A number of social landlords are claiming that advice agencies are wrongly helping tenants to write-off their rent arrears by encouraging them to obtain a Debt Relief Order (DRO). Landlords report that they have to claim on their landlord insurance policies more and more as the use of DROs spread rapidly.
Landlords claim that financial advice agencies are now telling tenants on low incomes to write off as much as £15,000 by simply getting a DRO. The Insolvency Service approved 7300 DROs in the last three months. This figure compares with an average of nine-hundred per month for the previous twenty-one months.
Nick Atkin, chief executive of Halton Housing Trust, said “This organisation have four cases currently being processed and another twelve being referred, equating to total write-offs of close to £10,000. Our customers are beginning to get wind of it because it looks like a pain free way of getting rid of their arrears. It’s created quite a significant risk for us and for tenants themselves because we can still possess the property.”
Social landlords are bracing themselves for further increases of DROs over the next year as Citizens Advice and other advice agencies are urging tenants to write off their rent debt. Landlords feel that the orders should not be able to include debt to social landlords who should have the same protected status as a public sector debt. The Citizens Advice bureau says that whenever they do suggest a tenant obtain a DRO, they also make it very clear that it may pose a threat to their tenancy and if any social landlord believes that tenants have not been advised of this, they want them to contact their nearest office immediately.