Landlord Advice Blog

In the case where a landlord has been forced to obtain a county court judgement (‘CCJ’) for unpaid rent and damages (see Recovering Rent When The Tenant Has Left) and the debtor still does not pay enforcement must be considered.  Useful enforcement methods are seizure of goods, charging orders, and attachment of earning orders.  Here we will outline the attachment of earnings order.

An Attachment of Earnings order is a method by which money is deducted from a debtor’s wages in order to pay off a debt. It is therefore only useful if a debtor is in employment.

You can apply for an Attachment of Earnings order unless the Defendants is:
 
Unemployed or self employed
A firm or limited company
In the army, navy or air force

To decide how much should be taken out of the debtor’s wages the court will send a form to complete regarding information about his or her employment, income and outgoings (’statement of means’). This is sometimes abused by understating income and overstating expenses.  If the debtor does not send back the form the court will try and make contact to get the necessary information.  Failing this, a bailiff will serve an order telling the defendant to fill in a statement of means. If the defendant still does not return the form the judge may issue a warrant to arrest the defendant.

The order will be sent to the defendant’s employer saying how much money should be deducted from the debtor’s wages each month, and how long they have to make their first deduction. The order will be sent by the Centralised Attachment of Earnings System (CAPS), which will be responsible for collecting payments.

An Attachment of Earnings can be a lengthy process. However so long as you are confident that the debtor is employed and is not on a low wage it is a successful way to enforce a judgment and recover a debt.

It is common for tenants to leave property owing landlords rent.  Additionally, tenants may owe further amounts to cover repairs (dilapidations) to the property that are over and above wear and tear.  Landlords should keep receipts for the work done to prove what repairs had to carried out to place the property back into an adequate condition of repair.  The tenancy agreement should set out how the tenant should leave the property.  Therefore, with a rent book, a schedule of dilapidations, and receipts for works carried out it should be straightforward to establish how much is due by the tenant.  Despite this it can be difficult recovering the money.  There are several reasons for this.

Firstly, recovering the security deposit from a statutory tenancy deposit scheme (“TDS”) can be difficult if the tenant does not leave a forwarding address or disputes what is owed.  When there is disagreement over what is owed the matter will be referred to the TDS’s mediation service which can be very slow to resolve matters.  You should check what your TDS’s procedures are in this situation.  This information will have been provided to you on opening the deposit account.

Secondly, if the amount held by the TDS does not cover what is owed the landlord will have to write to the tenant detailing what is owed and when to pay it by.  To do this the landlord will need the tenant’s new address.  Often a forwarding address will not have been left and you will need to employ a tracing agent.  The best results for tracing are obtained once your tenant is established at a new address.  Therefore, you may consider waiting 2 – 3 months before instructing an agent.  Giving the agent as much information as possible on your tenant will help the tracing process.  Key information would be date of birth, employment address, mobile telephone number, and club memberships.

Thirdly, even if your tenant is found he or she may be reluctant to pay.  Therefore, a County Court Judgment (a “CCJ”) is often required.  Obtaining a CCJ is important as it will negatively impact a debtor’s credit profile until the debt is repaid.  A CCJ places pressure on the debtor to pay off the debt.  A CCJ is also important as you will need it if you wish to force the tenant to pay by one or more enforcement options provided through the courts (see enforcement blog).

Fourthly, once the landlord has a CCJ the enforcement against the debtor may not be possible if he / she has neither job nor assets. 

Before trying to recover money owed a landlord should always weigh up the cost of pursuing the debtor with the probability of recovering the money.   However, some landlords feel strongly that even if they are unlikely to recover the money they wish to obtain a CCJ that will appear on the tenant’s credit profile so altering others as to the poor credit of this person and making difficult for their tenant to obtain any sort of credit.

A legal problem which surfaces almost daily concerns the rules regulating tenancy deposits taken by a landlord on entering into an assured shorthold tenancy.  The Housing Act 2004 sought to address the imbalance between landlords and tenants when it came to what should be done with the deposit at the end of the tenancy. 

Previously tenants were at the mercy of the landlord as to how much of their security deposit would be returned to them.  Since the new legislation came into force the balance has been shifted firmly to the tenant’s favour.  This is for many reasons.  Firstly, an independent body now decides how the deposit is to be returned after having heard from both tenant and the landlord.  If the tenant doesn’t comply with the process it can be a very time consuming and frustrating one for the landlord to recover the deposit. 

Secondly, the landlord has to comply with the general rule of protecting the deposit within 14 days on receiving it and complying with the scheme’s initial requirements.  Failure to correctly execute either of these obligations carries sanctions against the landlord.  For example, if the tenant makes an application to the court, an order will be made that the landlord returns the deposit in addition to paying the tenant statutory compensation equal to three times the deposit amount.  It is likely that the landlord will also be ordered to pay the tenant’s legal costs for making the application.

Another sanction for non compliance is that the landlord is not permitted to serve a section 21 notice and so will be unable to recover his or her property if the tenant has paid the rent.  Landlords often do not realise that deposits physically taken before 7 April 2007 can also be covered by the Housing Act 2004.  An example of this is when a landlord renews the tenancy after the date the legislation came into force.