Applications for the Recovery of Land

Enhanced Court Fees

Applications for the recovery of land

DRAFT

Community Housing Cymru Group response

About Us

The Community Housing Cymru Group (CHC Group) is the representative body for housing associations and community mutuals in Wales, which are all not-for profit organisations. Our members provide over 158,000 homes and related housing services across Wales. In 2013/14, our members directly employed 8,400 people and spent almost £2bn (directly and indirectly) in the economy, with 81% of this spend retained in Wales. Our members work closely with local government, third sector organisations and the Welsh Government to provide a range of services in communities across Wales.

Our objectives are to:

• Be the leading voice of the social housing sector.
• Promote the social housing sector in Wales.
• Promote the relief of financial hardship through the sector's provision of low cost social housing.
• Provide services, education, training, information, advice and support to members.
• Encourage and facilitate the provision, construction, improvement and management of low cost social housingby housing associations in Wales.

In 2010, CHC formed a group structure with Care & Repair Cymru and CREW Regeneration Wales in order to jointly champion not-for-profit housing, care and regeneration.

Housing associations do not just provide bricks and mortar. All of our members provide care and/or support in addition to their landlord role, including a wide range of preventative interventions which promote sustainable tenancies.

Social landlords must protect their incomes in order to remain viable. They are monitored on their arrears by the regulator. Increased arrears could impact on their Financial Viability Judgement and their ability to continue to deliver affordable homes to those in most need.

Response

Housing associations are not-for-profit organisations that provide homes to some of the poorest and most vulnerable people in our communities. There exists a high level of social and financial exclusion amongst social housing tenants and many require intensive, long-term support in order to maintain their tenancies.

Housing associations use possession proceedings as a last resort and take every opportunity to put support measures in place for tenants before entering into this formal route. Tenancy sustainability is of paramount importance, not only for the business but also to promote stability and a sense of wellbeing within communities.

In order to promote sustainable tenancies housing provides pre-tenancy support and advice which continues throughout the lifetime of the tenancy. Through their financial inclusion, tackling poverty strategies and support services, housing associations identify changes in circumstances and other trigger points which might suggest an increase in support needs for individual households. By working with other partners, such as mental health and advice services and by providing consistent and intensive support, housing associations are usually able to prevent the escalation of arrears and / or anti-social behaviour.

Unfortunately there are occasions when despite repeated interventions and a sustained level of support, the tenancy is at serious risk of failure and the housing association is left with little alternative but to issue formal proceedings in the County Court. Housing associations are not-for-profit organisations and as such are unable to absorb arrears and associated costs as a profit making organisation might. They must, therefore try to recoup outstanding arrearsplus associated costs such as Court and legal fees. The housing association has no alternative but to pass on court costs to the tenant, who will already be in crisis and highly likely to be grappling with multiple issues. In the event that the possession claim is unsuccessful, the landlord bears the full cost of bringing the action.

In bringing court action, the landlord is understands that the likely outcome in most cases will be a Suspended Order with specified repayment terms. Court is a last resort by which the landlord can enforce minimum repayment. Housing associations continue to work with the tenant after a suspended order to address all contributing underlying issues, such as mental health, basic skills and poverty.

According to Ministry of Justice statistics, between October 2013 and September 2014, 5,068 possession claims were issued by social housing providers in Wales. (Note: This figure includes local authority action). Only 18% of those cases (915) were said to have resulted in eviction, the other 82% coming to an alternative arrangement about the terms under which they can remain in the property and in manycases, the social landlord bears the cost of the court fees.

We are aware from feedback from our own members that actual evictions may be even lower since many eviction warrants do not always result in actual evictions, because often they are; (1) successfully appealed against, or (2) cancelled because of a payment made by the tenant.

Whilst the Ministry of Justice suggests that fees are generally a secondary consideration when taking court action, they must also consider that in the case of an eviction, these fees are passed onto a vulnerable individual, who is quite possibly experiencing a lack of representation due to severe cuts in legal aid and also likely to have a reduction in income, due to welfare reform.

The Ministry of Justice should also consider that many tenants now have little choice but to remain in a property which they cannot afford, due to a reduction in benefits as a result of welfare reforms particularly the bedroom tax, whilst they wait for a suitable property to remain in a property until they are evicted by their landlord, as otherwise they will lose their right to be re-housed by the Local Authority. Equally, social landlords are under increasing pressure due to massive cuts in the welfare budget.

Due to welfare reform, housing associations face challenges in supporting tenants with very limited income to improve their financial situation. This leaves little option but to take court action. Increasing the cost of Court action increases the loss to the organisation. We are also mindful that Judges are now issuing as part of an Order the need for the tenant to go to the CAB for ongoing support. Feedback from a member in North Wales suggests that this often leads to a DRO, where the debt gets written off permanently.

Furthermore, feedback from our members suggests that for a not-for-profit organisation, such an increase in fees could make trying to recoup arrears financially unviable for the organisation. Should the tenant be in receipt of benefits, currently the landlord might hope to receive £3.75 per week by direct deductions.

The increase of £75 is unreasonably high, particularly given increases which occurred in 2014, whereby the cost of online possession claims rose from £100 to £250 per case.

For example, during 2013/2014, a member operating in the South Wales area brought 23 online possession claims, costing a total of £2,300. From 2014 to the present date, it was necessary for the same organisation to instigate 21 possession claims at a total cost of £4,950 (including two cases charged at £100). Should costs increase again by £75.00 per case, based upon this year’s figures, the organisation would be charged an additional £1575.00.

Should the proposals to raise court fees yet again go ahead, between May 2014 and May 2015, Court Costs will have leapt from £100 to £325. This sharp 225% sharp increase is unreasonable and extremely difficult to justify, part.

Increasing costs at such a high rate yet again means that not-for-profit organisations, who are providing homes to some of the most vulnerable and impoverished people in our communities, are increasingly becoming less likely to be able to justify recovering monies owed to them. The Ministry of Justice should also consider that in the case of domestic abuse and anti-social behaviour, landlords must respect the safety of others in the community when weighing up potential evictions.

Furthermore, if the increase of £75 is passed onto the tenant and that tenant is in receipt of housing benefit, an additional 20 weeks will be added onto the tenant’s repayment schedule, exacerbating a very difficult financial situation.

The current fees apparently represent the average cost of providing access to the courts. As a general point, we feel that the impact of the increased court fees for general applications on the poorest is not dealt with by the fee remission policy, since the income level is actually set at such a low level that it will discourage individuals from making claims.

• Given very recent, large increases in fees, we do not accept the current proposal to increase fees for possession claims, or general money claims. Instead we seek assurances that such cost increases will not continue at such an unreasonable rate.
• Implementing both Options 1 and 2 will exceed the costs of those proceedings which, according to the impact assessment, reduce the level of public subsidy provided to HMCTS. However, we maintain that the courts must be accessible to all and as such would expect the public purse to subsidise Court Services.
• We would like to see greater transparency around Court Services costs, particularly in light of recent price increases.

Community Housing Cymru

January 2015

Community Housing Cymru Group Members:

Aelodau Grŵp Cartrefi Cymunedol Cymru: