x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

Tenants asked to sign a ‘moral contract’ committing to repay rental arrears

A letting agency is asking tenants to sign a ‘moral contract’ to express their unconditional commitment to repay their rental arrears in full. 

The agreement is designed for tenants whose income may have been affected by Covid-19.

At the bottom of the letter, there is a tear-off slip which says: “I …[name]… agree to pay my part and be #part of the team. I am committed to paying all rental arrears and honour my moral obligation to play my part”, but this could cause a problem moving forward.  

Experts at property litigation firm Hägen Wolf say that it may be a way of maintaining effective communication with the tenants through the Covid 19 crisis, but its effectiveness is questionable. 

Matt Pugh, managing partner at Hägen Wolf, commented: “Firstly, there is a question of whether such a moral contract is an enforceable legally binding contract. For a contract to be enforceable, five requirements must be met: there must be an offer, acceptance, consideration, intention to create legal relation and certainty of terms.

“In terms of acceptance, you have to ask how many tenants will return the tear-off slip reaffirming their commitment to pay all rental arrears and their moral obligations towards their landlord. 

“Following recent changes to the law which have, in effect, suspended evictions, communication between landlords and tenants has often been drastically reduced, with the latter often failing to return their landlord’s calls or to update them on their current situation. It might be argued that, if the slip is returned, then a legally enforceable contract between the tenants and the landlords was created.”

Hägen Wolf argues the moral contract does nothing more than reiterate the tenant’s obligations already detailed in the tenancy agreement. The current suspension on evictions does not alter the terms that both parties agreed to when entering into the original tenancy agreement and it does not, therefore, exonerate tenants from their obligation to pay rent. 

If tenants fail to make payments or accrue rent arrears, they will still be in breach of their contractual obligations and would still be at risk of possession proceedings being issued at a future date, after the current eviction suspension ends. 

Pugh added: “While the use of a moral contract does not effectively change the position for either landlord or tenant it might mitigate against the fear many landlords have that the current suspension on evictions has sent the wrong message to tenants who might believe that they have been completely relieved of their contractual obligations during this period.”

Poll: Do you expect a moral contract to be an enforceable legally binding agreement?

PLACE YOUR VOTE BELOW

  • icon

    Total waste of time, a good tenant would repay the shortfall slowly over a period of time, some will be out in the cold next winter and wonder why.

    icon

    @Sebastian, a very big difference, a good tenant is someone that you can trust and that will repay, a bad tenant is someone that you cannot trust and will not make up the shortfall', thankfully most will fall into the good bracket, but their will still be a lot that will not

     
  • icon

    For sure if they don't pay, then it will be my pleasure to serve eviction notices on these thieves.
    And why would I care? The colder the better. Maybe they will learn, but likely they never will.

    Why do they not understand their signed commitments.?

    icon

    Mr crisp I have currently 2 tenants that have defaulted but the uk government have stopped all evictions for the next 3 months on top of that the courts will have a huge backlog that no doubt you'll be the least deemed priority. You'll be looking at 18 months minimum to evict. Better to try to negotiate than go down that avenue at present.

     
  • icon

    There is no difference between arrears or fecklessness.....in BOTH cases they have not paid a legal agreement......
    In both instances, they must go...and fast.

    icon

    I disagree David if they have been good tenants and are honest then they deserve a chance at least, however if they do not start to make the short fall up then they do need to go fast, I know all my tenants and 15 out of the 16 I would like to keep and would give them a chance.

     
  • icon

    My tenant (Company Let) seem to believe they have been relieved of their obligation to pay. They have recommended I take a mortgage holiday..?! You couldn't write this nightmare!! Meanwhile, they have just now registered an additional/new company at my address... My fear is they will try to manipulate this into a claim that they have a Commercial Lease rather than a Company Tenancy Agreement. My solicitor is as much use as a chocolate fireguard, and all the time the Government is protecting these frauds!! Has anyone had experience of this before please? A Company Tenancy (Directors living and carrying out administrative work at house) trying to argue that they are using the house for commercial purposes and therefore have a Commercial Lease?

    icon

    Not helpful Sebastian...

     
    icon

    I believe the owner of the property can only apply to the council to change the purpose of the building

     
    icon

    Thanks Jacob, but unfortunately I have just checked and it would seem that the tenant has been able to register the property as a catering premises?? When I asked the council how this was possible they explained that anyone can apply for a licence at any address???

     
    icon

    Try telling this bunch of shysters you will be letting the council know they are using this as business premises and should be charged uniform business rates. As it's probably considerably higher than normal council tax..............

     
    icon

    But the original agreement is what is binding regardless of what they claim the property purpose is now.. have they registered the property to pay businesses rates council tax at business rates etc check with the local authorities sounds like you have the worse kind of scenario for a LL might be worth changing your solicitor good luck.

     
    Matthew Payne

    There should be a NHA tenancy in place, they cant just rip this up. Difficult to advise without getting into all the detail, but it may be that they are winding up the original company, hence all the activity on a new one.

     
    icon

    Kate most tenancy agreement state no businesses are to be conducted at the premises, if this is in yours they are in breach. Use that as grounds for removal

     
    icon

    Thanks all. Am I right in thinking that the Covid eviction ban applies to those breaching contractual terms as well as non-payment?

     
    Matthew Payne

    The guidance doesnt state a reason, it just changes the timescales on notices and proceedings.

     
    icon

    Kate, I had an excellent solicitor for over 30 yrs (he was also a landlord both residential and commercial ) he retired a couple of yrs ago, all I can find now are chocolate teapots universities turn out academic idiots now complete waste of time, but that is now true of anything that comes out of a uni now, doctors, teachers all of them .

     
  • icon

    Of course such a letter is nonsense. Every case of late payment or non-payment should be treated on its own merits in terms of the tenant. "It will be my pleasure to serve eviction notices" (above)? - did I read that correctly? Surely if one has to serve an eviction notice, one does this with a heavy heart. Maybe tenants should ask their own solicitors to write to their landlords (or letting agents) with a tear-off section asking them to confirm they will fulfil their moral obligations as landlords, virus or no virus? This is getting silly...……. (If I get on a bus and touch in my card, do I ask the driver to sign a form to state he/she will do his best to get me to my destination stop?)

  • icon

    I will just take it to the High Court, as I always do, and bypass the court bailiffs. Much faster and easier. And ensured that the tenant will go on that day.

  • icon

    Many letting contracts have penalty interest rates for late payments. Mine is 3% per day. When overdue, what are the thoughts on applying this, my tenant offered to pay £100 per month against £1550 pm so is taking the proverbial. Suspect when he realises he is also accruing daily interest he may try to make a better effort to pay?

    Matthew Payne

    Hi Joe, these matters are all individual to each case and these decisions spin on the personalities and circumstances involved. Personally, I would not apply the charge straight away, I would send an email explaining all the potential pitfalls for the tenant not paying the rent, of which this would be one. Confrontational strategies should only be used in my view if you wish to remove the tenant. If you would rather have them stay and resolve the situation then I would recommend avoiding until you decide to remove them.

     
  • icon

    What does it have to do with the EU?
    I will use the High Court in The UK...Nothing to do with Europe..!!!!!!!!!!!!

  • icon

  • icon

    Not only that, as soon as there is a default, I will put a CCJ on them through Money Online....And that will be an issue for them for at least 6 years, depending if I want to do another CCJ at the end of the first one until they pay. It is worth the money to mess them up.

    Don't care how long it takes, I will chase them to the end. I can afford it...Even if it for £5 or £100,000

    icon

    Sebastian

    I don't think Courts ever sell tickets, but some cases would be worth paying to see, although the opponent is unlikely to turn up and put up a fight.

    I think the Romans had the right idea. Pity it got too cold for them up here!

     
  • icon

    I will drag them through the courts for as long as it takes and however much it costs until then leave....
    FULL STOP

  • icon

    I assure you all....I will never stop.

    It has worked for me before with 4 other defaulting tenants.....It took time, but my god, the satisfaction was just fabulous.

    And I got ALL the money I had claimed for....Every penny. And in 2 of the cases, even more.

    Contra to most thoughts on this site though, the Uk Courts do actually work for those who have genuine claims, albeit slowly.

    Patience and perseverance are truly virtues.

  • icon

    A virtue is a virtue, they never change.
    And anyway, all I do is get what is owned to me.
    What is wrong with that?

icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up