Possession action - the last resort?

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Possession action- the last resort? [ 390 kb] - CAB evidence on court action by social landlords to recover rent arrears

Summary

There is extensive evidence from Citizens Advice Bureaux throughout England and Wales that significant numbers of local authority and housing association tenants face possession action on grounds of rent arrears prematurely, before all other avenues, to recover the arrears, have been explored.

The number of outright possession orders granted to social landlords by the courts almost doubled between 1996 and 2001, and increased by 12 per cent in both 2000 and 2001. In 2001, social landlords were granted outright orders for possession against 30,350 tenants. Additionally, in more than twice that number of cases (70,293) suspended orders were granted.  This is despite the fact that it is explicit in the regulatory guidance for housing associations and the assessment criteria for local authority housing services that possession action for rent arrears should only be used as a last resort .

Citizens Advice believes that a new approach is needed to ensure possession action is only used as a last resort. The approach should comprise of three key elements. Firstly it is imperative that the administration of housing benefit is dramatically improved so that the needs of tenants and landlords for prompt payment are met. Secondly legislative reform is needed to provide a greater focus on debt recovery rather than possession.

The third element, which is the main focus of this report, relates to the need for a change in approach by some social landlords towards the recovery of rent arrears. Many social landlords rely too heavily on court action as a basic rent arrears recovery tool: housing managers spend time and resources pursuing arrears through court-based systems despite growing levels of arrears; tenants who are responsible for paying their rent, are often caught out by poverty, debt and personal problems or crises, leaving them unable to negotiate their way through the maze of agencies who may be involved; CAB advisers find themselves repeatedly advising tenants on the brink of losing their home on how they can navigate through the court to prevent homelessness. From all perspectives the present system is inadequate, ineffective and frustrating.

There is also pressure for change from other quarters. The Law Commission’s review of housing law proposes fundamental changes to possession procedures which would reduce the current use of suspended possession orders, and the Homelessness Act 2002 charges local authorities with a more pro-active approach to homelessness prevention, including greater emphasis on sustaining tenancies rather than eviction.

This report draws on case evidence submitted by 389 Citizens Advice Bureaux across England and Wales between January and December 2002 and from internal policy and procedural documentation kindly provided by housing associations and local authorities. The evidence is supplemented by a monitoring exercise carried out with CAB clients at 38 county courts throughout England and Wales over a four-week period between May and June 2002. Citizens Advice Bureaux are involved in running desks in 129 county courts, providing advice and representation for people attending court. Often these people have had no independent advice prior to attending court for a hearing.

• CAB evidence suggests that the main factors which cause people to fall into rent arrears are:
• sudden changes in personal circumstances such as job loss or relationship breakdown which result in a drop in income
• delays and failures in the housing benefit system, and
• sheer poverty and the problems of trying to manage on a low income.

In addition, many tenants of social landlords have specific problems which make them vulnerable (for example poor physical or mental health, literacy or numeracy problems). These factors can make it particularly difficult to cope with the pressures of rent debt.

Despite this, CAB evidence demonstrates that many social landlords start possession action before all other avenues for recovering the arrears have been explored. Cases include:

• tenants facing possession action despite having agreed and kept to arrangements to repay their arrears in instalments
• tenants facing possession action where their arrears could have been recovered through deductions from their income support or job seekers allowance
• vulnerable tenants, for example people with learning difficulties or with mental health problems, facing possession action when they had got into arrears because of a lack of support with their housing benefit claim
• tenants facing possession action for rent arrears where there were unresolved housing benefit issues.

Failure in housing benefit administration is a common cause of significant rent arrears. It is not unusual for Citizens Advice Bureaux to report clients waiting three or four months between submitting a housing benefit claim and payment being made. But CAB evidence indicates that in too many cases social landlords make no allowance for the fact that rent arrears may be caused by problems in housing benefit administration, and pursue court action regardless. Tenants can then find themselves threatened with eviction for reasons which are beyond their control. Recent research by the National Assembly for Wales (ONS 2002) found that housing association landlords admitted that delays in housing benefit payment were the main cause of arrears in 13 per cent of cases where a possession order was granted.

But the situation is not uniformly bleak. Analysis of over 40 social landlords’ rent arrears policy documents found that some recognise that effective rent collection and arrears recovery cannot be isolated from providing wider tenancy support along with access to independent information and advice. Key good practices we have identified include:

• early and sustained contact with tenants including support throughout the housing benefit claims process, to prevent arrears getting out of hand
• flexibility of response both in when and how tenants are contacted and in agreeing and rescheduling repayment arrangements when circumstances change
• referral arrangements for tenants to holistic independent debt advice where appropriate
• close liaison with housing benefit departments and
• clear and constructive communication with tenants.

There is evidence that tenant-focussed housing management can result in financial benefits to both tenant and landlord in terms of reduced rent arrears and possession action.

Social Policy contact: Liz Phelps Social.policy@citizensadvice.org.uk

Possession action- the last resort? [ 390 kb] - CAB evidence on court action by social landlords to recover rent arrears