Landlords Count the Cost of Christmas

By:  Madalena Penny

Christmas, a time of year to be enjoyed by all?  Unfortunately for landlords, the festive season of good cheer can be one of the costliest periods due to an increase in rent arrears, especially LHA tenants.

The LHA (Local Housing Allowance) introduced in 2008 to replace the housing benefit system has caused serious problems for landlords, resulting in sizeable loss of revenue.  Paying tenants direct, hapless landlords have little control over rent payments and must abide the 8-week rule of arrears before benefit payments can be diverted to them and bypass the tenant.

Sim Sekhon of legal eagles ‘Legal 4 Landlords’ said:

“Christmas is always frustrating for a majority of landlords with LHA tenants.  Faced with immense financial pressure at this time of year, tenants can be tempted or even reluctant to pass their LHA payments onto their landlords.  It’s of great benefit to send tenants a reminder in December of holiday banking dates.”

Any lapse by landlords can see rent arrears spiral as tenants dig themselves deeper into debt then find themselves unable to manage or address the issue.  Because of strict harassment legislation, landlords can find themselves in a vulnerable position and unable to directly deal with defaulting tenants.  As part of their ‘Landlord Awareness’ initiative, Legal 4 Landlords have different strategies for coping with difficult and defaulting tenants.

Recommending a ‘pre-court’ letter, Mr. Sekhon added:

“Landlords must adhere to a strict 8-week period of tenant arrears before they can issue a notice 8 and initiate an eviction process.  Through our own experience, a simple pre-court letter informing tenants of this procedure and explaining their financial responsibility can be enough to settle things and re-instate communication between landlord and tenant so that rent can be resumed and installments on arrears can be negotiated.”

Landlords are urged to act faster when dealing with defaulting tenants, especially at Christmas as Courts experience backlogs of paperwork and hearings in the New Year.

Up to the end of 2009, there were 675,000 LHA tenancies and rent arrears in this sector were considered to be in excess of £220 million.  This year, research indicates that there are now 993,000 LHA tenancies, however the true extent of rent arrears is as yet unknown.

Legal 4 Landlords can arrange a Pre-Court letter at a fixed fee of £25.  Click here for more information or to contact an advisor.

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