How mediation helps landlords reclaim rent

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The pandemic has affected numerous tenants financially, leaving their landlords out of pocket, in most cases to the tune of thousands of pounds. Research has shown that it takes 51 weeks and £3,000 on average for a landlord to reclaim rent arrears or regain possession of their property through the courts. But there is a much quicker and cheaper way that also helps tenants in trouble – mediation. 

The Property Redress Scheme tenancy mediation service launched right at the beginning of the pandemic and is designed to help landlords, agents and tenants resolve tenancy issues without the need to go to court. Since then, the service has helped hundreds of landlords and tenants resolve rent arrears, possession and tenancy issues. 

Mike Morgan, Head of the Property Redress Scheme tenancy mediation service, takes us through some case studies, which demonstrate just how effective the service is: 

Dave – a landlord with six months’ rent arrears gets his case resolved in two calls and two days 

Dave, a landlord with over six months’ rent arrears, contacted us for help. He had been trying to find a solution with his tenant, who had stopped paying his rent six months ago when he lost his job, and was now over £4,500 in arrears. Dave had always had a long-standing and happy relationship with the tenant and could not understand why he was no longer responding. 

We were able to get hold of the tenant, who agreed to take part in mediation. The tenant explained that he had been worried about losing his home and had been ignoring Dave’s calls. He had since found a new job but was still afraid that with this amount of rent arrears, and no savings to pay them, his days were numbered. 

We were able to agree to a payment plan that Dave and the tenant were both happy with. The tenant committed to paying his normal monthly rent, plus extra each month which would clear the arrears in a little over a year. Dave and his tenant also agreed to review this every six months with a view to increasing the monthly arrears payment to clear the total more quickly, as the tenant got back on his feet. 

Jane – a landlord who had been told by her solicitor she could not use mediation once she had served notice 

Jane, a landlord with several months’ rent arrears, contacted us for help. She had spoken to solicitors who had advised her that notice periods were returning to pre-COVID levels from 1 October 2021. They also advised her that, despite this good news, it was still likely to take many months to get through the court process.  

Jane had heard of our mediation service and mentioned this to the solicitors. They advised her that mediation could not be used once she had served notice on the tenant.  

There is no truth to this. Mediation can be used at any time during a tenancy, regardless of whether  notice has been served. Many landlords will serve notice and then offer the tenant the option of mediation. Serving notice first gets the tenant’s attention and shows that the landlord is serious. Equally, we also see landlords who use mediation before serving notice, as a softer initial approach – which is what Jane decided to do. 

We were able to agree with the tenant that they would leave the property voluntarily on an agreed date. As an incentive to encourage this, Jane was happy to reduce the rent arrears owed by one month from £6,895 to £5,910. We produced a mediation agreement making it clear that if the tenant failed to stick to the agreed terms, the reduction no longer applied and Jane would be able to take legal proceedings, claiming the full amount owed. The tenant left the property and paid the balance of the reduced rent arrears as agreed. 

Ian – a landlord with a ‘breathing space’ preventing him from chasing rent arrears 

Ian, a landlord with two months’ rent arrears and a tenant with a ‘breathing space’, contacted us for help. We were not allowed to talk to the tenant about their rent arrears because they had a ‘breathing space’ – a new initiative that prevents creditors contacting their debtors – but we were able to talk to them about their future plans; when they thought they would be able to start paying rent again, and what that meant for them if they could not. 

To cut a long story short, the tenant realised that staying in the property was only going to get them deeper in debt. Ian agreed to waive the rent arrears, and the tenant agreed to leave by the end of the month. Ian took the view that it was a small price to pay to get his property back, compared to what could end up in a lengthy court battle and mounting rent arrears. 

You can use mediation too 

If you have a tenant who is not paying the rent on time or is not paying full rent and the communication has broken down, contact us. By opening dialogue again and getting the ball rolling, we are sure we will be able to get you the outcome that you would like. Contact the Property Redress Scheme tenancy mediation service today and speak to one of our trained mediators, who will be able to guide you through the process. Alternatively, you can find out how mediation works with tenancy issues in our previous article. 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – How mediation helps landlords reclaim rent | LandlordZONE.

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Court highlights red tape faced by landlords with benefits tenants

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An Upper Court Tribunal has rapped a council and First Tier Tribunal on the knuckles for leaving a landlord out of proceedings when trying to claim back a Housing Benefit overpayment, highlighting the vortex of red tape involved when councils try to claw back payments off tenants.

The First Tier social entitlement court had dismissed the tenant’s appeal against the claim but the Upper Court ruled that it made a legal mistake by failing to appreciate that his landlord should have been added as the second respondent.

The tenant’s Housing Benefit was paid directly to his landlord but, after he had lived away from the property for some time, West Lindsey District Council decided he was not entitled to the benefit and was liable to repay £2,020.97 for a six-month period. The council tried to recover this from him – not the landlord.

Obvious

The Upper Court ruled: “It was apparent from the evidence that Housing Benefit was paid directly to the landlord and that recovery of the overpayment was being sought from someone else. 

“It should have been obvious to anyone reading those regulations that the landlord needed to be joined as a respondent to the appeal.”

However, the judge added that the tenant shouldn’t see this win as an indication of success at the next hearing, where it will be decided exactly who is liable. 

Expert Bill Irvine (pictured) says it’s unusual that the council chose to pursue the tenant but that the ruling restates the law, which can be complex and difficult to understand without professional help.

He tells LandlordZONE: “It appears there has been a change in circumstances here which wasn’t reported. There are myths around overpayment – the general rule is you’ll be asked to repay, but landlords have the right to challenge this if the tenant has made a misrepresentation or failed to disclose information.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Court highlights red tape faced by landlords with benefits tenants | LandlordZONE.

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Landlords must ‘up their game’ to compete with build-to-rent sector, says Foxtons

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Landlords need to install bike storage, allow pets and quickly sort out maintenance issues if they want to compete with the growing build to rent (BTR) sector.

Estate agent Foxtons helpfully advises them that highlighting amenities within a few minutes’ walk, including gyms, green space, parking and co-working office space would help landlords compete with the purpose-built blocks.

Its latest London Lettings Report says landlords and their lettings agents need to take note of why BTR is appealing to many renters and what this means for their offering.

Sarah Tonkinson (pictured), Foxtons MD – institutional PRS and build to rent, says renters in build to rent developments are buying into a lifestyle as their every need is catered for.

She adds: “The leases are long and the community feeling is strong. The wider market needs to take notice of build to rent developments as they’re the benchmark to which eventually all landlords will be held.”

Foxtons reports that BTR housing stock in London grew 24% in the last 12 months to 30,000 homes, with almost 55,000 currently under construction.

High demand

Demand is high, with 27% of the agent’s BTR units let within one week of coming to market, compared with 16% for the rest of the sector. While BTR still only accounts for 1% of the private rental market, it has huge potential, says Foxtons, as it currently accounts for 8% of its lets, up from 2.2% in 2017.

It reports that the average rent paid for homes in BTR developments to the surrounding local market. For one-bed flats, there was an average 9.1% premium per week while for two-bed flats, it was an average of 11.3%.

Foxtons adds that private landlords still have a major role to play in the rental sector and can be reassured that BTR isn’t for everyone, as some renters value their privacy and are not attracted to the ‘community’ aspect of BTR.

Read more: What does build-to-rent mean for buy-to-let?

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords must ‘up their game’ to compete with build-to-rent sector, says Foxtons | LandlordZONE.

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Toys R Us plans return to UK four years after administration

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When all 106 of its stores closed in 2018 it was thought that it was the end of the toy chain in the UK. But following a successful bounce back in Canada, Australia and New Zealand, the company has announced a ‘long-term’ agreement to bring the brand back to the UK.

The winning formula down under has included online sales that could be up and running ‘over the next several months’ in the UK, while physical stores are slated to start re-opening sometime next year, and in 2023.

The once-iconic toy store, Toys R Us is returning to the UK with a new digital offer after it proved increasingly difficult in Britain, and across the world, for its physical stores to compete with online retailers.

The US headquartered company plans to reintroduce bricks and mortar shops to the UK after they collapsed amid increasing online competition. The toy stores branches in both the UK and the US closed their doors for good back in 2018, but the Canadian arm continued to trade.

Successful relaunch down under

Now, thanks to the company’s Canada stores success, and a successful relaunch of the brand in Australia and New Zealand, Britain is next in line to welcome back the iconic toy shop brand to its shores.

Chairman and CEO of parent company WHP Global and Toys R Us, Yehuda Shmidman, has said:

“We selected Toys R Us ANZ as our partner to expand into the United Kingdom because of their proven success in launching with us in Australia under the leadership of their CEO, Dr Louis Mittoni.

“Toys R Us today is a vibrant business with over 900 stores and e-commerce sites across 25 plus countries generating over $2billion a year in sales and growing, especially with the new launches underway for both the US and UK markets.”

CEO and managing director of Toys R Us ANZ, Dr Louis Mittoni, says:

“Tailoring our successful Australian relaunch plan to the UK echoes the success of other e-commerce ‘platform play’ businesses that have delivered growth and value due to their ability to quickly and cost effectively expand their software, processes, partner relationships and brands into new countries.

“Since Toys ‘R’ Us returned to Australia in June 2019, we have scaled quickly as customers returned to the much-loved brand and our e-commerce model has proven its success.

“My team and I are looking forward to developing technical and commercial relationships with UK-based vendors and partners and to engage with the many loyal Toys R Us former customers and fans in the UK.”

Digital first

The company plans to redirect UK shoppers through to its now well established Australian online resource while the relaunching of physical stores in the UK gets underway.

The recent confirmation that Toys R Us will be expanding in the UK will be welcome news for many British landlords, former employees and shoppers.

Louis Mittoni told Retail Gazette that the brands will return in “what we refer to as ‘digital-first’ ecommerce, followed by a unique physical experiential offering”.

“The announcement of the return has been met with an overwhelmingly positive response from UK shoppers, suppliers, previous employees of Toys R Us UK and the toy and baby media,” Mittoni said.

The company says it is keen to hear from former employees and people with strong toy retail experience and a passion for toys, as the process of building the UK team begins.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Toys R Us plans return to UK four years after administration | LandlordZONE.

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Bonfire Night – What are the rules for tenant fireworks parties?

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Bonfire Night is almost here. As one of the most popular and widely-celebrated days of the year, towns and cities up and down the country will be hosting large, public displays. But, with COVID-19 still an underlying threat, more people than usual are choosing to hold their own fireworks displays at home.

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£66m for somewhere safe and warm to stay this winter

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Rough sleepers will be helped into safe and warm accommodation and treatment services for drug and alcohol dependency this winter, supported by an extra £66 million the Department for Levelling Up, Housing and Communities announced.

The support will help rough sleepers off the streets at a time of year when they face falling temperatures and give them an opportunity to turn their lives around by ending the cycle of addiction.

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Serving section13 after 9-months fixed term AST?

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Hi, I have a 9-month fixed term AST with my tenant that includes a clause for the tenancy to become a contractual periodic tenancy after these 9 months.

The question can I serve a section 13 notice to increase the rent after the initial 9-month fixed term?

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