The latest Quarterly CourtWatch from Legal for Lettings makes for fairly sobering reading if you are a landlord in London. Based on 1,200 possession-related applications handled nationally over the previous 12 months, the report shows average court delays across the 63 courts analysed sitting at 4.85 months, with an average loss per claim of £6,411. London, however, is in a league of its own. The report puts London court delays at 12 months and shows the highest average rental loss at £26,484. It also notes that since the previous report, London losses have risen and delays have become longer.
Now, there is an obvious reaction to figures like that, which is to focus on possession proceedings, legal process and how landlords can protect themselves once a tenancy has gone badly wrong. All of that matters, of course. But for us at base, the more interesting question is what happens before you ever get near a courtroom, because by the time a case reaches that stage a lot of damage has already been done.
Rent arrears do not begin with a possession order. They begin with a missed payment, a change in someone's circumstances, a communication that does or does not happen, a maintenance issue that is allowed to fester, or simply an agent who is too slow to notice that something is going off course. This is where good property management earns its keep, and it is also where too much of our industry still gets distracted by process instead of relationships.
At base, our very low arrears levels are not the result of some miraculous ability to predict the future or because we only ever deal with perfect tenants. People lose jobs, relationships break down, costs rise and life happens. What makes the difference is how quickly a problem is spotted, how well it is handled and whether there is enough trust in the relationship for people to have an honest conversation before the situation becomes entrenched.
We have always believed that good resident relationships are not some soft, fluffy add-on to property management. They are part of proper risk management. If a resident trusts the people managing their home, they are more likely to raise a problem early. If repairs are handled properly, resentment is less likely to build. If expectations are clear from the outset, there is less room for confusion later on. And if difficult conversations do need to happen, they are far easier when there is an existing relationship rather than a trail of automated emails and an anonymous inbox.
That does not mean being soft on arrears, nor does it mean landlords should accept poor behaviour. Quite the opposite. It means being engaged enough to understand what the issue actually is, acting quickly and knowing when a situation can be resolved through communication and when it needs to move into something more formal. There is a world of difference between someone who cannot pay and someone who will not pay, and treating those situations in exactly the same way is not good management. It is lazy management.
The Legal for Lettings data also highlights something else that London landlords should be thinking about. Higher rents magnify every delay. A possession case that takes months to resolve in a lower-rent market can be painful, but in London the financial exposure can escalate at a frightening rate. That £26,484 figure is not abstract when there is a mortgage, service charge, insurance, maintenance and all the other costs of ownership still ticking away in the background.
This is why we think the traditional conversation around management fees is often back to front. Landlords quite reasonably look at what an agent charges, particularly in a market where the cost of owning and operating rental property has increased. But the more useful question is what risk that management fee is actually removing. Is the agent monitoring payments properly? Do they know the residents? Do they understand the tenancy? Will somebody notice quickly when something changes? Are maintenance problems being dealt with before they turn into disputes? Is there a competent person actually taking ownership, or is "fully managed" really just another name for an inbox and a ticketing system?
The cheapest agent can become spectacularly expensive if the underlying management is weak. That is particularly true in London, where the CourtWatch data shows just how severe the financial consequences can become when things drift.
There is another part of this that we think the industry sometimes loses sight of. Most landlords are not looking for conflict. Most residents are not looking for conflict either. A landlord generally wants the rent paid, the property looked after and unnecessary drama avoided. A resident wants a decent home, fair treatment, repairs dealt with and, equally, unnecessary drama avoided. Those interests are far more aligned than the usual landlord-versus-tenant narrative would have you believe.
A good managing agent sits in the middle of that relationship and protects both sides by doing the fundamentals properly. That is exactly how we have always approached management at base. We are there to protect the asset and the landlord's income, absolutely, but one of the most effective ways of doing that is to create a tenancy that works well for the people actually living in the property.
None of this means possession cases disappear. Sometimes they are unavoidable and, when they are, landlords need good legal advice, clean documentation and an agent that has kept its compliance and records in order from day one. But the latest London data should be a reminder that prevention matters more than ever. A 12-month court delay is not something any landlord should want to build into their business plan.
For us, the lesson from this quarter's CourtWatch is therefore fairly simple. The value of a managing agent is not just demonstrated when something goes wrong. It is demonstrated in how often good management stops things getting that far in the first place.
If you'd like a copy of the full report please do get in touch and we will happily send you a copy.
