There has been a big rise in the number of court possession orders as tenants increasingly fall on hard times – and landlords give up on trying to claw back arrears.

Let Insurance Services claims that in nearly 40% of courts in England and Wales, the number of claims brought by landlords and agents which resulted in an order being made for possession has increased by between 10% and 50% on last year.

It says increases are being seen across the country and gives examples of Aylesbury (10%), Bury St Edmunds (30%) and Chelmsford (45%).

However, the number of applications for possession has also increased, by 6%, as tenants fall behind on rent.

Let Insurance Services says it had a 24% increase in rent guarantee insurance taken out by landlords in the first nine months of this year, and a ‘significantly’ higher increase in arrears notifications over the same period.

Michael Portman, managing director, said…

“Landlords and agents are facing mounting rent arrears, and with no alternative but to seek a quick resolution in the courts.”

“Tenants have become more savvy with rental law and much more conversant with the legal detail.”

“This trend, combined with the fact that many tenants have fallen on bad times and have no financial resources to clear arrears debt, has led many agents and landlords to pursue possession only, foregoing any attempts to secure rent arrears through the courts.”

“Landlords and agents often face better odds securing new tenant rental income than they do securing rent arrears from an existing tenant.”

“We have seen a sharp rise in demand for rent guarantee insurance as landlords and agents look to find ways to protect their rental income.”

“It is clear that this problem is not going to go away. The labour market is starting to feel the strain of public sector job losses and the economy is far from healthy. Ever-increasing fuel and food prices could place more tenants in difficulty, and the labour market has much ground to make up as the private sector struggles to compensate for public service job losses.”

“Against this backdrop, as rents rise over the medium term, a growing number of tenants will see their finances come under mounting pressure – and we expect tenant arrears cases to climb over the next 12 months.”

In a separate new report, from research group BDRC Continental, one fifth of landlords claimed that their arrears had risen in the last quarter, with almost half having experienced arrears.

The same proportion of landlords had increased rents and a further 34% said they would do so in the next six months. All cited the increased cost of running a property portfolio.

The report also found that almost three-quarters (72%) of those who have sought possession of their rental property were driven to do so by rent arrears. Other reasons for seeking possession include anti-social behaviour, which contributed to nearly half of possessions.

Landlords wait an average of almost four months to obtain possession and pay £866 in legal fees alone.

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