PayProp: Letting agents must prepare for new system

21 August 2020 | General

Letting agents should prepare for changes to the repossession process following the ban on evictions coming to an end this month, according to rental payment automation platform PayProp.

Changes include a new pre-action protocol, a temporarily extended notice period and potentially longer waiting times for court hearings. According to PayProp, agents will play a crucial role in explaining the new system to landlords and helping them to manage rent arrears so the option of eviction remains a last resort.

Evictions have been banned since mid-March to protect renters who have been financially affected by COVID-19. The ban was initially set to last for three months, however was extended for a further two in June. From 24 August, courts will start to hear rental property repossession cases again, with the government also creating temporary ‘Nightingale Courts’ to deal with the backlog of cases.

Neil Cobbold, chief sales officer at PayProp, said: “Following a five-month hiatus, evicting a tenant through the courts may take longer than usual once the ban is lifted.

“The government’s new measures suggest that it wants to limit evictions pursued solely due to COVID-19 arrears. It has also been made clear that the courts will prioritise cases of extreme arrears accrued before lockdown, and cases of anti-social behaviour and domestic violence.

“It’s vital that agencies communicate the changing situation to landlords so they can assess their options carefully as the ban is lifted.”

There has been speculation that lifting the ban on evictions will lead to a spike in COVID-19-related repossessions. However, research from the National Residential Landlords Association (NRLA) suggests that over 95% of tenants surveyed are paying rent in full or have agreed with their landlord to reduce or defer payments.

The research also found that less than a third of renters in arrears have been served with an eviction notice.

Cobbold added: “The majority of tenants have been able to pay rent in full during the pandemic and those that haven’t are likely to have made alternative arrangements with their landlord. Although there will be many new claims and a significant backlog of eviction cases to be heard when the ban ends, the number related to COVID-19 arrears may not be as high as anticipated.

“If landlords want to deal with tenants who have recently fallen into arrears, there are more effective ways than going through the courts. Letting agents can help them to pursue these options. Agencies can help landlords and tenants to manage rent arrears through affordable repayment plans, digitally recording all payments and automating arrears chasing. This also allows agents to maintain a clear paper trail in the event that the landlord does want to pursue an eviction in the future.

“Ultimately, strong and effective communication with tenants can help to reduce the impact of rent arrears before they become a serious issue. Agents that take this approach can help landlords to manage arrears and recoup unpaid rent while sustaining the tenancy instead of pursuing an eviction through a long and potentially expensive court process.”

This post has originally been featured in Property Wire.