COVID-19: How does this impact upon residential landlords?

We have recently been approached by a number of residential landlords who have been told by their letting agent that they have no prospect of getting a tenant out of their investment property any time soon; the anxiety and frustration is palpable when we are posed the question “But the Tenant isn’t paying the rent! That can’t be true, surely?”

The answer is, well actually it is sort of true, but it isn’t the whole story.

The current COVID-19 crisis has changed the world, including this country, immeasurably in a very short period of time. The way we do business, go to work, look after our children, shop and socialise has shifted beyond recognition. Many people have been furloughed and some, regrettably, have already lost their jobs. Many self-employed people have simply been unable to work and have had no choice but to “down tools” and stay at home.

Fortunately, we are now starting to see some of the lockdown restrictions relaxed and we hope that this trend will continue steadily over the coming weeks and months as people are able to return to work and some degree of “normal”. Well, the “new normal” at least.

Despite the light at the end of the tunnel, the last 9 weeks have been very difficult indeed for a number of people, particularly from a financial perspective. The government introduced emergency legislation at the height of the crisis in England in the form of the Coronavirus Act 2020 (“the Act”) which came into force on 26^th March 2020.

One of the issues addressed by the Act was intended to reassure tenants of residential properties that, even if the lockdown measures meant that they could not afford to pay their rent, they would not lose the roof over their head.

Generally, the effect of the Act on residential tenancies was to make it more difficult for landlords to evict their tenants and to protect tenants who might be facing financial hardship as a result of the crisis.

Notice

In the ordinary course of events, before a landlord can issue possession proceedings against a tenant, he or she must give the tenant notice of intention to seek possession. This can be in the form of a section 21 notice, requiring at least 2 months’ notice to be given, or if the tenant is in breach of one or more of the terms of the tenancy agreement, notice can be given by way of a section 8 notice which typically requires 2 weeks’ or 2 months’ notice to be given, depending on which ground(s) you rely on. In the interests of full disclosure, there are other section 8 grounds that require different notice periods so you should seek legal advice from a specialist before serving your section 8 notice.

Under the current emergency legislation, however, during the “relevant period” (which is currently from 26^th March to 30^th September 2020, but this may be extended if necessary) landlords cannot start possession proceedings against a tenant without giving at least 3 months’ notice, regardless of whether they are serving a section 21 or a section 8 notice and, in the latter case, regardless of the ground(s) relied upon.

It is important to note that in serving these notices, you must still comply with any contractual requirements in respect of the notice which can be found in the tenancy agreement. For example, some tenancy agreements require that a notice expire on a particular day such as the day on which or the day before a rent payment becomes due.

Stay on possession proceedings

In addition to the longer notice period required, the government introduced a stay of all possession proceedings, whether new or existing, for a period of 90 days from 27^th March 2020. The Housing Secretary, Robert Jenrick, announced on 5^th June that this has now been extended by a further 60 days. So, instead of expiring on 25^th June 2020 as originally provided, the stay will now end on 23^rd August 2020. This is, of course, subject to any further extensions of time that the government decides to grant in pursuit of its stated commitment to ensuring that “no-one is evicted this summer due to coronavirus”.

Enforcement

At present the courts have also suspended the landlord’s ability to enforce a Possession Order by writ. This means that even if you have the benefit of a Possession Order made before 27^th March 2020, you will not be able to enforce it yet.

Rent

The Act did not alter the tenant’s obligations under the existing tenancy agreement to pay rent or comply with any other tenant covenants, although we are seeing evidence that some tenants are viewing this as an opportunity simply to not pay their rent, safe in the knowledge that they cannot be evicted. This is not only a rather cynical approach, but also a short-sighted one. The provisions intended to protect tenants described above do not provide indefinite protection and nor do they release the tenant from the obligation to pay rent or any other outgoings associated with the rented property. By simply stopping paying rent, the tenant is just creating a problem for later, when these provisions are lifted.

In the meantime, landlords can still enforce payment of rent, if they choose. There is nothing to stop a landlord from issuing debt recovery proceedings in the County Court if they are owed rent.

Any landlord proposing to pursue a tenant for rent arrears in this way is urged to proceed with caution, however. Both the government and the courts are urging co-operation and, where appropriate, leniency and understanding.

For this reason, we recommend that before you take any action – even before instructing a solicitor – your first step should be to talk to your tenant. It may be that they are genuinely experiencing financial hardship at present, or that they are waiting for money that they have applied for by way of one of the government’s financial aid measures. You won’t know until you get in touch with them so that should be your first port of call.

For specialist advice on residential landlord and tenant matters, or if you have a problem with a tenant, contact Sheena Bradfield or Kate Williams at Colemans on 01628 631051 or email litigation@colemans.huntersserver.co.uk

This is general advice and should not be relied upon as you must seek specialist advice on your particular circumstances.

Updated on 12th June 2020.

Categorised in: Residential Property

This post was written by Colemans Solicitors LLP