The implications of Covid-19 for residential landlord & tenant possession proceedings…

With the passing of the Coronavirus Act 2020 emergency legislation was introduced by the government which came into force on 25th March to make general provisions available for dealing with the fall-out of the pandemic.

Amongst other things, emergency provisions designed to deal with protection from eviction were enacted. Schedule 29 of the Act deals with residential landlord and tenant possessions. In passing the new legislation, the government has tried to balance the needs of landlords and tenants in extremely challenging circumstances and it is a matter of opinion as to whether the balance has been correctly struck.

The Impact of the Provisions

With an assured shorthold tenancy agreement, once the fixed term has expired, and the tenancy has become periodic, landlords were historically able to serve a section 21 notice to bring the tenancy to an end on two months’ notice. This period has now been extended to 3 months, with the option for the period to be extended 6 months. We await further government guidance in regard to whether that will materialise.

There are various grounds that can be advanced by a landlord for seeking possession of a residential property. Some of them are mandatory grounds under which a court must grant possession of a residential property. Arrears of rent is one of those. Most landlord possession claims brought on the grounds of arrears of rent, are made under ground 8 of Schedule 2, Part 1, of the Housing Act 1988.

If a landlord can show two months’ arrears of rent are due the ground will, on the face of things, be made out. The requisite notice period to be given to a tenant, before possession proceedings can be commenced by a landlord, has been extended to 3 months.

The implications of the above are that landlords can still serve their notices now, but have to wait 3 months before they can commence court proceedings, to try to obtain possession.

In theory, therefore, a landlord faced with a tenant owing two months’ arrears of rent, may, on expiration of the notice served, find 5 months’ of arrears of rent owing, before they can commence proceedings.

Notices served before the Act came into force will still benefit from the old 2 month notice period for tenancies where their fixed terms have already expired, or the tenancy has become a periodic one; and 14 days where the claim is based on arrears of rent under ground 8. Landlords can commence proceedings on expiry of their notices but it is clear now that their possession proceedings will not progress for at least 90 days.

Landlords with buy-to-let mortgages, faced with tenants who are unable to pay rent, will be able to avail themselves of the new scheme negotiated by the government with lenders; which provides temporary relief for landlords against meeting their mortgage capital payments for three months. However, lenders will not forego interest and landlords will still have to meet attendant interest accruing as per normal.

Many possession cases were issued at court before the pandemic started.

So what is the impact on cases currently before the courts?

A Practice Direction has been issued which provides that all possession actions before the courts should be suspended or stayed initially for 90 days.

So, all cases listed for hearing and those with bailiffs’ appointments already arranged are now frozen at least until the end of June 2020 and with extension of that period remaining a real possibility. Consensus is that the impact of these new arrangements will be harsh on landlords. In particular, on those who had secured a right to possession long before the coronavirus pandemic happened and whose substantive cases had already been decided.

The future is still uncertain for many, but capitalists who have worked hard to manage their investments and who may be under extreme pressure financially too at this time, may be the bearers of even more bad news if they cannot turn over the occupation of their premises quickly enough to ensure that their property investments keep paying.

Contact the Fisher Jones Greenwood’s quick response team on 01206 700113 (a free initial call to discuss individual matters is available) or alternatively, please email [email protected].