The Coronavirus Act: A Guide for Residential Landlords
The Coronavirus Act was granted Royal Assent on 25th March 2020.
An indication from a District Judge this week indicated that the County Court is likely to remain open for business, although hearings are likely to take place by telephone conference. It would appear that Hastings County Court has the capability of carrying out telephone conferences, but these facilities are not available in Tunbridge Wells. It is therefore likely that any hearings will be dealt with through telephone conference in Hastings.
The Government has announced a number of measures to protect Tenants during the Coronavirus crisis. In order to give Landlords (and Tenants) some idea of what they may be facing in the next few months, we have put together this brief guide to the measures set out in the Coronavirus Act.
This note will only deal with Assured Shorthold and Assured tenancies, being the most usual tenancies that we come across. The Act does make provision for other types of residential tenancy. If anyone would like information on these then please feel free to contact us.
We will be writing a separate note on commercial tenancies
Fault-Based Possession Action (Section 8 Notices)
Under the Housing Act 1988 a Landlord can take possession proceedings on a number of fault-based grounds, such as non-payment of rent, breach of tenancy agreement, anti-social behaviour. Rent arrears is the most common that we come across.
The usual procedure for a Landlord to follow is to serve a notice (a Section 8 Notice) upon the Tenant setting out the complaint and the grounds upon which they would seek to rely on in order to obtain possession. The Act then allows a period for the Tenant to try and resolve the issue before the Landlord can apply to the Court for a Possession Order. This period differs depending on the ground relied upon between immediately (in serious anti-social behaviour cases) to 2 months. For rent arrears cases, the period is usually 2 weeks.
If the problem has not be rectified then the Landlord can issue proceedings for possession in the County Court. The Court will list a hearing sometime between 4 and 8 weeks after the papers have been sent to the Court and the matter would usually be dealt with at that hearing.
Under the 29th Schedule of the Coronavirus Act, the Housing Act is amended to state that the period between serving a Section 8 Notice and issuing proceedings for possession in all cases is extended to 3 months.
Section 8 of the Housing Act 1988 states that the Court will not entertain proceedings for possession unless notice has been given and the timeframes as set out have been adhered to. What this may mean is that all notices that have been served will have to be re-served with a 3 month time limit as any proceedings issued after the Coronavirus Act came into force would probably not be entertained by the Court as the new time limits have not been followed.
It is likely that all cases that have already been issued in Court, will be able to continue. But this is by no means certain
For new cases, whilst notices can still be served, Landlords will not be able to issue proceedings for a period of three months. It is quite possible that this could be extended, depending on how the crisis develops. The legislation allows the period to be extended up to 6 months.
The advice now to Landlords who would be looking to gain possession on a fault-based ground, is to serve notice now, but bear in mind that you will not be able to issue proceedings for a period of 3 months.
For those people who have already served s.8 notices but who have not issued proceedings, you may be best advised to serve another notice. Whilst the Housing Act provides that the Court can dispense with the service of notice where it is ‘Just and Equitable’ to do so, in the current climate it may be best to re-serve a notice as it may be quicker than waiting for a Court date to make this argument.
Non-Fault Based Possession (Section 21)
For Landlords who have let their properties under an Assured Shorthold Tenancy (most modern residential tenancies), they have the option to regain possession after the expiry of any fixed term (subject to a minimum term of 6 months), by serving giving the Tenant 2 months notice (a s.21 notice). If the Tenant does not vacate the property then the Landlord can apply to the Court for a possession order. This is usually a paper-based process and no Court hearing is necessary.
The Coronavirus Act amends s.21 of the Housing Act 1988 by providing that a Court will not make an order for possession unless the Tenant has been given at least 3 months’ notice.
This means that all current s.21 notices are likely to be invalid, as once the bill is enacted the Courts will only make a possession order if 3 months’ notice has been given.
However, this could cause significant problems for Landlords. If a section 21 notice has been served, our advice is to re-serve a notice giving 3 months’ notice.
For those Landlords who are seeking possession on the basis of rent arrears (or who are using the s.21 procedure due to rent arrears) and who have mortgages over their rental properties, it is important to note that you can apply to your mortgage lender to request a 3 month payment holiday. It is important that you consider the implications of such a holiday as it is likely that interest will continue to accrue.
Finally, the Act does provide that the 3 month period could be extended to a period of up to 6 months. For Landlords relying on s.21 notices, this could again cause further problems.
If you have any queries about the above or wish to speak to a member of our team then please telephone 01892 526344 or email email@example.com.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.