Reset the pain threshold

Faced with benefit cuts, housing providers will need to maximise income if they want to deliver their services and remain within banking covenants. This may mean renegotiating the ‘deal’ with tenants and resetting the pain threshold to ensure a workable understanding that may extend beyond binding contracts.

Rent arrears and outstanding service charge are likely to increase. Housing providers are increasingly likely to pursue rent arrears by way of Ground 8 (mandatory rent arrears) alongside claims for outstanding rent and persistently failing to pay rent. Service charges might be robustly pursued and leaseholders may face forfeiture. Shared owners not paying monies due could be pursued via Midland Heart v Richardson, treating it as if it was a standard rent arrears case.

Public law defences under the Human Rights Act are likely to be argued. Whether courts support such activity will be another matter. District judges might ‘push back’ against cases involving smaller sums and suspend warrants rather than give possession. It is not uncommon for rent arrears in excess of £2,000 to be subject to a suspended possession order.

So what can housing providers do? If policies are in place regarding Ground 8 or rent levels before the issue of proceedings then they might need to consult and amend. Internal processes might need changing so that public law defences can be countered. Courts, like residents, might need to adjust their pain threshold.

Social landlords must be very clear about what monies tenants and leasholders will be required to pay and when. They will also need to negotiate with tenants under-occupying property (particularly in the light of the proposed housing benefit cap) or in a property they cannot afford, to offer them suitable and more affordable accommodation.

Rebecca McGuirk, partner, Shoosmiths
rebecca.mcguirk@shoosmiths.co.uk

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