With the repossessions ban extended, what is the roadmap to recovery?
On 10 March, the Government once again extended the ban on repossessions enforced by bailiffs in England – and the six-month notice period - until 31 May 2021. Paul Shamplina of Landlord Action explains why he believes the changes will harm those they are designed to help.
Whilst the Government’s decision to extend the repossessions ban and notice period will not have come as a huge shock to anyone in the industry, in my opinion it does little to help those in the private rented sector who are most affected by the repercussions of the pandemic.
From tenants’ point of view, another couple of months’ respite, does not give them a way out of mounting rent arrears or a way to achieve long-term housing security.
In any case, those with significant rent arrears of six months or more (in addition to cases of serious antisocial behaviour) are exempt from the ban, and the longer the situation continues the more likely it is that more tenants will have built up this level of arrears.
At all of our Section 8 hearings over the last couple of months, we have been requesting that our advocates ask for leave on the exemption orders so that the most pressing cases can proceed because they all have more than six months’ arrears. If a judge at court allows leave Under Section 42 of the County Court Act 1984, to ‘transfer up’ the case to the High Court, this enables us to instruct a High Court Enforcement Officer to carry out the eviction instead of waiting for a county court bailiff, which are in short supply. Our advocates will make a request for leave at court, but it is up to the judge’s discretion to grant the leave; if they do it can help speed up the process.
The good news is that this does seem to be happening.
From landlords’ point of view, with little or no financial support, other than a mortgage holiday which does not help those who rely on rent as a source of income, the constant ‘shifting of goalposts’ is sparking increased frustration.
Unfortunately, rather than encouraging landlords to maintain their tenancies and remain in the sector, the measures taken mean rent arrears are growing and simply making the situation worse for everyone in the long run.
Since most landlords can see little or no way of recouping these losses, they know that ultimately their only route will be repossession.
Without a package of measures to address the mounting rent debt crisis and help tenants clear their arrears, we will inevitably see more properties repossessed.
Tenants, many through no fault of their own, will see debts mount, which will in turn impact their credit rating and force them to rely on social housing from local authorities, an area which is already under insurmountable pressure.
We know that over the last few years, landlords have become increasingly frustrated by escalating legislation and taxation, which has created more barriers to investment.
In a recent survey by mydeposits and Ome, 65 per cent of landlords said the industry has changed for the worse, for reasons predominantly linked to regulation, legislation and tax.
However, the vast majority of landlords do want to remain in the sector. The question is whether it will be viable for them to do so.
I recognise that some of the Government’s pre-COVID measures were necessary to balance the playing field and provide support to tenants - such as the ban on tenant fees.
However, I, like many others, cannot help but feel that offering landlords no support during the pandemic, on top of the many restrictions already placed upon them, will only accelerate their decision to exit the market.
It is a short-sighted view which, on the face of it offers some protection to tenants right now, but cannot go on forever.
If landlords are pushed much further, it is tenants who will ultimately suffer through a lack of available homes, which will lead to higher rents and landlords ‘cherry-picking’ tenants they see as most reliable.
If tenants most in need could get access to targeted financial support which not only met their rental costs more adequately (making them far less likely to default), but also provided them with a workable solution to paying back arrears, the pressure on them would be alleviated.
Consequently, the above, as well as automatic direct payments to landlords for any tenants in receipt of Universal Credit who are in arrears, could incentivise landlords to remain in the sector for longer.
I also feel that the Government should, in addition, be looking at measures to penalise those tenants who have deliberately not paid rent over the last 12 months, even though they had the funds to do so.
Unfortunately, we have come across some shocking individual cases where landlords have supported tenants, believing in good faith they have been impacted by the pandemic, only to discover their circumstances had not changed.
One landlord found that his tenant had gone on a two-week all-inclusive holiday to Barbados.
Finally, one of the biggest issues which has not been addressed is how on earth the court system is going to cope with the number of cases which are already in the system, let alone those which are on the horizon.
Having already waited, what will be 14 months by the end of May, for bailiff enforced repossessions to go ahead, is there a plan or roadmap to help the justice system cope?
I suspect not.
However, to end on a positive note, I should also make the point that, although there are lots of landlords and tenants who have been negatively impacted by the pandemic, and some who are facing court action, these are the minority.
There are many more cases where landlords and tenants have a fantastic relationship, where they have worked together to support one another through the pandemic, and where landlords with great tenants wish to remain in the sector for as long as possible.
Buy to let is still a worthwhile investment, but how landlords navigate the next 18 months will be crucial to their survival.
My advice to any accidental or first-time landlords embarking on buy to let, is do not try to navigate the minefield of rules and regulations alone. Appoint the help of a reputable agent to enable you to be care-free, committed and most important of all, compliant.
If you need help with the repossession of your property, contact NRLA recognised supplier, Landlord Action today.
The NRLA is calling for a package of support for landlords and tenants affected by the pandemic. For more information click here.
The association has also written to the Government with its own proposed roadmap out of emergency restrictions. For more information click here.