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By Neil Cobbold

Global Chief Sales Officer, PayProp


Are you prepared for a seasonal upswing in missed rental payments?

It’s that time of year again. Black Friday has been and gone and the run-up to Christmas is well and truly under way.

While agents and landlords may be hoping that the seasonal uptick in arrears doesn’t happen this year because tenants spent months in lockdown, reducing their spend on going out and physical shopping, research suggests otherwise.

According to the latest Household Finance Index from IHS Markit, household finances are under more strain than they have been at any point over the past six months. Redundancies and the worst recession in 300 years – brought on by the COVID-19 pandemic – has seen the level of household savings fall at its quickest rate in seven years. This suggests that people are dipping into savings to cover expenses due to a loss in household income from employment.


As a result, agents and landlords will more than likely be facing growing tenant arrears. But what can be done to control the situation and ensure that arrears don’t become unmanageable?

Start by talking

Whether agents are tracking arrears automatically using PropTech or keeping a record through monitoring the agency’s client account, it’s important that both landlords and tenants are kept aware of any missed payments and the total amount of arrears owed.

If arrears have built up, the UK government’s non-statutory guidance recommends that tenants and landlords agree a payment plan that ensures arrears are settled over time. If there are still rent disputes, government advice recommends mediation, rather than taking the matter to court.

Meanwhile, landlords with mortgages can speak to their lenders about payment holidays, with the UK government implementing a moratorium on lenders seeking property repossessions until 31 January 2021, barring exceptional cases. This will give a majority of landlords more time to deal with arrears before a property is at risk of repossession.

If both steps fail and an eviction is necessary, it’s important to first take stock of the recent changes to the evictions process, outlined below.

Do your homework

Under normal circumstances, a Section 21 or Section 8 notice could see the tenant vacate the property within a month, but because of the pandemic, the government has passed several changes to eviction law that agents and landlords must comply with.

When the pandemic first hit, the government passed the Coronavirus Act 2020, both delaying when landlords can start proceedings to evict tenants, and extending the length of the notice period required.

Subsequent lockdowns and tiered restrictions have extended these provisions, with the latest change introduced on 17 November 2020 during the most recent lockdown. In it, the government confirmed that bailiffs would not, except in the most serious circumstances, be allowed to enforce evictions between the end of lockdown on 2 December and 11 December, when the Christmas eviction enforcement ban was due to start.

However, critics have pointed out that this ‘evictions ban’ is at best a non-binding request to bailiff trade bodies not to proceed with evictions, which may be subject to legal challenges from the industry.

A Christmas ‘evictions ban’?

Agents will be well aware that, even under normal circumstances, evictions do not take place on Christmas, Boxing Day or New Year’s Day, as the courts are closed (bailiffs being officers of the court). But this year, the reasons for an extended ban are entirely different.

While courts will still be operating and ruling on eviction cases over the Christmas period, landlords looking to enforce eviction notices will have to wait until the end of January. Instead of restrictions lasting only a few days, no eviction notices will be served this festive season until 11 January 2021.

In England, no enforcement action will take place until 25 January 2021. The only exceptions are in cases featuring: “illegal occupation, false statement, anti-social behaviour, perpetrators of domestic abuse in social housing, where a property is unoccupied following the death of a tenant and extreme rent arrears equivalent to 9 months’ rent with any arrears accrued since 23 March discounted”.

Typically, Christmas is a difficult time for arrears. Now, with evictions being stopped, the role of agents as mediators is crucial, and being able to advise landlords on the current evictions process may well become a critical service if arrears continue to build as expected over Christmas.

Call in the experts?

Keeping up with the near-constant changes to evictions can be a challenge, and getting it wrong could have a negative impact on your business.

However, there are some services that can help agents manage the stressful evictions process and reduce the chances of a landlord or agency contravening eviction law.

For example, professional organisations like Landlord Action will manage the evictions process for them, while PayProp has partnered with Agent Smart to provide specialised services to any of our clients looking for help with evictions.

The good news? While the sheer pace of change may be difficult to keep up with, agents focusing on arrears management are seeing returns.

Lost commission recovered

Whether arrears are tackled in-house or by third parties, the money may be recoverable in most cases. Once the outstanding amount has been quantified, tenants have been made aware of the seriousness of the situation and repayments have started, agents can recover thousands in missing commission.

One relatively new PayProp client managed to cut their total arrears bill by £60,000 across their portfolio. Despite the ongoing pandemic, they used automated arrears chasing technology including a mixture of e-mail notices and text messages which enabled them to recover a significant amount of ‘lost’ commission – either immediately or over time, and in all cases taking cognisance of tenant circumstances.

Light at the end of the tunnel?

As part of PayProp’s recent series of special reports, we have been tracking the arrears position of all our clients across the UK and will soon be sharing updated stats for the past few months.

While we expect the most recent lockdowns to have worsened arrears, the renewed furlough scheme and a vaccine on the horizon may give some hope to those struggling with it.

*Neil Cobbold is Global Chief Sales Officer at PayProp


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