Covid-19 and Securing Possession of a Tenanted Property
Many people fear the financial effects of Covid-19 as much as the disease itself. landlords are worried about the potential drop in value of property portfolios and the inability to secure a return from their rental property as some tenants are unable to afford to pay their rent. In these worrying financial times we look at whether landlords can secure possession of tenanted property.
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If you need legal advice about securing possession of a tenanted property then the landlord and tenant team at OTS Solicitors can help you. Call us on 0203 959 9123 or complete our online enquiry form for a video conference, Skype or telephone appointment.
Covid-19 and starting possession proceedings
The government has brought into force the Coronavirus Act 2020. The Act means that until the 30 September 2020 the majority of landlords can't start possession proceedings unless they have given their tenant at least three months’ notice of their intention to bring a possession case and seek an eviction order.
If a landlord decides to issue a tenant with a three-month notice (for example, if they believe that the tenant is deliberately using the coronavirus as an excuse to not pay rent even though the tenant hasn’t been financially affected by Covid-19) the landlord can't start possession proceedings until the end of the three month notice period.
A notice given in late March (after the passing of The Coronavirus Act) would expire at the earliest in late June 2020. At the expiry of the notice a landlord can then apply to the court for a possession order, requiring a listing for a possession hearing. Landlord and tenant solicitors say that it used to take about six to eight weeks from date of issue of a court application for possession to secure a possession court hearing. However, the timescales for hearings is likely to be significantly extended.
The extended three month notice period for tenants is a temporary measure. The legislation is in force until the 30 September 2020 but the government has said that the legislation is subject to review and may be extended by secondary legislation.
Covid-19 and current possession proceedings
If a landlord has a pending possession application the likelihood is that the court proceedings have been or will be suspended. This is because the court announced the suspension of housing possession cases started after the 27 March 2020. The suspension of housing possession cases lasts for ninety days.
The decision to suspend possession proceedings was taken by the Master of the Rolls and means that housing possession claims in the court system are effectively suspended for ninety days from the 27 March. However, the ninety day period could be extended.
The government guidance states that they ‘’strongly advise landlords not to commence new notices seeking possession during this challenging time without a very good reason to do so. It is essential that we work together in these unprecedented circumstances to keep each other safe’’.
Covid-19 and rent payments
A tenant is under a contractual obligation to pay rent under the terms of their tenancy agreement. Legally the position is that the tenant should pay the rent, whatever their financial circumstances. If a tenant does not pay their rent then rent arrears will occur. That is the case even if the tenant genuinely can't afford to pay their rent because they have been furloughed or been made redundant.
If a tenant has been financially affected by Covid-19 then ideally they should let their landlord know as soon as practical as the tenant’s inability to pay all or any rent may affect the landlord‘s financial plans or their need to try and secure a mortgage holiday on the tenanted property. Of course a mortgage holiday isn’t a ‘’real solution’’ as the mortgage payments aren’t waived by the mortgage lender and the overall debt will increase by virtue of the interest payments.
If a tenant tells their landlord that they can't afford their rent then it is sensible to check:
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What they can afford to pay
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Whether they have claimed all the benefits they are entitled to, including universal credit and any housing help.
Once a landlord has that information they can decide on:
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Whether they can accept a temporary lower rent from the tenant
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Whether the arrears of rent will accumulate (or be waived) and the timescale in which they will be repaid.
The government says that it is important that landlords offer support and understanding to tenants who may be financially effected by coronavirus but the reality is that may depend on:
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The landlord‘s ability to be flexible over rent payments
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The financial pressures the landlord faces
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The history between landlord and tenant and whether the tenant is a ‘’good tenant’’
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The likelihood that the landlord will be able to sell the property or rent it to an alternative tenant during the Covid-19 lock down and the government restrictions on house moves.
Covid-19 and mortgage repayments
Although the government has offered protection to tenants, landlords are still under an obligation to pay the mortgage on tenanted property, even if they are not receiving rent. Mortgage lenders have said they will offer three month ’’mortgage holidays’’
if there is Covid-19 related hardship and that this includes help for those with buy-to-let mortgages. However, any missed mortgage payments will be added to the mortgage and interest will continue to accrue. That is worrying for landlords whose tenant/s cannot afford or have stopped paying rent and the landlord thinks there is little prospect of recovering the rent arrears from the tenant because of their financial circumstances.
The government is recommending that landlords discuss their situations with both mortgage lenders and tenants to try and reach an agreement if a tenant has been financially affected by Covid-19. However, many landlords are speculating that the true problem is currently being masked by the furlough scheme with many employees receiving eighty percent of their salary to a cap of £2,500 per month and therefore, with no commute costs, able to pay all or some of their rent. landlords are asking what ongoing help will be available as the furlough scheme has been indirectly assisting them as well as their employed tenants.
At present the government advice is for landlord‘s to discuss the tenant’s financial situation and ability to pay rent before starting possession proceedings at the end of the three month notice period. However, the landlord‘s ability to remain flexible over the amount of rental payments and payment plan for rent arrears may well depend upon their own mortgage lenders willingness to extend any mortgage holiday and the financial consequences for the landlord with accrued interest.
What happens if a tenant is asked to leave without a court order?
Some landlords have asked what happens if a tenant is asked to leave without them first applying to court for a possession order as they are worried about their financial position and how to meet all the associated bills on a rental property, even if they are able to secure a mortgage holiday.
Tenants are protected by legislation called ‘’The Protection from Eviction Act 1977’’. The Act says a tenant cannot be forced to leave a rented home without a court order for possession and a warrant for execution of the possession order. If a landlord doesn’t comply with the Act then there could be civil proceedings and a criminal prosecution.
The Coronavirus Act 2020 and possession proceedings
The new law says that if a landlord wants possession of their property they must give the tenant three months’ notice. At the end of the notice period, a landlord will need a court order to obtain possession of the property.
The Lord Chief Justice has urged that court officials ensure:
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Pending possession proceedings have applications to suspend warrants of possession prioritised so that the tenant can secure a court hearing
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That orders aren’t made that risk impacting on public health.
If a landlord does want to start possession proceedings they will need to give their assured shorthold tenancy tenant notice under either:
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Section 21 notice seeking possession of a property under an assured shorthold tenancy or
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Section 8 notices seeking possession of a property under an assured or assured shorthold.
Section 21 notices seeking possession of a property under an assured shorthold tenancy
A landlord can only give a Section 21 notice to ask their tenant to leave their rental property if:
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A fixed term tenancy has ended or
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The tenancy has no fixed end date as it is a ‘’periodic tenancy’’.
A Section 21 notice must give tenants at least three months’ notice of the intention to
seek possession.
There are circumstances in which a landlord cannot use a Section 21 notice to give notice of planned eviction proceedings to a tenant with an assured shorthold tenancy. If a landlord is planning to give notice to a tenant it is best to take legal advice on whether section 21 notice is applicable.
It is also essential to give the tenant notice in the prescribed form. The forms have been updated to reflect the changes made by the Coronavirus Act 2020. The amended form makes it clear that tenants must be given at least three months’ notice before a landlord is able to apply to the court for a possession order.
If the tenant doesn’t leave the property by the date specified on the prescribed form as the date on which possession is required, the landlord can apply to the court for a possession order.
Section 8 notices seeking possession of a property under an assured shorthold tenancy
As an alternative to a section 21 notice a landlord can give a tenant notice under section 8 that they intend to seek possession of the property using a ground set out in in schedule 2 of the Housing Act 1988. For the notice to be effective it must be the prescribed form 3 notice as amended to take into account the changes made by the Coronavirus Act 2020.
Online Landlord and tenant solicitors
If you are unsure of whether you can give notice or start possession proceedings or have questions about landlord and tenant law then the landlord and tenant team at OTS Solicitors can help you find a solution. Call us on 0203 959 9123 or complete our online enquiry form.