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Debt Collection arising from rent arrears
Prof Eman
Posted: 09 April 2018 21:56:12(UTC)
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I know many of you have acute business minds and many have let property.Perhaps you can give me some advice.
Have had a bad experience with a tenant, who developed a drinking habit, which got worse and worse, progressively paying less and less and accumulating rent debt.
Took him to court thinking he will not want a ccj, but to no avail.
He now has a ccj of about £2500 against his name and secondly against his Company Ltd.
I do not think he has any significant assets, but he does work and is on good pay. However he is paid via his company. As he is not a direct employee collection is difficult? Not PAYE?
Any ideas on how to collect the debt in the circumstances?
I would be grateful for any advice.
I again reiterate that the debt is against him in person and secondly against his Company (Ltd)
PS He has moved and I do not know his present address.
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Guest on 21/04/2018(UTC)
Copperview
Posted: 10 April 2018 07:57:53(UTC)
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Cant pay or won't pay?
what assets can you seize?
If his bank account is in credit you could go for a garnishee order, but. if theres no money there its waste of time.
not an employee, so cant go for an attachment of earnings order.
the fact that he was renting means he cant afford a house so has no equity.

send in the bailiffs as per one of the many TV programmes, but regrettably if he cant afford his rent he probably won't keep up a monthly repayment programme.

in short your probably stuffed
Mr Helpful
Posted: 10 April 2018 08:28:04(UTC)
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Prof Eman;60412 wrote:
a tenant, who developed a drinking habit, which got worse and worse, progressively paying less and less and accumulating rent debt.
Took him to court thinking he will not want a ccj, but to no avail.
He now has a ccj of about £2500 against his name and secondly against his Company Ltd.
Any ideas on how to collect the debt in the circumstances?
I would be grateful for any advice.
PS He has moved and I do not know his present address.


Trying to get money out of a 'man of straw' usually a waste of time.
Refurbish the property as necessary and move on with new letting.
The plus is that possession has been regained.
Prof Eman
Posted: 10 April 2018 15:37:53(UTC)
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Shows the difficulties of the landlord in law as opposed to the tenant.
Are most of you aware of the raft of new regulations coming/pending in 2018 to make landlord's time more difficult and expensive, with penalties etc.
Consultations if they can be called that, are ongoing, two are due in this week,,including one on
a redress scheme which all landlords in future will have to be paid members of in future.
No doubt landlords will have to continue with expensive court actions, whilst tenants can have free redress paid for by the landlords membership fees.
The Colonel
Posted: 15 April 2018 14:18:04(UTC)
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Forget the debt just concentrate in getting the property back ASAP with as little damage as possible, Go for the High Court rather than the local County Court, More expensive but well worth it
Prof Eman
Posted: 17 April 2018 21:40:38(UTC)
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Just shows how easy it is for tenants to accumulate debts, for no real reason, and how difficult it is to recover debt from tenants.
Looks like in future I will try to establish whether a person has any assets and secondly whether he is self employed or equivalent, say working through a Company.
Seems like my list of exclusion tenants is most likely to increase.
Captain Slugwash
Posted: 18 April 2018 06:49:06(UTC)
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A cautionary tale, and why my only property ventures of the past 12 years have been solely through REIT's.

Best of luck with your endeavours.
Prof Eman
Posted: 20 April 2018 13:07:46(UTC)
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I have successfully gained possession, but what upset me most was the statement from the Judge on recovering the property that it was not usual to give landlords any costs. Their time comes free. Had I used a solicitor costs would have been automatic. Trying to save myself costs and the tenant is not worth anything, in the eyes of the Judge.
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Tim D on 20/04/2018(UTC)
Tim D
Posted: 20 April 2018 14:04:42(UTC)
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Prof Eman;60944 wrote:
I have successfully gained possession, but what upset me most was the statement from the Judge on recovering the property that it was not usual to give landlords any costs. Their time comes free. Had I used a solicitor costs would have been automatic. Trying to save myself costs and the tenant is not worth anything, in the eyes of the Judge.


Thanks for the update... interesting how these things pan out. Do you mean you have possession "on paper" (which might still need some sort of enforcement) or have you actually physically reoccupied the property, changed the locks etc?

If you had used a solicitor and been awarded costs, wouldn't you still have had to pay the solicitor yourself and then attempt to recover the amount from the tenant? Which might never happen (or only recover pennies in the pound)... so the DIY approach might well turn out to be cheaper. Not actually sure how these things work (have had one problem tenant in 15+ years ourselves; lost a few months rent plus expense of a deep-clean team, but was resolved without court action).
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Prof Eman on 20/04/2018(UTC)
Bruce J.
Posted: 20 April 2018 14:57:02(UTC)
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When you are deciding on your strategy remember that your legal costs and repair costs are all tax deductable, so in the long run not as expensive as they may seem.

For the future you can also consider specialised BTL landlord insurance which covers you against this sort of thing.
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Prof Eman on 20/04/2018(UTC)
Prof Eman
Posted: 20 April 2018 20:38:17(UTC)
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Tim D
I obtained it on paper, but he did not move out in the two weeks specified. So I then went for bailliffs at a cost of £121. He moved out and returned the keys shortly before they were due to visit him.
As regards costs it was obviously cheaper to do it myself than go through a solicitor. Some landlords I know advised that a solicitor was likely to charge £800 or more.
I claimed considerably less than that under the Costs (Litigant in person) Expenses Act to cover my list of costs and just £16 per hour of my time. However the judge would not have it.
So there you have it, litigant in person costs are discretionary, irrespective of the circumstances.
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Tim D on 20/04/2018(UTC)
philip gosling
Posted: 21 April 2018 16:50:13(UTC)
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Bruce J.;60948 wrote:
When you are deciding on your strategy remember that your legal costs and repair costs are all tax deductable, so in the long run not as expensive as they may seem.

For the future you can also consider specialised BTL landlord insurance which covers you against this sort of thing.




Wow no form of insurance covers the full costs of getting a tenant out- not in London where it happened to me. I had legal expenses insurance - luckily. You need 2 months no rent before you apply to court it can in London take 6-8 weeks to get a court appearance date after the 2 months then there is always at least 28 days plus the "4" weeks in London for the clerk of the Court to actually publish the findings (Reform of Courts by Justice Department to reduce costs!!!) for the tenant to actually leave even if you get an immediate entry order and then when the tenant doesn't leave you apply to the court again to get the Bailiffs/High Court authority for an eviction and a locksmith and maybe estate agent rep to go the flat and get the tenant physically out and then pay for the new locks a professional clean. Occasionally the solicitor will ask for a Barrister to appear for you in court to defeat the "sob" story from the none paying tenant. 6 months lost rent, Barrister, Solicitor, Estate agent (*Posh Green London mini estate agent £300 initial charge for court appearance to prove tenant and not paid and had many opportunities), Locksmith and professional clean charges /fees is not all covered by most Landlord insurance - maybe 40% in my case. Rent insurance guarantees are hugely expensive (extra 10-15% on top of normal estate agent charges and fees) because of course Insurance companies charge a lot as if you think you might need them they'd better watch out.

Tenant moves on no forwarding address changes jobs so unless you are lucky you get the deposit back but not the many months missed rent etc and that doesn't even cover any damages. Mind you in 20 plus years letting I have only had 2 none payers and only one did I have to go off to Westminster magistrates Court , then the High Court , bailiffs etc - but that was an expensive journey.
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Tim D on 21/04/2018(UTC)
Bruce J.
Posted: 21 April 2018 18:52:26(UTC)
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Sorry to hear you had bad experiences Phil.

My properties are in Walthamstow, (London) and I have had a pretty positive experience, thankfully.

Going back to the issue of the insurance: Direct Line (for example) do a package of landlord insurance which has a number of optional extras, including legal expenses, accidental damage, employers liability, theft by tennants, loss of rent, and malicious damage.

I don't actually use it, but it is available for those who want to.
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Mr Helpful on 22/04/2018(UTC)
Prof Eman
Posted: 22 April 2018 21:58:25(UTC)
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Some landlords I have been talking to, have said that there appears to be a hostile environment developing in the private landlord sector. Considering the raft of new regulations, taxes, penalties and costs coming in, they might well be right?
What do you think?
Tim D
Posted: 22 April 2018 22:19:33(UTC)
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Undoubtedly. We've been quite tempted to get rid of our one... but the hostile environment covers the exits too... would mean a significant 28% CGT hit (when everything else is 18%) and in any case we've no idea what might be a better home for the cash when all other asset classes look so inflated. So for now we keep it as a diversifier.
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Mr Helpful on 23/04/2018(UTC)
Freefall Junkie
Posted: 23 April 2018 09:28:07(UTC)
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I also have 2 BTW properties which I am happy to keep as a bit of a diversifier from stocks. A bad experience with a tenant in the past is one of the reasons why I now use a letting agent - it can be a huge hassle and stress. A good agent will be diligent with credit checks etc to ensure you get a good tenant in the first place, but they are also used to dealing with bad tenants if they have to. The law seems very heavily stacked in favour of the tenant but agents know how to work the system. Obviously the agent's 10% slice of rent diminishes your returns significantly, but set against this they are very well tuned to achieving the maximum possible rent so for me the difference in returns wasn't all that great.
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Mr Helpful on 23/04/2018(UTC), Tim D on 23/04/2018(UTC)
Tim D
Posted: 23 April 2018 10:04:23(UTC)
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Yup we also use an agent (also 10%) ourselves and consider their expertise and services good value (although recently the turnover rate of the agency's reps seems to have shot up... not sure how to interpret that). By contrast, we have an acquaintance who does everything themselves and so far as I can tell the 10% they're saving doesn't compensate them at even minimum wage for the amount of time they have to put into sorting their tenants' dramas out.
Prof Eman
Posted: 23 April 2018 22:40:43(UTC)
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GDPR could be another reason for some to use Letting Agents.
I just wanted clarification for the future. Will it be 10% plus covering the tenants costs.
Does it mean that in the future a landlord might have to make several payments to cover prospective tenants costs before he/she gets an appropriate tenant
Mr Helpful
Posted: 24 April 2018 07:53:00(UTC)
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Most will probably be aware of the half-way house use of an agent for tenant finding only, rather than full management?
With procedural credit checks, background references, etc, plus deposit protection arrangements, It may avoid the obvious bad tenant, but little more. Bad experiences do still happen, but maybe less so?
Cost is usually approx a one off months rent.
A long-term relationship with a reliable agent is a plus, for possible later full management.
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Tim D on 24/04/2018(UTC)
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