Every buy-to-let landlord's worst nightmare is to find that their tenant has stopped paying rent. Suddenly, the investment that was paying a solid five per cent is now swallowing money to service the mortgage. And evicting a tenant is not a simple business.
The balance of power between landlord and tenant has shifted dramatically over the decades, from the 1950s when the notorious Peter Rachman could evict sitting tenants with impunity, through to the 1970s when tenants almost had security for life.
Now it is generally agreed that the balance is about right. Tenants cannot take possession of properties, and landlords must go through the proper legal channels to evict. However, they would be well advised to get professional help in doing so. According to the Residential Landlords Association, at least half the forms presented to courts to support eviction proceedings have damaging errors. The resulting delays and wasted court fees are costing the private rented sector about £17m a year, the RLA estimates.
To help landlords get it right first time, the RLA has produced a new software package downloadable from www.rla.org.uk to take them through the process. Members can even have the printable forms personally checked to ensure that they are acceptable to the courts.
According to Dave Absalom, manager of the helpline at the RLA, errors can be very expensive. "An applicant often doesn't discover there's a problem until the court hearing - up to two months after lodging the possession summons," he says. "The process then has to be started all over again. In the meantime, the tenant is legally entitled to stay in the property. Even then, a landlord may have to apply for bailiffs to evict."
Some errors seem obscure to the non-legal mind. "Many landlords of properties in England or Wales filing a document under Section 28 of the Landlord and Tenant Act using the Law Society standard forms will fill in the address for documents to be served on the landlord as their home address," Absalom says.
This seems logical, but it is a big mistake if you are an overseas investor. "The address has to be in England or Wales," Absalom says. "If the address is in Ireland or Scotland or elsewhere, your case will be thrown out before you get to court."
Dates have to be very specific and notices must be served at the right times and in the right order, or the process may come to grief, and there are special cases, too, Absalom says: "Where a tenancy worth more than £5,000 was entered into before 1 December 2003, the letter has to be stamped by the Stamp Office, for example. If it is not, the letter is invalid."
If even a computer-aided eviction process is too alarming, it is probably time to call in the professionals. Former legal executive Paul Shamplina runs Landlord Action, dedicated to getting bad tenants out. Landlord Action also has a free advice line on 0870 389 0581.
The key, Shamplina says, is a computerised diary that helps him file the correct notices at the right times - vital when courts allocate just five minutes for undefended cases. It also allows him to keep the costs down.
"We offer a three-step process at fixed prices," he says. "The first is to serve notice on the tenant, which costs £98 plus VAT. If the rent is not paid in 14 days, we go to step two, which is to go to court for a possession order, which costs £565 including the court fee, a solicitor and an advocate." If the tenant still refuses to go, step three is sending in the bailiffs, at a cost of £198.
Unfortunately, even though the court will always order the tenant to pay these costs as well as the overdue rent, very few will. "Eighty per cent of landlords don't get any money back," Shamplina says.
Shamplina's best advice to landlords is not to get in that position in the first place. "When vetting a potential tenant, always ask for three months' back bank statements showing income and expenditure - and make sure you see the one that the pay goes into," he says. "Get credit and employer references, and speak to the employer personally." With young tenants, it may be possible to have the rent guaranteed by a parent or employer. And never, ever resort to abuse or violence, Shamplina says firmly.Reuse content