7 May 2020

Extending eviction bans is a gift to non-paying tenants – and a nightmare for landlords

By Rosalind Beck

Many landlords, tenants in house-shares and neighbours of anti-social tenants will be filled with despair at the latest news that there may be a three-month extension to the current three-month moratorium on evictions in the private rented sector.

The announcement was made by Communities Secretary Robert Jenrick during a virtual Q&A with MPs on the department’s parliamentary select committee.

Justice delayed is justice denied and never more so than in the case of letting houses; when a tenant isn’t paying, the debt increases every day the tenant remains in situ.  This is completely different to pursuing fixed debts, where a delay may be stressful, but not more costly.

Landlords will not be surprised by the announcement however. It is such an easy option and just the latest evidence of the Government treating private landlords as though their concerns are irrelevant. With the current three-month ban, the Government has already forced landlords to keep people in their properties when they are not paying the rent. This is a gift to the large sub-section of deliberate defaulters who think ‘why pay if they can’t evict me?’.

Of course there are tenants who are genuinely struggling to pay their rent and who have always been decent and reliable. These invariably are finding ways to meet their obligations and work with their landlords. What is of concern is the behaviour of those who were facing eviction before Covid-19, often after lengthy court processes and already thousands of pounds in arrears and those who see this as a chance to take advantage.

There are also those tenants who are receiving Government assistance but not using it to pay rent as they heard the Government mention ‘three-month mortgage holidays’ and landlords’ obligation to pass on this ‘gift,’ when it is a highly problematic rent deferral and not a holiday at all.   A huge number of tenants have wrongly got the message that they now don’t have to pay, largely thanks to the Government.

This is especially galling as landlords are receiving no assistance from Government, despite the latter passing legislation hugely detrimental to them, including the embargo on re-letting vacant properties as well as the ban on evictions.  Landlords are not eligible for any help as HMRC doesn’t classify them as self-employed.  In addition, most would not be eligible for Universal Credit.

This week we have heard that in Scotland – contrary to England and Wales – the Government is helping landlords by setting up a £5 million fund for landlords to borrow money if their tenants don’t pay the rent. This is not what it first appears. What the Scottish Government has actually done is ban evictions for six months, meaning many landlords will lose thousands in unpaid rent, and then offered landlords a loan which landlords will have to pay back. Obviously, it is tenants who should face the liability of paying back the missed rent, not landlords, but the Government knows they would not then get the money back.  So a Government measure exacerbates the problem of rent arrears and the landlord foots the bill.

Within this plan to possibly extend the eviction ban, one might also ask what forward planning the Westminster and devolved governments have done to help the courts process all the claims that will be made at the end of the ban? Pushing evictions further down the road will cause a system shock in the courts. In addition, local authorities will need to house huge numbers of tenants in a short space of time when landlords finally get to repossess their properties.

As a further way of delaying this day of reckoning, Jenrick has suggested new ‘pre-action protocols’ be put in place. “This puts a duty on the landlord to work in good faith with their tenant and see if there is a sensible way in which to manage the situation before embarking upon eviction proceedings,” Jenrick said.

In fact, landlords know that such mediation procedures are often a farce. I know of one example where a landlord who used mediation said that a tenant whom a court had ordered should pay £700 to the landlord, suggested in mediation that they pay none of the debt, but that the landlord pay the tenant £400. This was an ‘after the event’ mediation.

To have to enter these pointless procedures before eviction however would be even worse.  Non-paying tenants would gain a further opportunity to stay even longer, rent-free, while both parties enter ‘talks’ on what the tenant agrees to pay.

Since the tenant already signed to say they would pay the rent in the tenancy agreement and then didn’t, any signature on an eventual ‘agreement’ doesn’t count for anything. The process does however buy the tenant more time – also meaning the Government doesn’t have the problem of their potential homelessness to deal with – while landlords shoulder the burden.

Both the eviction ban and the pre-action protocol are cynical moves by the Government. It knows it can impose burden upon burden on landlords – as it has been doing for several years – in the knowledge that the latter can do absolutely nothing about it.

Nothing, that is, other than pull out of the sector as soon as they feasibly can; a move which can only lead to fewer homes to rent and an increase in homelessness. Landlords will only be the whipping boy for so long.

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Rosalind Beck is a doctor of Criminology and a Conservative Party member in South Wales.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.