Ref. Southwark LBC v Ofogba  EWHC 1520(QB)
All across the country, reports are of possession order numbers rising as tenants struggle with rent arrears and landlords lose patience.
‘Let Insurance Services’ claims that in nearly 40% of courts in England and Wales, the number of claims brought by landlords and agents which resulted in a possession order has increased by between 10% and 50% on last year. Examples include Aylesbury (10%), Bury St Edmunds (30%) and Chelmsford (45%) as well as a marked increase in London, including the case referenced above.
The same company reputedly stated that it had a 24% increase in rent guarantee insurance taken out by landlords in the first nine months of this year, and a ‘significantly’ higher increase in arrears notifications over the same period.
Perhaps the most significant change is the number of cases being brought for possession, without any claim for rent arrears. A reported 30% increase of this type of case has occurred in the last year, in conjunction with a year on year increase for the last four years of possession orders of all types.
Michael Portman, managing director of Let Insurance Services, explained:
“Landlords and agents are facing mounting rent arrears, and with no alternative but to seek a quick resolution in the courts.
“Tenants have become more savvy with rental law and much more conversant with the legal detail.
“This trend, combined with the fact that many tenants have fallen on bad times and have no financial resources to clear arrears debt, has led many agents and landlords to pursue possession only, foregoing any attempts to secure rent arrears through the courts.
“Landlords and agents often face better odds securing new tenant rental income than they do securing rent arrears from an existing tenant.”
Research group BDRC Continental claimed in a report in December 2011 that one fifth of landlords claimed that their arrears had risen in the last quarter, with almost half having experienced arrears.
The same proportion of landlords had increased rents and a further 34% said they would do so in the next six months. All cited the increased cost of running a property portfolio.
With rents continuing to rise and the economy back in technical recession, this trend looks set only to increase in the short term.