A legal loophole is letting tenants taken to court to tackle rent arrears problems escape without details of court orders appearing on the credit references.

Lawyers are warning private landlords that some county courts are failing to register rent arrear or possession orders against tenants – which means they are missed off credit references.

The loophole is also causing problems for rent guarantee insurers who would not have taken on policies if they had known some tenants had already faced court proceedings over rent arrears.

Lenders checking credit files are also financing customers who they would otherwise turn down for loans or credit cards.

Clare Kelly, a partner at debt recovery specialists Anthony Gold Solicitors, revealed the loophole.

She found out that if a tenant is in rent arrears, a county court judge will grant possession under a section 8 notice and the landlord would also win an order for the tenant to pay the arrears.

However, should the landlord decides not to enforce the order, the debt is not registered as a county court judgement

“Surprisingly few solicitors are aware of this problem. Rent-guarantee insurers requiring professional references are taken on all tenants, have paid out claims for the same bad tenants at least twice because their previous histories were not disclosed by the referencing companies,” said Kelly.

“This is a big gap in the system. I am sure many agents and private landlords who are awarded possession, with the tenant ordered to pay, believe that the judgment is enough to ensure that defaulting tenants have debts registered against them.”

Landlords should help each other by enforcing court orders to make sure they are registered and appear on credit checks, urges Kelly.

“Most landlords are only too happy to see the back of bad tenants and don’t bother pursuing the case any further,” she said.