Coronavirus Act 2020: Residential Lettings
Claire-Elaine Arthurs
The Coronavirus Act came into force on 26 March 2020 and Part 51Z was introduced to the Civil Procedure Rules on 27 March 2020, subsequently amended to include paragraph 2A on 20 April 2020.
These pieces of legislation will have an impact on the following parties:
Landlords wishing to forfeit or end a residential lease
Parties who wish to recover possession of their property
Parties part way through the possession proceedings process
Parties holding unexecuted Possession Orders
The Government have now issued full guidance on the new measures that have been introduced and a full copy can be found here: https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities. Answers to the key questions being asked by residential landlords are found below:
Should tenants stop paying rent?
Tenants remain fully liable for rent throughout the lockdown period and should continue to make payments to the best of their ability. They should ensure that they are claiming all they are entitled to from the government's package of financial support. Where tenants are unable to make payment of their rent, the onus is on them to talk to their landlord at the earliest opportunity.
Some tenants are operating under a misunderstanding that a 3 month rent holiday has been granted by the Government. This is not the case and it is recommended that Landlords reach out to their tenants to confirm rent remains payable but open the channel of communication for tenants to speak to them if they feel unable to meet their obligations.
Tenants need to be clear that they are still required to pay rent and, where possible, they should be making such payments. The Government's provisions only prevent some enforcement action for non-payment of rent for a period of time. If tenant's do not pay rent then, when the restrictions come to an end in a few months' time, they may find themselves facing eviction and other enforcement measures to recover the arrears that have accrued.
How can a landlord deal with rent arrears?
The Government have asked landlords to offer support and understanding to tenants who may see their income fluctuate over this period. Where tenants find themselves unable to meet payments, landlords are encouraged to agree that they might put off enforcement action and allow no or a lower level of rent to be paid in the short term, with a plan to pay off arrears put in place to recover the accrued arrears over an extended period of time. Landlords may also be struggling and have their own financial obligations to meet, so the expectation is to be reasonable and pragmatic.
Where a landlord decides to serve a notice of possession for rent arrears, the timescales for these processes have been extended. This is detailed below. Landlords remain able to issue debt claims for rent arrears. However, this action is likely to be frowned upon if the arrears relate to difficulties caused by Covid-19 and the timescales for payment in any orders given are likely to reflect this.
Local authorities are now able to offer some support to help people stay in their homes. Tenants experiencing financial hardship may be able to access new funding through their local authority. The Government has allocated £500m for this purpose. There are also packages available for those who are employed, or self-employed and tenants are expected to have taken full advantage of these schemes to ensure they can keep making rent payments, where possible. These initiatives may take some time to pay out, which is why landlords are being asked to be flexible, where possible, on the timing of payments.
How much notice is needed to forfeit a lease?
All notices for both the private and social rented sector tenancies must allow a full 3 months. These requirements are currently in place until 30 September 2020. The most common notices are those issued under s8 and s22 of the Housing Act 1988, which have both seen their notice periods extended to 3 months for rent arrears.
Regardless of the legislation, where tenants have difficulty paying rent up to 30 September 2020, the Government has asked that landlords do not issue a notice seeking possession, particularly if the tenant may be sick or facing other hardship due to COVID-19. However, many landlords are finding that their own circumstances dictate that they are forced to take earlier action.
What is happening to possession proceedings?
The Coronavirus Act came into force on 26 March 2020. Landlords must now give 3 months' notice in respect of both s8 and s21 Notices. Landlord can choose to give a longer notice period, to 30 September 2020 perhaps, if they wish to do so. From 27 March 2020, any claims in the system or being issued are caught by a 90 day stay of possession hearing and enforcement under Part 51Z of the Civil Procedure Rules.
If a possession order has already been granted, then the tenant can apply to stay the warrant the enforce that order. These applications will be treated as a priority by the Court and it is likely that stays will be grated until 1 October 2020. To save unnecessary expense, property owners holding an unexecuted claim may wish to write to the occupier confirming that they will not enforce the order until 1 October 2020, but that they reserve their position in relation to seeking damages for the ongoing unauthorised use and occupation of the property.
Where proceedings have been issued or are about to be issued, the Government strongly advises landlords not to commence or continue eviction proceedings during this challenging time without a very good reason to do so.
It should be noted that on 20 April 2020, paragraph 2A was added to Part 51Z, which confirmed that those claims against trespassers ("persons unknown") and any applications for interim charging orders would not be caught by the stay.
Once the stay is lifted possession proceedings may start to progress again, depending on the Courts' capacity. Any orders given for possession of residential property will only be able to take effect though from the 30 September 2020.
The suspension of housing possession cases will also apply to possession cases brought by mortgagees against homeowners, and to possession cases brought by landlords against long leaseholders (forfeiture).
What can landlords do about mortgage repayments?
Many mortgage lenders have agreed to offer payment holidays of up to three months where this is needed due to Coronavirus-related hardship, including for buy-to-let mortgages. The sum owed remains and mortgages continue to accrue interest during this period. This means that landlords still need to make those payments, with interest, at a later date. Landlords are not benefitting from any savings that can be passed on to tenants. At best they have a delay in those payments, which they need to make up, probably with additional interest, in the future. It is hoped the delays in the mortgage payments may enable more landlords to facilitate delayed rent payment arrangements with tenants to support them though this difficult time.
Extending the current 'pre-action protocol' on possession proceedings to private landlords
The Government is working to widen the existing 'pre-action protocol' on possession proceedings, with provisions that will apply to Social Landlords, to include private renters and to strengthen its remit.
The revised protocol will require private sector landlords reach out to tenants to understand the financial position they are in before taking possession action through the courts once the 3-month delay on issuing eviction proceedings has ended. Ideally there should be a dialogue before the notice is issued and during the 3 month period if possible.
Does the Coronavirus Act cover licences to occupy?
This legislation only applies to tenants so will not apply to licences to occupy, such as those used for lodgers. However, the Government are asking the landlords of such licences to occupy to follow the same guidance and to work with renters who may be facing hardship as a result of the response to COVID-19.
What about accommodation linked to employment?
If an employee is required to live-in to be able to do the job, or the occupation of the accommodation is necessary for the performance of their duties, and their contract clearly states this, they are classed as a "service occupier". This will include some teachers in boarding schools, caretakers, carers and hotel staff, for example. As you do not have a tenancy in this situation you are not covered by this emergency legislation.
If an employee's contract is terminated, then an employer will still need to apply to the Court for an order to remove an ex-employee and will be subject to the same delays. The Government has again asked that employers are as flexible as possible with those finding themselves in this situation.
Does a landlord still need a Court Order to regain possession?
A Court Order is still needed. The stay of housing possession claims from 27 March 2020 for 90 days means that progress cannot be made towards obtaining a Court Order at present. When that stay ends, any orders granted will delay possession until 30 September 2020.
The Protection from Eviction Act 1977 provides that a tenant cannot be forced to leave their home without a Court Order and Warrant of Execution being issued for that order. The 1977 Act also protects some people who occupy their home under a licence. Breaches of the 1977 Act can give rise to a civil action and be a criminal offence.
What happens to claims against trespassers?
The stay does not apply to proceedings against trespassers. However, the are other delays being caused in the speed at which the Court can process claims as a result of Covid-19 and Judges will still be unable to make any order that would put public health at risk, so there will be delays in obtaining possession orders against trespassers as well.
How should landlord manage regular gas and electrical safety inspections?
Landlords must provide tenants with all necessary gas and electrical safety and any other relevant certification at the beginning of a tenancy (and carry out all scheduled inspections and tests where required). Where inspections have already been carried out, documents can be provided by post or in some circumstances it may be possible to provide digital copies.
Landlords should make every effort to abide by existing gas safety regulations and electrical safety regulations:
Electrical and gas safety in privately rented properties
The new Electrical Safety Standards in the Private Rented Sector Regulations 2020 were made on 18 March and will apply to all new tenancies on 1 July 2020 and for existing tenancies on 1 April 2021.
The Electrical Safety Regulations will require landlords to:
• Have the electrical installations in their properties inspected and tested by a person who is qualified and competent, at least every five years;
• Provide a copy of the report (known as the Electrical Safety Condition Report or EICR) to their tenants, and to the local authority if requested.
• If the EICR requires investigative or remedial works, landlords will have to carry this out.
The Gas Safety (Installation and Use) Regulations 1998 require landlords to have annual gas safety check on each appliance and flue carried out by engineer registered with the Gas Safe Register and to keep a record of each safety check. Further advice can be found on the Gas Safe Register's website at https://www.gassaferegister.co.uk/help-and-advice/covid-19-advice-and-guidance/.
Both regulations are clear on the issue of compliance. If a landlord can show they have taken all reasonable stepsto comply with their duty under the regulations, they are not in breach of the duty. With regards to the Electrical Safety Regulations a landlord would not be in breach of the duty to comply with a remedial notice and with regards to the Gas Safety Regulations a landlord would not be liable for an offence.
If landlords are not able to gain access to the property due to restrictions in place to tackle COVID-19, or are not able to engage a contractor to carry out the necessary work, we recommend landlords document your attempts to do so and all correspondence with their tenants or contractors, to demonstrate that reasonable efforts have been made.
The Government are encouraging local authorities and other enforcement agencies to take a pragmatic, common-sense approach to enforcement in these unprecedented times. The latest guidance can be found here: https://www.gassaferegister.co.uk/help-and-advice/covid-19-advice-and-guidance/
How should landlords obligations to repair be managed?
Landlords' repair obligations have not changed. Tenants have a right to a decent, warm and safe place to live. It remains in the best interests of both tenants and landlords to ensure that properties are kept in good repair and free from hazards.
It is appreciated that routine maintenance may be delayed but dangerous conditions should be addressed as a matter of urgency.
Where reasonable, safe and in line with other Government guidance, it is recommend that tenants allow local authorities, landlords or contractors access to their property in order to inspect or remedy urgent health and safety issues.
Urgent health and safety issues are classified as those which will affect a tenant's ability to live safely and maintain their mental and physical health in their home. This could include, but is not limited to:
leaks or roofing issues
broken boilers
plumbing issues that restrict washing or toilet facilities
broken white goods (provided by landlord) preventing clothes being washed or food being safely stored
security issues such as a broken door or window
installation or repair of equipment for disabled tenants
You can find further guidance on visits to properties to make repairs here https://www.gov.uk/government/publications/further-businesses-and-premises-to-close/further-businesses-and-premises-to-close-guidance#work-carried-out-in-peoples-homes
How can the risk of catching the virus be managed during visits?
Parties should take reasonable and sensible precautions as provided for in Government guidance. Where an urgent repair is required tenants may be required to remain in a separate room to the contractor and all parties are advised to follow Government advice on hygiene and cleanliness before, during and after visits.
Tenants do not need to have direct contact with anyone visiting their property to carry out repairs.
Can landlords or their agents access to the property to conduct viewings for sale or letting?
Landlords should follow the Government's latest guidance and it is recommended that property access should only be requested for serious and urgent repair issues.
Is it still possible to move home?
Home buyers and renters are advised, as far as possible, to delay moving to a new home while emergency measures are in place to fight coronavirus.
You can find specific Government advice on moving here https://www.gov.uk/guidance/government-advice-on-home-moving-during-the-coronavirus-covid-19-outbreak
If someone in a House in Multiple Occupation (HMO) has the virus, are landlords obliged to remove them or find the other tenants alternative accommodation?
Nobody can be removed from their home because of the virus. Landlords are not obliged to provide alternative accommodation for tenants if others in the property contract the virus. Tenants are advised to follow the guidance.
If you require any further assistance in relation to residential leases and letting arrangements, please contact Claire-Elaine Arthurs at claire-elaine.arthurs@gunnercooke.com
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