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Written by rosalind renshaw

There has been a big rise in the number of court possession orders as tenants increasingly fall on hard times – and landlords give up on trying to claw back arrears.

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 an order being made for possession has increased by between 10% and 50% on last year.

It says increases are being seen across the country and gives examples of Aylesbury (10%), Bury St Edmunds (30%) and Chelmsford (45%).

However, the number of applications for possession has also increased, by 6%, as tenants fall behind on rent.
 
Let Insurance Services says 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.

Michael Portman, managing director, said: “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.

“We have seen a sharp rise in demand for rent guarantee insurance as landlords and agents look to find ways to protect their rental income.

“It is clear that this problem is not going to go away. The labour market is starting to feel the strain of public sector job losses and the economy is far from healthy. Ever-increasing fuel and food prices could place more tenants in difficulty, and the labour market has much ground to make up as the private sector struggles to compensate for public service job losses.

“Against this backdrop, as rents rise over the medium term, a growing number of tenants will see their finances come under mounting pressure – and we expect tenant arrears cases to climb over the next 12 months.”

In a separate new report, from research group BDRC Continental, 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.

The report also found that almost three-quarters (72%) of those who have sought possession of their rental property were driven to do so by rent arrears. Other reasons for seeking possession include anti-social behaviour, which contributed to nearly half of possessions.

Landlords wait an average of almost four months to obtain possession and pay £866 in legal fees alone.

Comments

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    S A Longren: "Rents are too high in the first place, and it is plain silly to increase them when tenant's incomes are not rising..."

    "...plain silly..."? Oh, grow up won't you!

    What is plain RIDICULOUS is your one-person war against renting and rental values.

    Is it equally "plain silly" for the fuel suppliers to raise their costs by 30%? For Heinz and ASDA etc to be charging 121% MORE for a four-pack of beans than it did last year? But all you can do is to attack rents which go up a few percent here and there.

    I think that you will find that the cost of living has gone up around you EVERYWHERE - and not for the roof over people's heads.

    To then state "some will have no choice but to part-pay financial obligations, including rent, or opt out altogether? It is not as if there are many decent more affordable rentals to move to as an option, when having to factor in their area of work/travel/schools/family" is frankly absurd. Are you saying that it is acceptable to take a tenancy on a property which 'suits' your lifestyle - even if you have no intention or means of paying for it??

    Beggars belief.

    Before you next raise an argument... at least have something sensible to raise - and save yourself this constant embarrassment of errors.

    • 12 December 2011 11:25 AM
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    exactly

    and so the spiral begins just like the dotcom boom and every other bubble in history.

    when you read articles that first time buyers will be 44 before they can buy a property and 52 in london you know it cannot last.

    these soundbites will be used by historians to explain the property mania in the uk

    p.s how can wanting our kids to buy a property and grow the economy by taking a stake in it be 'doom and gloom'?

    • 11 December 2011 12:26 PM
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    RE not stupid "Doom and gloom Dave you forgot supply and demand-everyone needs a roof over their head...so they leave the private rented sector and go where??????"

    Why do people always give the stupid & simple answer supply and demand. Its if people have no choice but have no choice to pay ever increasing rents? What a load of rubbish.

    Haven't you heard of coping strategies? Greedy landlords are charging record high rents despite being bailed out by low interest rates. Wages are frozen and falling due to inflation. There is simply a point probably reached now where people will find alternatives. Many will stay with parents, more will share, more will squat. Void periods will simply increase and rents will simply fall as people have less money to spend.

    In these times people will find alternatives.

    • 10 December 2011 22:24 PM
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    they will be buying the forced sales of liquidated btl portfolios

    I expect average prices to fall to around 90-110000

    there is always a demand for property,but its the supply of credit which decides whether prices rise or fall.

    if you have buy to lets sell now or pay the price later

    p.s there was lots of demand for tulips in amsterdam and limited supply at one point...obviously that changed

    I think its a very positive situation for our kids

    • 10 December 2011 07:51 AM
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    Doom and gloom Dave you forgot supply and demand-everyone needs a roof over their head...so they leave the private rented sector and go where??????

    • 09 December 2011 17:08 PM
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    as prices fall,people will buy rather than rent leaving huge supply chasing dwindling renters.

    landlords will be hit with the unthinkable

    a property to rent with no tenants wanting it...they will be hit with

    1/falling prices
    2/increasing mortgage rates
    3/lack of tenants
    4/falling rents

    banks will ruthlessly persue landlords who cannot pay their mortgages and then go after their family home...in fact if you have money in family home they are more likely to bankrupt you.

    BTL is the next financial disaster to hit the uk

    • 09 December 2011 07:54 AM
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    Rents are too high in the first place, and it is plain silly to increase them when tenant's incomes are not rising, quite the opposite, in real terms. What else would be expected but that some will have no choice but to part-pay financial obligations, including rent, or opt out altogether? It is not as if there are many decent more affordable rentals to move to as an option, when having to factor in their area of work/travel/schools/family.

    • 08 December 2011 11:51 AM
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