary if you want to get back what is owed to you as a landlord.

As advice to landlords, I will also say that this is so often not what the typical agent will do: the complexity of the process and the sheer weight of time will often make an agent shrug the shoulders and say “what more can we do”….in truth, the return to the agent for seeing through months of hard grind to recover occasionally pitiful amounts (once the Court has had its say) makes this all too understandable. You’ll understand this too once you see what has to be done in the cause (see what is described below by Gosia Prazeniak, our Branch Manager and resident expert on all this).

I’m emphasising here that this is not about knocking tenants: hard things happen in life in so many ways, job loss or relationship changes, and obviously these can lead to problems with paying the rent. In many ways I hope this note will be taken as advice to tenants when those difficulties have cropped up  -don’t ignore your agent or landlord, try to seek a path out of the problem by discussion and an action plan, otherwise the legal process is immeasurably tougher. A CCJ is not something to be taken lightly, when your whole credit file will depend on a clean record.

But, I will also say that my policy is relentless pursuit: no-one should ever believe that non-payment of rent or debt arising from damage to a property can simply be allowed to be forgotten.

First things first, as a landlord getting your property back when the rent stops coming in is usually priority number one. This particular note is not about a detailed consideration of the Section 21 Accelerated Possession procedure (somewhat laughingly titled, that one) or when one should use a Section 8 Notice. This note is about getting your money: how employing a Money Claim in the Small Claims Court doubly ensures you are going to get what’s owed. We can cover the whole property repossession process in detail another time or we are more than happy to chat it through with anyone who wants advice (follow us via the Facebook links at Northwood Guaranteed Rent).

Suffice to say that five to seven months of your life might have elapsed to get to that point; that’s the time it can typically take to get a Section 8 repossession warrant secured.

This note focuses mainly on the processes once you have the County Court Judgement in your favour from a Money Claim, and assumes you have used a Section 21 Notice to get the property back in your possession: you have the property back, and you expect the money you’re owed to follow. Nope, not going to happen, at least not without a lot of hard work on your part (or ours if you have the unrivalled protection of the Guaranteed Rent scheme Northwood operates).

This is how Gosia, our most relentless debt chaser, describes it: as she puts it – “The process is by no means easy (nor pleasant to follow), but it grants results (if one is patient)”.

The lettings industry is seriously lacking in support from advanced, well informed and productive Debt Recovery Agents and, as the need for debt recovery is growing, we have done in-depth case research, reviewed Court paperwork and explored all available options to recover monies.

First, establish how much money is owed, then we can apply for County Court Judgement. The cheapest option (and the fastest at the same time) is the online Moneyclaim service and their fairly simple form that needs completing alongside the payment based on value of the total debt (the fee is then added to total owed). The Court then sends the claim to the defendant who has 28 days from the date of service to submit the defence, dispute the claim or admit to it. I have found that majority of defendants are simply ignoring the correspondence which is their worst possible option, because once the 28 days have elapsed and no response has been filed, the claimant can apply for the judgement by default. This in most cases is granted with 14-21 days.  What is very important, is that I have come across many case studies that claimants went as far as issuing the claim assuming that this is the end of it and judgement will then automatically appear on defendant’s credit file, however the facts are completely opposite – unless you manually apply for the judgement (even if it is to be granted by default) the claim will just sit forever without judgement.

Once judgement is granted, you can then start considering options for enforcing… and this is when the fun begins! There are many options one can follow and it all depends on the circumstances of your tenant/defendant: whether they are employed, on benefits, if they have dependants; basically on how much you actually know about them. This is when you will refer to the first days when you met the defendant and the reference process followed when they initially applied for the property. And this is why I always stress to every Landlord how important that initial process is, it is (almost literally!) priceless. The employment references, previous landlords and credit check is one thing (basics that every Landlord should expect from Letting Agent) but the amount of information is as crucial as actual references. You need to know where they work: department, some sort of identification number or payroll, NI number, length of employment, details of next of kin at work and everything else that you may come across as information related to employment. You need their car registration, another next of kin (ideally family member), and previous addresses. If anything rings alarm bells – do not proceed with the application, you will be better off if you carefully select your tenant rather than accept someone because you fear having the property vacant. Requesting a guarantor for your tenant is a clever option: but only if the guarantor is a working UK based homeowner who signs a Guarantor Deed for the entire length of the tenancy.

If things go wrong… all the above information gathered through the reference process will help you. Under enforcement you are going to be selecting options such as a Warrant of Control or an Attachment of Earnings. These are the two main ways of recovering debts from individuals (and rather cost effective).

For a Warrant of Control you must have an address for the Bailiff to call and reassurance that the defendant actually owns something that is saleable (the Bailiff can remove goods from the property for the value up to four times the debt, as when they are sold on auctions they never achieve RRP). It ought to be remembered: how quickly you can proceed with the Warrant of Control is based on the Bailiff’s availability in your area, I have found it to be an excessively long time (6-8 weeks) and the issue that this causes is that the defendant may move addresses in the meantime, meaning your Warrant will be suspended if the Bailiff called to the supplied address and did not find the defendant there. You can then re-apply once you have new address, but it is all time (= money).

For the Attachment of Earnings you must know details of employment, and the form that you need to complete is available online and needs to be sent to the local County Court with a £100.00 cheque. Courts then send the application to the defendant’s employer and who then submits an income & expenditure form. If they fail to do so within 14 days the Court then orders the employer to do so within 7 days. Downside: if your defendant moves jobs then the case is lost. Timescale is unpredictable too; usually you should start seeing monies coming through from the employer within three months (the defendant’s employer deducts agreed amount from defendant’s nett pay).

There is nothing to stop you going for more than one legal option of recovery at the same time, however you need to make sure you advise the Court at any point if you receive any funds from the defendant as it will affect the other way that you may be approaching the matter at the same time.

If those two fail… then my suggestion is: wait and then hit the whole issue again in 3-6 months’ time. Or go after the guarantor following the same steps! Trace them: Google their name, see if they are active users of social media, talk to all contacts you may have from their initial application form.

My advice to Landlords would be: if you want to do it yourself, do it properly. Otherwise find yourself the best agent possible, an agent who will take responsibility and will know what to do in every possible situation rather than passing the problem back to Landlord.

So, very detailed and comprehensive advice…and remember, at the end of this process, a successful conclusion might only be an Attachment of Earnings delivering maybe £30 a week into your bank as recovery against a multi-thousand pound debt. Nevertheless, it is recovery, and it will mount up. I suppose the parting question is: does your agent know how to do all this, and will they bother?

One thought on “The (unnecessarily) long and winding road….

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s