The Government has brought in emergency measures in an attempt to relieve the financial hardship the coronavirus pandemic has created. These unprecedented measures have many practical benefits but act as a fundamental intervention in the landlord-tenant relationship.
This is uncharted territory, resulting in uncertainty and many questions. This briefing answers a small selection of the most common questions raised by our landlord clients. A separate briefing for tenants can be found here.
Of course the individual terms of the tenancy agreement must always be considered in each case, which could influence the appropriate course of action to take. The situation is constantly evolving, and landlords should take specific legal advice for the latest position.
Considerations for commercial landlords can be found here.
Frequently asked questions
If my tenant hasn't paid rent, can I serve a notice on them?
A landlord can still serve a section 8 and/or section 21 notice to recover possession of their property; however, the provisions of the Coronavirus Act 2020 have extended any notice period to not less than three months, meaning that possession proceedings cannot be issued until the end of this three-month period. In other words, landlords cannot apply to start the court process until after this period. This new requirement will last until 30 September 2020 and this could be extended. This period is described as the "relevant period".
Landlords must use new prescribed forms which are an updated Form 6A for Section 21 notices and a Form 3 for Section 8 notices.
The Government has strongly urged landlords to avoid serving notices for the time being unless this is absolutely necessary. The Government is encouraging strong lines of communication and requesting understanding between landlords and tenants at this time; parties are advised to form agreements as to payment holidays and repayment schemes where possible (see below).
I served notice to my tenant before the Government brought in these measures. This notice has now expired. Can I evict my tenant?
Any notices which were served prior to the enactment of the Act (26 March 2020) are enforceable during the relevant period. This means that possession proceedings can be commenced if tenants fail to vacate the premises in accordance with the notice that has been served once those notices have expired.
However, a new Practice Direction 51Z to the Civil Procedure Rules has been put into force which has automatically paused all possession claims for 90 days, starting on 27 March 2020. Effectively, in any existing case, there is unlikely to be any progress until the end of June and almost no prospect of the tenant being evicted during this period. This stay in possession proceedings may be extended. The new Practice Direction expires 30 October 2020.
Landlords and tenants will now have to wait until at least the end of June before any progress in their case can be made, but the reality is that delays will continue for much longer than that. We have already encountered cases where hearings that were supposed to take place in April 2020 have been adjourned until October 2020. Many cases are being stayed and the parties are being asked to apply back to court to get hearing re-listed once the stay has lifted. This is an added step for landlords and tenants to have to take and one that will increase legal costs where those parties are legally represented.
Can I get a mortgage holiday?
The reforms obligate buy-to-let lenders to offer a mortgage holiday to private landlords. Landlords who do not have mortgage arrears can immediately apply for a payment holiday if they are facing financial hardship, whether or not their tenants are able to pay the rent. It will be for the lender to decide whether to grant the mortgage holiday on a case-by-case basis.
My tenant has requested a payment holiday. Do I have to agree?
Buy-to-let lenders are offering mortgage holidays to private landlords; this is on the understanding that landlords are expected to offer an equivalent payment holiday to their tenants in respect of paying rent.
Landlords are not obliged to agree to requests for a payment holiday from their tenants; nothing in the legislations says that tenants can stop paying the rent. Interest may accrue on any unpaid rent, depending on the terms of the tenancy agreement and subject to limitations contained within the Tenant Fees Act 2019. However, a landlord might choose to agree to a rent suspension or "payment holiday" or to waive any interest that would otherwise be due.
What happens if I agree to a payment holiday?
Any agreement reached should be formally documented so that both parties are clear on their obligations.
Key points to bear in mind include:
- How long will the arrangement last? Will there be an option to extend the arrangement?
- Is the rent suspension/reduction permanent or is payment to be deferred to a later date? If deferred, will interest be payable?
- Can either party withdraw from or terminate the arrangement, and if so, in what circumstances?
The Government has suggested allowing payment holidays of up to three months. At the end of the payment holiday, landlords and tenants will be expected to work together to form an affordable repayment plan, depending on the tenant's financial position.
I need access to the property, is the tenant still obliged to allow this?
The changes in the law that the Government has introduced do not change landlord liability in relation to repairs or safety checks of gas appliances or electrical inspections. However, the Government has issued comprehensive guidance in this area, which can be found here.
In summary, landlords and tenants are encouraged to work together in order to ensure that the rights they would usually enjoy and responsibilities they would usually be subject to are observed even in these times of social distancing, provided appropriate precautions can be taken. Matters such as gas safety and electrical safety checks cannot simply be ignored by landlords and tenants cannot assume that they are entitled to deny landlord access for such purposes. Although the obligations upon landlords endure, landlords who are unable to comply can protect themselves by keeping clear and comprehensive records of any attempts to comply and the reasons why compliance has not been possible.
A tenant is interested in renting my vacant property - how can I carry out 'right to rent' checks when I cannot meet them in person or check their original documentation?
The Government has not waived compliance with the requirements of the Immigration Act 2014 when it comes to 'right to rent' checks. They still need to be done before tenancies are entered into. However, the Government announced on 30 March that they would permit a relaxation of the procedures employed so that the checks could be done in a manner consistent with current social distancing requirements. The Government guidance can be found here.
In very brief summary, for a limited period of time, landlords can conduct checks by video link and without seeing original documentation. It is vital to appreciate that once current social distancing measures are lifted, landlords will be required to conduct the more rigorous standard checks of their tenants' right to rent and will be obliged to take action to recover possession of premises that it turns out they have rented to an individual or individuals who do not have the right to rent.
We are living in unprecedented times and under emergency measures. There are many other questions that landlords will undoubtedly have about how this might affect them and their tenants. We encourage you to explore the other material we have produced relating to Covid-19 and if you have any questions, contact one of the team.