According to Shelter, around 3m home owners and tenants will have problems paying their mortgages and rent following their pre-Christmas spending sprees.
Again, according to Shelter, who have been claiming that thousands of tenants are being thrown out on their ears because they complain about defects in the property, 'sky-high housing costs' are to blame.
But is this really the case' If you discount most of the pricier parts of London, inflation adjusted housing costs and rents have actually been falling across the UK.
As Mathew Lynn, writing in the Daily Telegraph about Shelter?s proposed introduction of rent controls observes: 'All the evidence suggests that rents are coming down in real terms, not rising, while the increasing numbers of tenants can mostly be explained by mass immigration and the explosion in higher education. There is no problem ' and, even if there were, rent controls would be the worst possible solution.?
?Austerity?, 'Housing Crisis?, 'Sky-high Housing Costs?, tenants 'Close to Breaking Point?, Revenge Evictions' all very emotive words and headlines currently being banded about by Shelter and others, but are they really painting a true picture?
Shelter claims that '60 per cent of Britons say they are struggling to cope with their monthly housing costs.?
Are things really so bad' When inflation is dropping to its lowest level for many years, and being given a further downward push by drastically lower fuel prices, interest rates so low they could hardly get any lower for the past 5 years, and more people getting on the housing ladder in 2014 than since before the credit crunch.
Some will argue that landlords are being subsidised by everyone. Housing benefit payments, favourable tax regime etc, But as Mathew Lynn says, 'Buy-to-let mortgages, for example, are significantly more expensive than those offered to owner-occupiers. Landlords face a range of regulatory costs, from gas safety checks to home energy surveys, that are not imposed on people who own their own homes. And of course they are also subject to capital gains tax on their properties, from which owner-occupiers are exempt. The playing field is already tilted ' and towards home owners.?
No matter what the causes of rent arrears, whether it's down to austerity or pre-Christmas indulgence, extravagance and downright irresponsibility, it's a real and immediate problem for landlords.
Landlords themselves have mortgages to pay and they don?t have the deep pockets of local authorities; councils that can and do let rent arrears in the borough run-up to millions.
Private landlords just can?t afford to subsidise the lives of their tenants when they have just one or two properties and a mortgage company threatening to re-possess if they miss their payments.
So, how can a responsible landlord deal with rent arrears?
Tom Entwistle, Editor of LandlordZONE says:
First off, in genuine cases of hardship most responsible landlords will and should help out their tenants with short term measures, such as helping with Housing Benefit claims and deferring demands or re-scheduling payments for a period.
If the tenants will cooperate, most responsible landlords will do this, but in my experience, tenants in difficulties often avoid their landlords; they don?t warn them in advance that a payment won?t be made, and they 'bury their heads in the sand?, perhaps hoping against hope that the situation goes away, refusing all contact when the landlord tries to help.
Private landlords can?t delay because arrears build up quickly. A 'Rent Arrears Letter' should be sent as soon as the arrears situation occurs explaining what help can be provided and the consequences of taking no action.
Landlords need to plan ahead to the unfortunate situation where eviction may be necessary. It can take up to 9 months to work through the normal eviction process, so the sooner notices are served, even if they are never implemented, the better. These notices (section 8 & 21) should be sent with the Rent Arrears Letter so the 'clock starts ticking?.
In addition, landlords should prepare a Rent Arrears Schedule, basically a spread sheet showing month by month the rent due, rent paid, rent not paid, and how it was paid: standing order, cheque or cash, and a running total of the arrears amount. The schedule should be sent out weekly or at least monthly to keep the tenants in the picture as to the arrears situation.
If the situation cannot be resolved, the landlord has no choice but to apply to the courts for a Possession Order when the notice period expires. Section 21 is the preferred route as this gives mandatory possession.
We can argue the rights and wrongs of eviction all day, but if private landlords don?t evict when all other options have failed, most will find themselves in deep financial difficulties themselves.
All the documents mentioned are available as free downloads:
Article – Dealing with Rent Arrears
Article courtesy of LandlordZONE