Are you a letting agent? Have any of your landlord properties been let to a tenant who has turned out to be a nightmare?
If you choose the tenant, you will often get the blame for this.
“You let them in, you sort it out” the landlord may say to you angrily, when their tenants fail to pay rent for the third month in a row.
There IS a lot you can do. But there are also things you can’t do. Not without making the situation worse and risking a claim for compensation by your landlord.
Lets look at what you CAN do first.
What letting agents can do to help a landlord with bad tenants
- You can monitor the situation carefully so you know immediately if the tenant is late in making payment.
- You can then contact the tenant and find out why they have not paid.
This is important as often if tenants are approached at this stage it is possible to sort things out. Whereas if rent arrears are allowed to mount up it may become impossible.
I give a lot of guidance on this in my Rent Arrears Action Plan which is part of my Landlord Law service.
- If it becomes clear that the tenant is in serious difficulties – and this will generally be when they fail to pay the second months rent – you should arrange to serve a possession notice.
This will normally be a section 8 notice, but it might be an idea to serve a section 21 notice as well.
Again, this is discussed in some detail in my Rent Arrears Action Plan.
It is after this that the problems start. Because as a letting agent, you are not authorised to start proceedings for possession.
Problems with eviction proceedings
One of the commonest reasons for possession claims being chucked out by the court is that they are signed by the letting agent and not by the landlord personally.
The ONLY people who can sign court proceedings are the claimant or his or her solicitor. There is even a specific note in the court rules saying that letting agents can’t do this.
This is not, as you might think, giving an unfair advantage for solicitors.
Why letting agents can’t start legal proceedings
Issuing legal proceedings is a serious business. It is a bit like getting on a fast train – easy to get on but often difficult to get off (I still remember the man who got on my train to say goodbye to his family in London, did not get off in time and then had to stay on the train until Doncaster ..)
- If you just withdraw a legal claim, you automatically make yourself (or rather your landlord if he is the claimant) liable for your opponents legal costs
- If you start a claim, your opponent can then issue a defence and counterclaim – that counterclaim will not end if you withdraw your claim, and if well founded, could cost you (or rather your landlord) dear
Unless you are a trained lawyer you may not appreciate all the potential problems that can arise with a claim – and which may make you wish you had never started.
For example if you just start a claim for possession based on rent arrears without your landlord, knowing about it, he will not be pleased if he then finds himself embroiled in a defended court case where his tenants are claiming compensation, for example for disrepair. Which could cost him many thousands of pounds to sort out.
It is for this reason that only solicitors are trusted to start court proceedings on behalf of clients. They are trained in the law, and they all have to carry special professional indemnity insurance so clients are protected if they get anything wrong.
If you issue proceedings for a client yourself and for some reason this does not get picked up by the court and is allowed to continue and runs into difficulties, you would nay end up with a claim against your firm either from your landlord or perhaps from the tenant.
This would almost certainly be rejected by your insurers – as letting agents are not authorised to issue court proceedings!
So don’t actually issue proceedings for them. However there are other ways you can help
Things letting agents can do short of issuing proceedings
- You can offer all your clients decent insurance products when they sign up, which will cover eviction claims
- If they are a ‘have a go’ landlord, you can refer them to my Do it Yourself eviction kit, which will give them all the guidance then need to bring a claim themselves
- You can discuss the case with them and give them advice
All of which will be very helpful.
Many letting agents will draft up the paperwork for their clients but require the clients to actually sign the forms. This should be all right – the landlord then knows about the proceedings (as he has signed them) and has thereby agreed to what the agent has drafted up for him.
If however you feel that actually you would like your firm to act for your landlords in possession claims and run the case like a solicitor, there is now a way this can be done.
How to act for clients in eviction proceedings – legally
You could follow in the footsteps of Crabtree Property Management Company who have become the first multidisiplinery alternative business structure under the new legal rules for law firms.
However Crabtree have an in house lawyer, they will have had to deal with a LOT of paperwork during the application process, and I bet their professional indemnity insurance will have gone up.
But if you want to do it, thats the way to go. You can read more about it here.