Expect more, earn more, be more
Call us on 01244 421 261
Posted by Ashley Taylors Legal on September 2, 2015
As a Practice we undertake about a thousand Landlord and Tenant hearings a month and we see just about every variation of a tenant’s reason not to pay there is and are always closely following the latest creative ideas raised as to why possession should not be given up.
It isn’t just possession or rental arrears though that can create headaches for landlords but in this issue I set out below a recent case relating to non payment of rent. In a recent case in the London Courts, a straight-forward possession claim nearly come unstuck because the Landlord had not kept clear and accurate records which anyone running a business would ordinarily do. The Courts regard letting out a property, even if there is only one property to let out, as a commercial enterprise and so with it comes the commercial risks. The view that the Landlord needs the rental to pay the mortgage on the property will not be accepted as a reason to hurry or grant possession of the property.
In this case the landlord was not insured so the loss of rent had a direct effect on his finances personally and the income was not replaced by any insurance payments. He waited until he was three months in arrears before taking action believing that the tenant would keep promises to pay and not wanting to incur any legal fees that may be “wasted” if the tenant paid. So by the third month he was three month’s income down, about to default on his mortgage and having to find fees up front to fund the legal proceedings to recover his property – all that in the knowledge that it might be another three months before he gets the property back, another month to clean it and find another tenant.
Thus, seven months loss of income and probably five months arrears of mortgage with the potential loss of the property to the Mortgage Company for defaulting on his mortgage.
The matter arrived at Court and on the day of the hearing the tenant disputed the amount of the arrears saying they had paid money direct into the Landlords account two days before the hearing and producing a paying in stub (in itself evidence of a payment but not necessarily to whom). At the hearing, the landlord or his agent must produce a proper understandable statement showing the arrears of rent and how they have arisen.The Landlord had only brought his bank statements saying he didn’t need to keep a formal account as he just ticked off the payments on his statement as they came in. The statements ran up to ten days before the hearing.
The Judge took the view there was no reason to presume the tenant was being untruthful and it was for us to prove otherwise which in the circumstances was difficult. Just because the tenant hasn’t paid in the past, doesn’t mean he won’t now. The alleged payment reduced the arrears below a mandatory threshold. The tenant had a sad story plus saying they now had a job and an income etc etc.
Would the Judge adjourn the case for a few moments for us to check the alleged? – No, he didn’t have time in his list and he was already running late so an adjournment followed and the Landlord should know what payments have been made as at the date of the hearing
Had the money been paid? – No. The case came back after five weeks with the tenant failing to attend that hearing. A possession order followed but a delay of a further five weeks had occurred. The uninsured landlord was six months rent plus out of pocket and legal fees of over £800, now three months in arrears with his mortgage.
Had he proper records, it would have been 5 weeks less lost rent and had he been insured, his lost income, depending on the terms of the insurance, would have been nil and no bad credit record for future mortgages.
Moral 1 for this story – It is a very common thing for tenants to pay some money into the bank account direct just before the hearing. Always know what amounts have come into your account that you can’t allocate at Court right up to the morning of the hearing.
Moral 2 if you rely upon that income to maintain your expenses, insure it!