Commercial Property Blog
All posts tagged: rent
Can’t pay? Apparently, there’s no need to!
The Supreme Court recently ruled against the Hounslow Council and its attempt to evict a tenant for rent arrears. The court found the council fell foul of the European Convention of Human Rights’ Article 8, which is to respect for someone’s home, and to my mind this has left a barn door open for challenges to the private rented sector and opportunities for miscreant renters.
Sometimes a decision arises that leaves one thinking how and why? How is society funding, presumably through legal aid, for those who don’t want to play their part and abide by basic terms of a contract. If these types of individuals do pay their legal fees, why don’t they just pay the rent arrears, or indeed, the rent on time?
One can look around a lot of areas and think how did these positions arise? Surely nothing is more simple than someone signing up to rent a property and, if they don’t meet the basic term of actually paying the rent, surely the landlord should be able to protect their own investment, property and livelihood. This applies to councils and social landlords as well as private rented sector.
What does it take to restore balance from the quirks of decisions that ride rough shod over the natural justice and what most would see as common sense.
Hopefully, somewhere down the line another case will restore the natural balance and justice but it will take either a lot more legal aid and a council or private landlord incurring huge legal fees to achieve it.
Surely the Government should step in to clear up these anomalies and abuses of what the Human Rights conventions were intended for.
I was amused – but not surprised – to hear this week that the word bailiff is now being used a verb. Tenants not paying the rent? Let’s bailiff them! (the latter usage is attributable to a FTSE 100 chief exec whose modesty I will preserve).
In my innocence, I asked how being “bailiffed” was different from going bust and calling in the administrators.
The answer? Bailiffing (if one can say such a thing) is increasingly being used as a weapon by retail landlords large and small as a means of extracting late rental payments.
One private investor I know with a modest portfolio of small shops explained further.
The retailer’s quarterly rent is overdue, and they aren’t returning phone calls from the landlord, or their agents, to explain the circumstances.
The decision “to bailiff” is made.
Apparently, most bailiffs are very pleasant ex-army chaps who dress exclusively in black clobber (topped off with a bomber jacket).
Bristling with ruthless efficiency, they approach the shop counter and ask for the owner by name.
They explain how much rent is overdue. And then they produce their nastiest weapon – a clipboard – and cheerfully say, “We’ll just start taking an inventory”.
At this point, I am told, the shop assistants dissolve into tears and any remaining customers flee.
The bailiff will then offer to delay the taking of the inventory for a few days, and drive off empty handed in his van. Nine times out of ten, the quaking retailer will find the rent money.
If not, the men with clipboards and padlocks will return. A nasty process, but one I must admit to being fascinated by.
Could it be significant that all the examples I have been hearing about concern the retail sector? Private investors have always loved to own small high street shops, snapping them up through auctions or by private treaty, typically holding them in a tax-efficient SIPP.
But the sector is increasingly vulnerable to rental default and voids are difficult to fill.
One tale I heard last week is that bailiffs find it very hard to deal with pet shop owners, as the presence of live animals on the premises offers some sort of legal immunity from the unpleasantness.
Another loophole occurs when people are sleeping on the premises overnight (the mind boggles at the thought of retailers staging sleep-in sieges to ward off bailiffs). But the best story I heard concerned an investor who instructed bailiffs to change the locks on a shop so he could take the lease back.
Unfortunately, they changed the locks on the wrong shop.