Limit on landlord’s remedies

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Currently, where a tenant is in arrears of rent totalling £750 or more, a landlord is entitled to serve a statutory demand for payment. This is a very effective weapon in a landlord’s arsenal of rent recovery remedies because it is efficient in terms of both time and cost and it is highly effective. Service of a statutory demand is the pre-cursor to a tenant’s insolvency in circumstances where an undisputed debt remains unpaid. Receipt of a statutory demand therefore prompts payment by tenants who are in funds, and it flushes out those who genuinely face financial difficulties. In the latter scenario, landlords can at least look to mitigate their losses in light of their tenant’s situation, rather than throwing good money after bad pursuing more expensive debt recovery options.

As from 1 October 2015, however, the threshold for service of a statutory demand will be increased to debts of £5,000 or more. Couple this with the recent abolition of the landlord’s option to distrain against goods for arrears of rent and it seems that landlords will be forced into incurring the time, cost and risk of pursuing court proceedings in many more instances than hitherto.

Concurrent changes within the court system, such as the frontloading of work and costs occasioned by the heightened case management regime imposed by the Jackson Reforms [1] and court fee increases in effect from 9 March 2015 mean that landlord will have to weigh their options more carefully than ever when it comes to dealing with defaulting tenants.