Increasing rent arrears and a long backlog at the courts means mediation will become an increasingly important tool for letting agents, landlords, and tenants alike, says Sean Hooker, Head of Redress at the Property Redress Scheme.
The current pandemic has been an unprecedented period in our country’s history and everyone has faced hardship and sacrifice in their daily lives and many face an uncertain future without security and in fear. Whilst every sector faces challenges, the private rented sector is one that is particularly vulnerable at the moment. The number of people who rely on renting privately is around 23% of the population - not just single people and students, but hardworking families up and down the country.
The housing stock is provided by around 2 million private landlords, many of whom only own one or two properties, often relying on their investment and rent income to provide for their pension provision and balancing being a landlord with a full-time job and their own family commitments.
These ordinary people have faced the same challenges as everyone else, with some being on furlough and themselves losing their jobs or facing redundancy. The mortgage deferral scheme has helped but, inevitably, this debt will have to be repaid.
For tenants, the threat of homelessness during this time hangs over them constantly and whilst the government has pulled out all stops to protect jobs and provide benefits to help them weather the storm, some half a million are now in some form of rent arrears.
The vast majority of landlords have been patient and understanding, with as many as 60% of them deferring rent payments, writing off debt, and reducing rents, according to research by the National Residential Landlord Association.
This said, everyone has a limit and ultimately an ongoing debt situation will result in landlords asking some tenants to leave their property. With local authorities stretched in their housing obligations, the tenant has no choice but to sit tight and wait for a formal eviction to occur.
In anticipation of this, the government took measures to prevent an eviction crisis and first suspended the courts and during lockdown prohibited the actual removal of tenants by bailiffs except in the most extreme cases.
This situation at some near stage will need to end and the process is set to start in June with the reduction of notice periods, but when it does there will be close to a quarter of million cases awaiting court action or the carrying out of actual possessions.
This backlog will put tremendous pressure on the court system and this has been recognised by every organisation and professional body in the sector. Recently, the House of Lords Select Committee on the Constitution produced a report that sets out the challenge on this front and calls for immediate action.
This does not mean that action has not been taken and I recognise that measures have been put in place to try and alleviate the situation, with the government funding Nightingale Courts, drafting in former judges, and modifying the processes to try and help get possession cases through the system as effectively as possible. I also acknowledge the introduction of a pilot mediation service to try and resolve cases before a final hearing.
It is easy to ask the government to do more and no doubt this will continue to be the case, with those on all sides of the sector wanting further measures and more expenditure to resolve the challenges.
I completely understand the frustration - if not desperation - of landlords and their letting agents with the current situation, however, rather than doing nothing or expecting those in government to come to the rescue, there are things that can be done and new services now out there to help.
I am talking about the need for mediation and conciliation to try and resolve end of tenancy disputes, tackle arrears and find solutions for both tenants and landlords that avoid the trauma, cost and time involved in using the courts to deal with these issues.
Now the case for alternative dispute resolution has been made eloquently by many, including the current Master of the Rolls, Geoffrey Vos, and this has led to the mediation pilot which is offered free of charge in the last 28 days before a case is due to go to court. The trial has been running since February so it will be interesting to see what difference it has made and how successful it is been.
My view is however that is the number of cases being dealt with are but the tip of the iceberg and the process probably comes too late in the day for many situations, where the relationship has broken down to such an extent or the costs of arrears so great that a deal is beyond both parties. This is why a number of other alternative dispute resolution services have emerged and can make a real difference.
Honourable mentions must go to Goodlord who have added a mediation service to their Rent Protection & Legal Expenses Insurance policy, in addition to proving help with formulating payment plans for landlords and tenants to try to negotiate a settlement before going down the court route.
The Property Redress Scheme Mediation Service also offers early intervention, with a high success rate in terms of outcomes and we are confident that not only can help reduce the pressures on the court system during the forthcoming months following the return to post-lockdown recovery, but that we can help forge a long term solution for the government's plans for court reform and the ending of no fault evictions.
Mediation is by far more effective in dealing with deep seated disputes than the parties trying to resolve it themselves and is where a trained mediator deals with each party separately without all the finger pointing and blame that can occur if they have to engage with each other.
Ultimately the challenges we face post-pandemic with the court system and the arrears and possession backlog will not be solved with two jabs and a squirt of sanitiser, it will need multiple solutions and remedies to come out the other side. It will need the government, it will need reform of the courts, and it will mean the sector pulling together.
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