Problem Tenants: tact can save money

Landlords going to court over unpaid rent can lose out. A little diplomacy costs far less, says Chris Partridge
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Taking a bad tenant to court takes, on average, six months and costs £800 plus the loss of five months' rent, according to new research.

As a result, private landlords are using eviction less, in contrast to the social sector where actions for possession doubled in the decade to 2003, with more than 26,000 tenants being evicted annually, according to research by academics from Glasgow and Heriot-Watt Universities. The evictions were mainly due to rent arrears and, in some cases, anti-social behaviour.

The Office of the Deputy Prime Minister last week issued social landlords with new guidelines, placing eviction as the last resort, rather than the almost routine way of dealing with bad tenants that it has become.

In the private sector, however, the cost and difficulty of gaining possession through the courts has already forced most landlords to rely on tact and diplomacy, rather than legal action, according to a survey of members of the National Landlords Association.

The chairman of the NLA, David Salusbury, says: "A landlord can easily swallow up a whole month's rent or more in the cost of evicting unsatisfactory tenants, not to mention the expense of putting right any damage they may have done and, almost certainly, unpaid rent."

The introduction of the assured shorthold tenancy (AST) in 1988 made it much simpler to remove bad tenants, but inefficient court procedures still can make eviction a lengthy and expensive process, according to the NLA survey.

More than half of the members surveyed said they had used persuasion rather than a writ to remove bad tenants. Nearly half reported a delay of between three and six months for the courts to get them out, whereas an unlucky 8 per cent had to wait for more than a year before getting their investment back. They spend more on legal costs as well – up to £2,000.

And the legal costs are only the start. The survey shows that 60 per cent of tenants evicted by the courts leave four months' rent unpaid. Small wonder that about half of the calls to the NLA advice line are from anxious landlords seeking guidance on how to deal with problem tenants.

The main problem is the law's delays, the survey indicates. "Landlords report that court clerks are often inefficient in providing the right documentation, while disputes over rented properties are often given low priority by our overstretched legal system," Salusbury says.

He is, however, keen to point out that the problem is rare. "Out of about just over two million private tenancies in the country as a whole, we calculate that less than 5 per cent encounter major problems," he says.

Letting agent Susan Fitzgibbon says she has had to take a tenant to court on behalf of the landlord just five times in the past 17 years. The secret is to move fast and hard when the rent does not turn up on time. If a landlord lets things slip, deadlines may be missed and everyone may end up in court by default. And if the landlord wins, there will be a further delay while the bailiffs are brought in to recover the flat.

"As agents, we jump in very quickly – on the day they don't pay, we are on to it," she says. "We are prepared to ring five times a day and send faxes to make sure the message gets through." If that doesn't work, legal notices are fired off immediately they become due, and the matter is put in the hands of a solicitor. If the case does end up in court, the time spent without any rent coming in is minimised and the legal costs should be lower, too.

"Eviction is much clearer now under assured shorthold tenancies, but some courts are faster than others and you cannot predict which judge you will appear in front of – some are more sympathetic to tenants and others to landlords," she says.

The essential first step to avoiding the stress and expense of evictions is to be particular about the tenants you accept, always taking up references and checking creditworthiness, Fitzgibbon says.

David Salusbury, at the NLA, wants the legal process to be speeded up, for the benefit of both landlords and tenants. "A streamlined procedure would also help tenants who may have a legitimate complaint against the landlord," he says.

One way forward might be to take such matters away from the courts and put them in the hands of the specialist residential property tribunals, which currently decide things such as rent levels.