More Tenants Are Suffering Because Of Rental Repossessions
Monday, April 6th, 2009 Subscribe To Our Feed
It’s not just people who own their homes and those with a mortgage that are feeling the crunch in the current economic climate! Tenants too are facing difficulties, either through circumstances that mean they can’t find enough money for the rent each month or they face the prospect of eviction because their landlords can’t pay their mortgage.
For those tenants in difficulties because they cannot meet rental payments, Guardian is currently working with letting agents to get in early with help. Often it’s the mounting burden of accumulated, unsecured debt or changes to income levels and employment that can lead tenants into a position where they could face eviction. Putting unsecured debts into a debt management programme can free up income to enable the tenant to pay the rent and avoid losing their home.
However, a Debt Management Programme is by no means a long term solution. It does provide some breathing space to let you start regaining control by prioritising household bills first (rent, gas, electricity, council tax) and offering sustainable but reduced payments to your unsecured creditors (personal loans, credit cards, HP agreements).
This can be achieved through an IVA - essentially a formal agreement with your creditors that lasts 60 months. Guardian can set up a meeting with your creditors (you need not be present) to discuss manageable proposals, which when agreed means that interest and debt charges are frozen. The IVA has to be supervised by an Insolvency Practitioner and the agreed payment is legally binding. Upon completion of the IVA you will be considered ‘debt free’, and although you may not have actually paid off all your debts, any outstanding balances will be written off.
A similar option, called a Protected Trust Deed, is available for tenants north of the border. Under Scottish law, if you qualify, you could cancel out up to 90% of your debt and pay the remainder in 36 affordable monthly instalments. It’s similar to an IVA as it must also be supervised by a licensed Insolvency Practitioner who is responsible for your negotiations with creditors and ensuring you keep to the terms of the Trust Deed.
Even for tenants who have consistently made rental payments, many have still had to move house because of repossession notices. In many cases, the first a tenant knows about the situation is when they find bailiffs in their home or that the locks have been changed.
The Civil Protection Rules are changing to give tenants slightly more rights in circumstances like these. Mortgage lenders intending to repossess will soon have to send notice to tenants within five days of receiving notification of a court hearing date (which is often several weeks ahead) rather than being informed 14 days before the actual hearing date itself as is currently the case. Practically speaking, that should mean that tenants ought to get around three to seven week’s notice before a possession hearing. But that could depend on which type of mortgage your landlord has. If it’s the wrong sort of mortgage, the tenant could still get no notice of possession at all.
Best practice is to always open mail addressed ‘To the Occupier’, as this may include notice of any possession hearings. Make sure your landlord has permission from their lender to rent the property out, otherwise the lender does not have to recognise the tenancy at all. Try to find out as much as possible about your prospective landlord and their mortgage status before taking up a tenancy and if things do go wrong and you were already living in the premises when the mortgage was taken out, the landlord’s lender may take you on as a tenant and allow you to pay rent to them directly.
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