Government mediation can help agencies recover arrears - industry leader

A leading figure in the lettings sector says the government’s new Housing Possession Mediation Scheme can help agencies and landlords recover arrears without lengthy waits. 

"If approached by both parties to the rental agreement with an open mind and flexibility, the government's mediation scheme can help to remove the need to go to court, which is usually in everyone's best interests" says Neil Cobbold, chief sales officer at PayProp.

Launched recently by the Ministry of Housing, Communities and Local Government, the free arrears mediation service can be requested by landlords or tenants at the review stage of their possession case. 

Once a case has been referred, the Society of Mediators will conduct a confidential mediation process remotely within 10 days. During this, the mediator will speak to each party separately to explore options and reach an agreement. 

If successful, an agreement explains what actions each party must take next; it will be signed and brought before a judge for approval. If the agreement is broken by either party, the other party can apply for the court to enforce it.

If unsuccessful, the case will continue to a substantive face-to-face court hearing.

Cobbold believes it will take some time for the courts system to return to anything approaching a normal service - even then, an eviction through the courts will still be a long and potentially expensive process.

According to data from Landlord Action, just 7,451 evictions of an expected 28,000 took place in the county courts in 2020. As a result, a significant backlog of court cases is expected when evictions are allowed to take place once more. The current ban on bailiff-enforced evictions is scheduled to end on May 31.

"This means that any landlord starting the eviction process now could have to wait months before their case is heard in court. Alternatives such as the Housing Possession Mediation Scheme could be a lifeline to those who have already been dealing with issues for a prolonged period – while also freeing up court time for those cases where a mediated agreement can’t be reached. When independent mediation works, it can help property professionals to come to an agreement with tenants, sustain tenancies and recover arrears more quickly than pursuing an eviction and a County Court Judgement."

He adds that it's vital for agents to put processes in place to reduce the chances of arrears becoming serious in the first place.

"This includes keeping digital records of all payments, while also chasing rent automatically using the most effective methods of communication. Educating tenants about the financial support options available to them and organising affordable repayment plans can help landlords and agents to collect more of the rent they are owed" he adds.

"By having these measures in place, agencies can add value for landlords from the start of a tenancy and reduce the chances of court eviction action being required at a later date," Cobbold concludes.

You can see full details of the MHCLG scheme here.