Introduction
Citizens Advice very much welcomes this initiative to draw up a rent arrears protocol, and we have been pleased to be involved in the Housing Working Group chaired by the Department of Constitutional Affairs, which has worked on its development. A very common area of Citizens Advice Bureaux (CABx) work is assisting tenants with rent arrears to maximise their incomes, prioritise their debts and set up mechanisms for repayment. The evidence from this work, particularly where CABx have a presence in courts on possession days, has clearly showed that many social landlords move too quickly to initiate possession action before all other options have been explored.
Over recent years therefore we have lobbied hard for a change of perspective by social landlords. Our work has included publication of an evidence report – Possession action – the last resort? which detailed our concerns and made recommendations for change. Since then we have seen welcome progress in the form of new regulatory guidance from the Housing Corporation, research and good practice from the ODPM, and new requirements on all social landlords to monitor and report on evictions. At the local level, a number of CABx have reported that they have been approached by social landlords to set up referral arrangements to provide advice prior to possession action being started.
However CABx report that practice remain very variable. We therefore believe there is an important role for a rent arrears protocol to play in giving some teeth to the guidance, so ensuring that all landlords adopt what is now widely accepted as being best practice in rent arrears recovery.
The use of Ground 8
Our one major concern however is that some social landlords may seek to avoid the protocol altogether by resorting to the use of the mandatory Ground 8, to which, we understand, the protocol cannot apply. This would be a very undesirable outcome and we would urge that steps are taken to pre-empt this. It also demonstrates the importance of moving swiftly to implement the Law Commission’s proposals which would end the use of this Ground by social landlords.
In the meantime, one way forward might be for the Housing Corporation to issue additional regulatory guidance specifically on the use of Ground 8, especially as this was also suggested by the judge in the recent Court of Appeal case regarding Ground 8 (North British HA v Matthews, 21 Court of Appeal, Dec 2004).
Specific responses to the consultation questions.
Do you consider a protocol for rent arrears would be helpful?
Citizens Advice considers a rent arrears protocol would be very helpful for the reasons set out above. It should reduce the number of cases coming to the court unnecessarily which is not in anyone’s interests as court costs will inevitably make it more difficult for tenants to pay off their arrears. In addition it encourages tenancy sustainment and should help ensure that landlords do adhere to the recent guidance from the Housing Corporation and the ODPM.
Will the protocol have any impact on your business/sector in terms of benefits or costs?
It may well increase the demand for advice on benefits and debt. However the costs of such advice should be more than offset by the wider savings in terms of better managed and hopefully reduced arrears, and reduced pressures on the courts and on homelessness departments.
Do you agree that the protocol should apply to both social landlords and private landlords as suggested?
We agree
If you agree that it should apply to private landlords, should the whole protocol apply or only parts and if so which parts?
Ideally the whole protocol should apply equally to private landlords as the protocol should be seen as the basic standard to which all landlords should adhere. There is no reason why private tenants should be disadvantaged in this respect.
One way towards achieving this would be for the ODPM to take steps to ensure that the principles of the protocol are embedded in the detailed requirements of licensing schemes, landlord accreditation schemes, and other initiatives aimed as raising the management standards of private landlords.
In practice however, we recognise that some sections will present difficulties. In relation to the paragraphs which the consultation paper suggests may not apply to private landlords, we make the following comments:
Clause 4
If the tenant has difficulty in reading or understanding English, the landlord should make special arrangements to ensure that the tenant understands any information given.
We cannot accept that this paragraph should not apply equally to private landlords. To do otherwise would result in discriminatory practice, compounding the disadvantages faced by tenants already vulnerable because of language difficulties, and leaving them at greater risk of losing their tenancies. It would also be likely to be in conflict with the new code of guidance on racial equality in housing currently in being prepared by the Commission for Racial Equality.
Clause 6
The landlord will assist the tenant in any claim s/he may have for housing benefit. Possession proceedings for rent arrears should not be started against a tenant who can demonstrate that they have:- (i) a reasonable expectation of eligibility for housing benefit; (ii) provided the local authority with all the evidence required to process a housing benefit claim; and (iii) paid other sums due not covered by housing benefit. The landlord should make every effort to establish effective ongoing liaison with the housing benefit departments and to make direct contact with them before taking enforcement action.
With the exception of the first sentence, we can see no reason why this should not apply to private landlords except where the landlord can demonstrate that they were unaware that the tenant was in receipt of HB. This would leave it open for the tenant to tell their landlord that they were in receipt of HB should they wish to use this as a mitigating factor.
The DWP reform proposals to end payment of HB direct to private landlords may in due course mean that many private landlords will not know that their tenant is in receipt of HB and indeed DWP has argued that one of the advantages of the reform is that tenants can choose not to divulge this information to their landlord.
Clause 7
Because rent arrears may be part of a general problem with debt, the landlord will, if appropriate, refer the tenant to a debt advice agency able to offer the tenant specialist assistance as soon as possible.
We agree that it would not be appropriate for a private landlord to be under an obligation to refer a tenant to a debt advice agency.
5. Do you agree with the scheme of the protocol, i.e. early intervention when rent arrears begin, agreement of instalment payments, assistance to the tenant to gain benefit and manage debt, postponement of proceedings?
Yes, we agree that these should be the essential ingredients for good practice on managing arrears, and they are consistent with the Housing Corporation regulatory circular and the ODPM good practice guidance. The inclusion of assistance with benefits and debt advice is particularly welcomed.
6. Should the scheme be varied for different landlords who have different resources? If so, in what respect?
We do not believe that there is any justification for treating landlords differently because of their resources. Tenants’ responsibilities do not vary according to the resources of their landlord, and nor do their rent levels. They should therefore expect a similar standard of tenancy management. We do not believe that this protocol would be particularly resource intensive for landlords and consider it should be seen as a baseline to which all landlords should adhere.
7. Should there be sanctions for non-compliance and, if so, what?
The landlord should not be able to make any claim for costs. Cases should be struck out or adjourned with liberty to restore, at the judge’s discretion.
8. What relationship should there be with the Disrepair Protocol, if any?
Where the tenant has already initiated a claim against the landlord for disrepair in accordance with the disrepair protocol, the landlord should either wait for the disrepair case to be heard or should deduct the amount claimed under the disrepair protocol from the arrears claimed.
9. Do you have any other comments?
Clause 1 – it would be helpful to define what is meant by “immediately”
Clause 2 – maybe rephrase as “use their best endeavours”
Clause 3 – it would be helpful to define “regularly”
Clause 7 – this should clearly state a “non fee-charging debt advice agency”. There has been a long history of mortgage lenders referring borrowers with mortgage arrears to fee-charging agencies, which only serves to compound their debt problems. It will be important to avoid the same practice arising with rent arrears.
In addition, statements should carefully distinguish between amounts due to the landlord which are “true” rent arrears on which possession can be taken, and other amounts owed.
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