Surge in Landlords seeking Rent Arrears Debt Collection

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surge in landlord debt collection

There has been a significant increase in the number of landlords seeking rent arrears debt collection action to recover lost rent, according to eviction firm Landlord Action.

The debt collection industry has seen a sharp rise in landlords requesting information on how to recover unpaid private housing rent. Debt Collection for unpaid rent is a well sought after service but is notoriously difficult especially in the current climate.

According to Landlord action, people enquirers for debt collection for landlord services for the last year, April 2021 to March 2022, were up 180% compared to the pre-pandemic year, April 2019 to March 2020.

The varying situations of a tenant falling into arrears can be tricky to navigate, especially if the tenant has fallen into financial difficulty. This was the case for many tenants throughout the pandemic reportedly.

However, as a result of a softening of debt collection actions during the pandemic, thousands of landlords and letting agents found that some tenants used the restrictions placed on landlords to avoid paying their rent, even when they had the means to do so.

According to Landlord Action, the restrictions also mean that the amount of private rent arrears in the UK is now higher than ever.

Whereas in the past there was a tendency for some landlords to seek possession but write arrears off as a bad experience, under the assumption that recovering the debt would be too difficult, many landlords can no longer afford to write off such large sums of money.

Responding to the English Housing Survey 2020-21, 4% of private renters reported being in rent arrears. With an estimated 13 million people in the UK renting from a private landlord, this suggests approximately 52,000 were in rent arrears between 2020 and 2021.

“Rent Arrears are notoriously difficult to collect”

It is well known that the average recovery rate for unpaid rental arrears is one of the lowest of all sectors given the nature of the debt. It is well known within the debt collection industry that rent arrears are notoriously difficult to collect given the nature of them.

Very often, people in financial difficulties ensure their rent is paid at the very least. It is usually the last thing that does not get paid as people want to ensure they have a roof over their head. There are set processes though for such scenarios and usually they start with the eviction process to attain possession of the property in question.

Once a judge has granted possession, they will then look at the arrears schedule to see what the landlord is owed by way of unpaid rent etc. As part of the judgement, the judge will order that the tenant pay the arrears owed which will include costs incurred by the landlord for bringing the claim and interest in an amount the court sees fit. The tenant will then be issued with a County Court Judgement (CCJ).

If, however, the tenant does not pay the money that is owed, the landlord can then move to enforcement by instructing a debt collection agency.  The Money Judgment is not registered as a CCJ on the Register of judgments.

CCJ’s Court Orders and Fines until the landlord attempts to enforce the judgement by way of unpaid CCJ Debt Collection.

Paul Shamplina commented “If there are substantial arrears and the tenant is employed with a steady level of income, therefore has the means to pay, but has simply stopped paying, it is worth pursuing the money that is legally and rightfully owed to the landlord.

“There are many ways to enforce an outstanding debt such as appointing a High Court Bailiff who can seize goods, apply for a Third-Party Debt Order (freeze bank account) or apply for an order for an attachment of earnings.  If a landlord wishes to seize goods on the eviction date this can only be done if a High Court Bailiff is appointed.”

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