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Courts set to slap £75 on the cost of evicting tenants
4 February 2015
Buy to let landlords will come under more financial pressure as court costs to evict tenants are going up again – for the second year running.
The rising costs are due to government spending cuts, with the Ministry of Justice shifting the burden of running the courts to claimants.
As part of the government’s austerity drive, the ministry has to plug a budget hole of £55 million, and putting up the costs of managing cases is one way of recouping some of the money.
The new move was announced as part of a consultation which closes on February 27.
For buy to let landlords, this means the filing court papers is hiked from £280 to £355, while the price of online claims rises from £250 to £325.
Landlords have to pay these costs in advance of any hearing, but can ask the court to make an order for costs if they win the case.
Launching possession proceedings becomes a vicious financial circle for landlords as the main trigger is the tenant has failed to pay the rent because they do not have the cash.
If the landlord wins the case, the arrears and court costs are rarely repaid, while leaving the tenant continuing to build rent arrears is not a financial option.
Either way, unless the landlord has rent guarantee insurance, the cost has to come out of their own pocket until the case is resolved, which can be three or six months down the line.
The ministry last increased the cost of possession cases in April 2014.
Then, the fees went up from £175 to £280 for paper claims and from £100 to £250 for online claims.
The ministry reckons this round of increases will raise an extra £15 million a year.
If the increase goes ahead, which is more than likely, the rise is 27% for paper claims and 23% for online claims, which far outstrips the current inflation rate of 0.5%.
Government figures show 38,509 possession cases from private landlords and social housing authorities went to court in the second quarter of 2014, while mortgage lenders made almost 11,000 claims.
“The government has set these fees based on full cost recovery, which is a court user paying for the court system less any waived fees. Despite this policy, the courts have not recovered full costs and have been subsidised by other justice services,” said a ministry spokesman.