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As Court Costs rise – What is the actual cost of removing a bad tenant?
On 22nd April civil court fees are rising, these are the fees relating to Repossession of a property from a bad tenant.
|Function||New fee £||Old fee £|
|N5B- Accelerated Possession -Section 21||280||175|
|& N5 Claim form for possession of property – Section 8
N119 Particulars of claim for possession – Section 8
|Possession Claim On Line||250||100|
|MONEY CLAIMS (N1)|
|Up to £300||35||35|
|£300+ to £500||50||50|
|£500+ to £1000||70||70|
|£1000+ to £1500||80||80|
|£1500+ to £3000||95||115|
|£3000+ to £5000||120||205|
|£5000+ to £15000||245||455|
|MONEY CLAIMS ONLINE|
|Up to £300||25||25|
|£300+ to £500||35||35|
|£500+ to £1000||60||60|
|£1000+ to £1500||70||70|
|£1500+ to £3000||80||105|
|£3000+ to £5000||100||185|
|£5000+ to £15000||210||410|
|325 – Application for a Warrant for Possession||110||110|
As we all know this is only part of the story and these huge increases in court costs to regain Possession have to be added to the hidden costs of Possession.
Section 21 Accelerated Possession.
2-3 months between serving Notice and submitting Court forms
5 days for Court to serve on tenant
2 weeks for tenant to reply
2 weeks until judge considers application
Judge May grant ‘suspended possession’ – usually 2 to 6 weeks
If tenant does not leave – at least 1 month for a bailiff to enforce the Court Order.
An average of between 4 and 6 month with no rent
Section 8 on Ground 8 (at least 8 weeks rent arrears) This will very for other grounds
8 weeks rent arrears
2 weeks before you can apply to the court
Legal process an average of 5 months depending on the pressures on court time
Providing procedure and paperwork to the court
Judge will give the tenant 2 – 6 weeks to leave
If tenant does not leave – at least 1 month for bailiff to enforce the Court Order.
A average of between 8 and 10 months with no rent.
The average rent in the UK is now £665, in London it is £1,516. The average loss of rent, while evicting a bad tenant outside of London, is therefore £2,660-£3,990 (Section 21) and £5,320-£6,650 (Section 8)
Add to this the court costs for gaining possession £250-280 the court costs cost of trying to recover your rent £80-120
Your losses will total between £2,990 and £7,050 (outside of London)
In London it is going to cost landlords £6,394-£15,560
That is if you do not pay for legal representation and do all the work yourself. This also does not take account of the fact that you cannot advertise your property for rent until you have the keys in your hands, nor any repairs and replacement costs and don’t mention the Council Tax bill during the void period. You may hold a deposit which will reduce your costs a little but that is cold comfort for the experience, stress and cost of this process.
How many times can you afford to carry these overheads?
How can you avoid them?
Avoid them by carrying out a thorough process of both lifestyle and credit referencing through LRS. As landlords know only too well ability to pay often has little impact on whether the tenant will actually pay – evidenced by the increasing number of people who are given benefits to help with their rent but choose to spend it on something else – and it is not only people on benefits who choose not to prioritise their rent. Only by checking the history of rent payment and behaviour of the tenant can we reduce the risk of ending up with the huge costs of eviction.
After all landlords do not evict good tenants.
I agree with most of the above except.
With a section 8 if the rent is paid monthly you can serve the notice after 1 month and one 1 day of arrears (= 2 months) not 8 eight full weeks which will save about 4 weeks.
I have never had to wait more that 6 weeks for a hearing.
The judge has to give a possession day of 14 days later unless undue hardship is claimed by the tenant which as stated can then be as long as 6 weeks but this can be countered if you are prepared on the day.
Also in my area I have never had to wait more than 10/12 days for a bailiff.
I think I must be lucky in my area and have a efficient court system.
I agree but many landlords do not understand contractual rent arrears and others have weekly rent payments.
Yes you are lucky, in London for example the wait for a hearing can be more than 6 months.
Many landlords complain that the Judge has given the tenant 6 weeks without any good reason - they haven't always got the confidence to remind the Judge that there must be evidence that this extension means that there chances of finding a new home will be improved and some local authorities tell them that if they can get 6 weeks they will find something for them.
It has been discussed before; but there is a massive disparity in the efficiency of County Courts.
Rigsby is VERY fortunate that he seems to have a very efficient and NOT very busy County Court.
Unfortunately that experience is NOT the experience of most LL!!
Consequently RGI is the only solution to inefficient CC unless a PRS LL wishes to waste the odd £8000 on all unfunded expenses per eviction and that is if they can afford it etc.
All the DD in the world carried out before taking on that tenant will NOT pay the mortgage if they stop paying rent.
Far easier and cheaper to choose tenants or their guarantor where they qualify for RGI.
RGI at about £130 per year including LRS referencing is the most cost effective way of renting a property.
Yes it means you are restricted into who can qualify to become a tenant of yours; but it is a far better option than gambling on a tenant or a guarantor on whom RGI is not possible!
Invariably this means that the LL will not be able to rent to HB tenants........................................................no loss there then!!??
LL being mindful of these circumstances will surely choose to invest in property which does not attract tenants who CANNOT qualify for RGI.
With fiscal drag gradually private rents will outstrip LHA rates so that LL need not bother with the lower social strata of tenant types
LHA rates will NOT increase as they CANNOT exceed the OBC UNLESS the lazy benefit scrounger opts to do at least 16 hrs work per week.
Many benefit claimants refuse to do even this to save themselves from the OBC.
They deserve everything that happens to them if they can't even be bothered to do 16 hrs work to retain their current status!!
Paul, your views on people who are in receipt of benefits are well known but you do not speak for all landlords.
The tenants who live in my properties who are in receipt of benefits are some of my best tenants - They stay for a long time and make my properties their homes, often doing small jobs that other tenants call me to deal with. They have become part of the community and are friends with their neighbours. They treat my properties and gardens as though they owned them. They pay their rent in full and on time. They are lovely to speak to and I find them very easy to get on with. What more could a landlord ask?
A huge proportion of tenants who receive benefits are working full time and just can't earn enough to cover their bills - and before you say it they haven't got dozens of children they are among the many people who provide us with services in health, retail and other businesses where pay is modest.
Other people who need support from benefits have health issues which prevent them from working.
One thing for sure a person cannot build a life until he has a home and if we want to break the benefits dependency culture the first thing that society needs to do is to make sure that they have the security of a decent home - in whichever tenure that is available.
My worst experience of damages and stress was with a couple who came with excellent credit references and good jobs but were weekend alcoholics. They always paid their rent on time and in full but they tormented the neighbours and wrecked my property - this was long before I found LRS and when they left me they went on to another PRS landlord. I don't ever want to go through that time again and this is why I have been a supporter of LRS - bad tenants don't come with a label and LHA tenants cannot be labelled either - the only way to avoid this type of tenant is through lifestyle referencing at LRS.
Building a tenure is all very well; but the LL must be in control.
HB tenants take that control from a LL due to the 'system'
It is great that LL take on HB tenants; they must surely be able to cover the risks of taking that HB tenant on!!?
I can't; but fully accept that LL do take them on.
I do however strongly suspect that most the LL haven't got a clue about the risks they run with HB tenants or for that matter ANY tenant on whom the LL doesn't have an RGI policy!
My suspicion is that they don't realise how much of a gamble they are taking.
I reckon if they knew there would be a rapid change in the tenant demographic in the PRS!!?
I agree with Mary and some of my best tenants are on HB/lha.
But Paul is correct in that a high percentage of landlords who take on HB tenants don't know what they are taking on. BUT THIS IS THE FAULT OF THE LANDLORD FOR NOT EDUCATING THEMSELF BEFORE HAND.
Don't complain that the system is wrong if you didn't learn about it before jumping in blind. Who fault is that?
I do not consider HB and professional tenants any different you just deal with the tenancy in a different manner. You can also get RGI for HB tenants if you choose to.
I wholeheartedly agree with you.
LL are usually the cause of their own destruction!
So how can we ensure LL know about the risks BEFORE they invest in the PRS!?
I believe we will be seeing as massive influx of these LL using their released pension pots in April 2015 to invest in the PRS receiving only advice from self-serving money grabbing LA!
There are very few honest LA that will give genuine advice about the pitfalls of renting to HB tenants or to anyone without RGI on them or their guarantor.
Therefore I predict many pensioners being taken to the cleaners by rogue tenants; with HB ones tending to be the worst.
Ideally every pensioner LL investor should know about LRS; but they won't.
Most will just go to a LA as they are just NOT sophisticated enough to understand the issues with LA.
I do fear for these poor pensioners in the coming year; I believe they will be looked upon as ready to be ripped off by tenants and LA alike!
I don't believe that the govt paid for advice will be in any way adequate for their investment choices.
I could advise a pensioner on lettings far better than your average LA or IFA with far more advice as to the risks involved.
Something very LA will do; as they like to paint a rosy picture of lettings.
But as a general principle you are correct that LL make mistakes because they fail to understand the letting risks before they enter the market.
I have attended numerous property lectures about the advantages of property investing and NOT one of them has EVER mentioned the problems I have discovered with tenants that occur.
The tenant is the fundamental weakness with the lettings business model; which the vast majority of LL fail to understand and prepare for.
I was one of those LL years ago and was severely financially punished for it then and still am now.
Very few LL enter the market with any real understanding as to what risks they take which is completely their fault; but that doesn't really help the situation.
How to help these naive newbie LL is the question!?
I don't know the answer!!
I am all for the information being out there in the public domain to help novice landlords but you can "lead a horse to water" etc etc.
I see it as setting up a business and no different to Mr & Mrs Joe Bloggs seeing a corner shop for sale and fancy working for themselves and think it will be a doddle. Some of these people will do well and others will fail miserably. It the same for novice landlords.
In this day and age with all the free info out there on web and landlord organisations you can join for about a 100 quid there is no reason why landlords cant be better prepared. We are not a nanny state and people have to take responsibility for their own actions, or lack of.
I agree there is also the issue of mickey mouse agents (no disrespect to the agents who post on here) can be just as bad and uneducated as a novice landlord. This needs to be addressed by the government.
Don't be fooled by agents who are members of Arla either because Arla doesn't appear to police their members very well and you may think a ARLA agent has qualified/trained staff which is the joining requirement I believe but I know of 2 agencies where the qualified person has left and not been replaced. So Mr Novice landlord could be getting advice from the teaboy.
I agree rigsby and this is why I spend so much time on this fora trying to pass on information and also to find solutions for landlords who have slipped up. I have no issues with bad landlords getting their just deserts but I really hate it when otherwise good landlords slip up and land in the doo doo. Yes we should all keep up with regulation and legislation and most landlords realise the danger of not doing so when it is too late.
Thank you for also spending your time posting helpful information, judging by the number of people who are reading these discussions, it is not going to waste.
So, having asked the Court online (not even considering how knowledgeable LRS forums are - apologies and I deserve to be beaten!) they had not updated their prices and I wrote my cheque out for the old amount on Friday. Yesterday I received a letter back from them asking for the £280.00 - more delays to remove my horrid tenant.
The Court is on my way home so I thought I would call in and deliver the papers to them to avoid another day's delay.
Well, it is an almost brand new Court building - state of the art - and the last time I went there, there was a Court Office to deal with stuff so off I trundle, call into the Court, get through security without beeping - ask them if I remembered correctly that the Court office was upstairs "oh no, there is no Court Office any more" "you will need to go and use that phone and dial the number and they will answer"
This I duly did to be greeted with "put your letter in the secure letterbox outside to the left of the door".
"Oh I exclaimed, I was not expecting not to be able to hand it in directly to you so I did not put it in an envelope"
"Dont worry, I will come down with an envelope for you"
Yes, you have guessed it I am sure - she came out, gave me an envelope for my papers and went back inside her door leaving me to post said papers through the secure letterbox!!!!
WOW - this Country has gone to the dogs!!!
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