Tag: coronavirus landlord

Coronavirus Act 2020 – How It Effects Landlords & Tenants

Coronavirus Act 2020 – How It Effects Landlords & Tenants

This note sets out how the Coronavirus Act 2020 (“the Act”) affects both business and residential tenancies taking into account the Governmental advisory guidance to help understand the implications of the Act.

As the situation is subject to change, the Government urges all landlords and tenants to abide by the latest Government guidance on COVID-19, which can be found here.

Business Tenancies

Landlords cannot evict business tenants on the grounds of non-payment of rent whilst the Coronavirus emergency continues. This currently applies from 26 March to 30 June 2020 (“the relevant period”) unless subsequently extended.

Forfeiture for non-payment of rent

During the relevant period the landlord cannot enforce a right of re-entry for non-payment of rent (the definition of rent includes service charge and insurance premium), whether by peaceable re-entry or in court proceedings. To protect the landlord’s position, the right of re-entry can only be waived during the relevant period by an express waiver in writing. These provisions do not apply to any other type of breach of covenant.

Where forfeiture proceedings for non-payment of rent are already on foot, the court cannot make an order for possession which expires before the end of the relevant period. In some cases the court will have made an order for possession which only takes effect if the tenant fails to do something (e.g. pay the arrears or instalments) by a certain date. In the High Court, if the tenant applies to vary the order the court must ensure that the tenant does not have to give possession before the end of the relevant period. In the County Court, the period during which the tenant has to pay cannot be before the last day of the relevant period (as in force at the date of the order). For existing orders, the period within which the tenant must pay the arrears is automatically extended to the end of the relevant period.

Opposing the grant of a new tenancy on the grounds of persistent delay in paying rent

Where a landlord opposes the grant of a new tenancy on the ground of persistent delay in paying rent, any failure to pay rent during the relevant period is to be disregarded.

Residential Tenancies

The Government has brought in several restrictions in relation to residential possession. Firstly, the Act lengthens the notice period required during the relevant period. For residential tenancies, the “relevant period” set out in the Act is from 26 March to 30 September 2020; unless subsequently extended.

Section 8 Notices

Possession proceedings under section 8 of the Housing Act 1988 have always required the service of a notice of intention to bring proceedings for possession. The minimum period of the notice depended on the particular ground for possession relied on – from immediately, in the case of an occupier who has committed an indictable offence, to two months in the case of a former owner-occupier who wants his home back. During the relevant period, all notice periods are extended to three months. The court retains its power to dispense with service of a notice or to abridge the time.

Section 21 Notices

The Act extends the minimum notice period under section 21 of the Housing Act 1988 (no fault eviction) from two months to three months.

Other Private Sector Tenancies

No amendments have been made to the law affecting private sector tenancies which do not fall within the Rent Acts or the Housing Act – essentially tenancies at a very low rent (less than £1,000 pa in Greater London, £250 elsewhere) or a very high rent (in excess of £100,000 pa).

Possession claims suspended

From 27 March 2020 for a period of 90 days (i.e. up to 25 June 2020) there is a suspension of housing possession cases in the Court. This affects new or existing claims, so effectively they cannot be progressed during this period. This is in line with current public health advice to stop all non-essential movement. The Government’s strong advice to landlords is not to commence new notices seeking possession during the current time without a “very good reason” for doing so.

Maintenance and safety

Landlords should still carry out essential and urgent work to ensure that rented properties are safe. Examples given in the Governmental guidance include testing the fire alarm, roof repairs where there is a leak, boiler and plumbing repairs, broken white goods and security problems e.g. a broken window or door. Landlords should take a “pragmatic, common sense approach” to resolving issues. Where COVID-19 restrictions prevent landlords from meeting routine obligations they should not be unfairly penalised. However, the guidance specifically refers to landlords making every effort to abide by existing gas safety and electrical safety regulations (the latter comes into effect for new tenancies from 1 July 2020). Landlords must demonstrate that they have taken all reasonable steps to comply with the law. If landlords are not able to engage a contractor or gain access to the property due to COVID-19 restrictions they should document their attempts and any responses. The relevant legislation already contains provisions where the landlord will not have breached his duty if he has taken all reasonable steps.

General governmental guidance

The general message is that the landlord and tenant relationship should continue as normal as far as is possible i.e. the tenant should continue to pay rent and adhere to all other terms in the tenancy agreement. Landlords should continue to comply with their obligations as well. Where the tenant is unable to pay rent due to Coronavirus related difficulties, the tenant should speak to their landlord at the earliest opportunity. Landlords are requested to be flexible and offer support and understanding to their tenants as part of the national effort during this national emergency. Both parties are encouraged to agree a sensible way forward including for example, to agree a lower rent and a payment plan going forward.

Where there are financial difficulties for the landlord where the tenant is not able to pay rent due to Coronavirus related difficulties, mortgage lenders have agreed to offer payment holidays of up to three months including for buy-to-let mortgages.

The future

There may well be further changes depending on how the situation develops. The Government has the power to alter the notice period required by substituting a period of up to six months. They may well also extend the suspension period on possession claims.

Rent and coronavirus: What comes next for UK landlords and tenants affected by Covid-19?

The coronavirus crisis is now fast-approaching its fourth month and we’re only just starting to see the economic impact. The spectre of a severe recession, the likes of which, in the words of Chancellor Rishi Sunak, “we have not seen” looms large. His words are unambiguous: we are awaiting the biggest economic shock in recent history.

There is rightful concern from one demographic in particular: private renters. This is a group thought to contain about 20 million people who rely on private landlords to keep a roof over their heads. It has grown rapidly over the last decade or so because getting on the housing ladder has become increasingly unaffordable while social housing has been in increasingly short supply.

This pandemic has exposed the precariousness of Britain’s private rented sector for what it is: a national emergency. Before Covid-19 disrupted life as we knew it, renters were already worse off than homeowners, spending a higher proportion of their earnings on housing. Sixty three per cent of them had no savings and almost half of working renters were just one paycheck away from losing their home. Think of them as the “squeezed middle” Ed Miliband once tried to champion – they were already stretching themselves to cover the most essential cost of all: housing.

The Government clocked this would be a huge problem early on. In late March, they announced a three-month suspension of evictions and the restoration of Local Housing Allowance to the lowest third of market rents which renters could access by applying for Universal Credit. These measures went hand in hand with the Job Retention Scheme which, they hoped, would tide anyone whose job was at risk over.

Now, as furloughs are extended, business closures are prolonged and redundancies registered, the housing charity Shelter estimates that around 1.7 million renters expect to lose their job. Early tremors revealed by the latest Office for National Statistics employment data – a 69 per cent increase in people applying to Universal Credit – point to a storm ahead. Citizens Advice estimates that 2.6m renters are behind on rent or expect to be as a result of this pandemic.

As we approach the end of that three-month period, questions are being asked about what the plan is for renters now. Will the evictions suspension be extended or will we, as the London Councils Group has warned, see an “avalanche” of them when it is lifted? Will the increase to Local Housing Allowance continue?

Left-leaning social media accounts are awash with calls for a “rent strike”. Labour’s shadow housing secretary, Thangam Debbonaire, has published a five-point plan for renters which includes protecting them from bankruptcy as a result of any rent arrears. Meanwhile, Housing Secretary Robert Jenrick has said the Government is still “thinking carefully” about what to do next and “developing a much more credible plan to protect renters and to help to shield them through this crisis.”

So where does that leave private renters who are, completely understandably, very worried?

What could happen with evictions and rent arrears?

As things stand, all evictions proceedings are suspended. This was initially done for a 90-day period and takes us up until the end of June. Last week Jenrick told Parliament a decision would be made on the future of the ban shortly before then. One of the suggestions in Labour’s five-point plan is extending it for six months.

Giles Peaker, an expert housing solicitor and partner at Anthony Gold explains: “The Government has increased the periods for notices seeking possession, and the courts have currently put all possession claims on hold until 25 June. But unless this is extended, or other measures are brought in by the Government, there is a real risk that people will face possession claims for rent arrears in a month or two, or possession claims after a section 21 notice. Tenants (and their guarantors) may also face money claims for arrears.”

One of the issues on the horizon, he adds, is that legally, as things stand, having been impacted by the crisis is not a defence for not paying rent for anyone challenging an eviction order in court.

It’s worth noting that, before Covid-19 took over every aspect of public life, we were expecting legislation to ban Section 21 evictions (also known as unfair or revenge evictions). It’s likely this will return to Parliament at some point. However, as Peaker notes, this wouldn’t protect those who haven’t been able to pay their rent.

What help can I get with rent because of coronavirus?

Back in March the Government announced that landlords could take a “mortgage holiday” if their tenants were unable to pay rent and encouraged them to be “compassionate” in such situations. Some didn’t feel this went far enough.

The Government also increased Local Housing Allowance (LHA) so that it covers the lowest third of market rents. This can be accessed by renters who find themselves unemployed because of this crisis via Universal Credit. However, not everyone will be eligible for this.

There is good news, though. When asked by i whether this change to LHA was permanent a spokesperson for the Treasury said: “This will apply for the 2020-21 financial year. There are no plans to reverse the increase.”

However, rents fluctuate. So, while the increase to LHA may be here to stay for now, if we saw rents rise, this wouldn’t stay in line with them and would continue to only cover the lowest third of market rents.

What ideas are being proposed to help renters pay their rent?

Labour’s plan to help renters was criticised by some because it proposed giving those who fall behind on rent a two-year period to pay back rent arrears which would leave them indebted to their landlord.

In Spain, a low-interest loan system has been introduced to help renters honour their payments. When Labour MP Clive Betts asked Jenrick if we would consider something similar, he didn’t dismiss the idea.

However, this would likely attract similar criticism to that thrown at Labour’s plan. Renters are already worse off than homeowners and saddling them with debt during an economic crisis will undoubtedly harm their prospects moving forward.

Caitlin Wilkinson, Policy Manager at Generation Rent, tells i that the rent strike being encouraged on social media by some is not the answer. “Suspending rents temporarily could put renters at risk of debt once the freeze is lifted,” she explains. “If we had a functional welfare system this wouldn’t be an issue, so fixing that should be our priority. Generation Rent is calling on the Government to remove the benefit caps, increase local housing allowance, and expand eligibility.”

So, what’s the alternative? Increasing the generosity of the housing benefits would be one place to start – this is something the Joseph Rowntree Foundation has already called for. JRF told i in April that the current increase to covering the lowest third of market rents just doesn’t go far enough and won’t break the fall of those who were already over-stretched. Shelter is calling for it to be increased further so that it covers “average rents” in any given area.

It’s really important that the Government comes up with an adequate plan to support renters who suffer financially in the coming months. As Peaker warns, a tenant not paying rent, regardless of the reason, could have serious implications. A tenancy agreement is a legal contract which means that “tenants are still obliged under their tenancy agreement to pay the rent, no matter what has changed in their circumstances.”

The Government, Peaker notes, have so far stopped short of telling landlords what to do. “While some landlords have agreed to waive rent, or reduce it, or for repayment plans in the future, there is currently no obligation on them to do this.”

Because so many people now rely on the private rented sector, an increase in the benefits available to renters is, in effect, going to result in a mammoth public bailout of private landlords on a scale never seen before. Building the social housing we’ve lost through Right to Buy is an obvious way out of this long-term but, in the short-term, renters can be reassured that the Local Housing Allowance increase isn’t going anywhere and wait for the Government’s next announcement.

Government announces mass testing plan for Covid-19 ‘Exit Strategy’

Ministers have finally revealed a long-demanded “exit strategy” from the coronavirus lockdown with a plan to recruit an army of 18,000 people to trace and isolate infected people – allowing restrictions to be eased, they hope.

Five weeks after the World Health Organisation urged all nations to “test, test, test” – a plea rejected by the UK at the time – it was announced that the mass contact tracing programme would begin “in a matter of weeks”.

Ministers have finally revealed a long-demanded “exit strategy” from the coronavirus lockdown with a plan to recruit an army of 18,000 people to trace and isolate infected people – allowing restrictions to be eased, they hope.

Five weeks after the World Health Organisation urged all nations to “test, test, test” – a plea rejected by the UK at the time – it was announced that the mass contact tracing programme would begin “in a matter of weeks”.

The move was greeted with relief by Jeremy Hunt, the former health secretary and a leading voice demanding mass testing in the community, rather than simply in hospitals and of NHS and care workers.

* Essential workers, including supermarket workers, bus drivers and teachers, and their household members were told that, from tomorrow, they will be able book a test on the gov.uk website – potentially benefiting 10 million staff if the rest of the UK follows England.

* Continuing problems with the current testing programme were laid bare – with only 23,560 carried out on Wednesday, less than half the capacity of 51,000.

* London was described as “two or three weeks” ahead of other parts of the country – with Manchester and Liverpool now the focus of the pandemic, according to a Health Service Journal analysis.

* “New and better” blood tests were promised – not requiring the chemical reagents that have been in short supply.

He sought to deflect criticism of delay, arguing he had had to wait until the pandemic had peaked, saying: “Critically, test, track and trace works more effectively when the rate of new cases is lower.

“So, the lower the rate of new cases, the more effectively you can keep it down using test, track and trace rather than having to use heavier social-distancing measures.”

Jonathan Ashworth, Labour’s shadow health secretary, criticised “confusion” at the heart of government, pointing out the deputy chief medical officer, Jenny Harries, had dismissed the idea only days ago.

And he said Mr Hancock had to be held to his original pledge, saying: “We were promised 100,000 tests a day by the end of the month. Not testing capacity at 100,000.

“We’re still not carrying out the numbers of tests we need to. In particular we should be doing so much more to test care workers. They shouldn’t have to travel miles for a test.

Property market open after lockdown measures lifted

As of today (Wednesday 13th May 2020) the property market has been given the green light to open for business again by the government. This means buyers and sellers are able to move home now which is important for those who are already in the process of either selling or buying.

Viewings are allowed to take place again as long as they are conducted in a safe manner and keeping to the social distancing 2m rule.

For those who wish to sell their property you are now oermitted to visit your property for valuation and marketing, whilst doing so keeping to the social distancing 2m rule. There are further safety measures such as gloves, masks and hand sanitiser that should be worn by all visiting parties.

Government support available for landlords and renters reflecting the current coronavirus (COVID-19) outbreak

The government has brought forward a package of measures to protect renters affected by coronavirus (COVID-19). With these in force, no renter in either social or private accommodation will be forced out of their home.

To ensure all renters are clear on the full package of support that is currently available to them, we are bringing this together into one place.

From today (26 March 2020) landlords will have to give all renters 3 months’ notice if they intend to seek possession (i.e. serve notice that they want to end the tenancy) – this means the landlord can’t apply to start the court process until after this period.

This extended buffer period will apply in law until 30 September 2020 and both the end point, and the 3 month notice period can be extended if needed.

This protection covers most tenants in the private and social rented sectors in England and Wales, and all grounds of evictions. This includes possession of tenancies in the Rent Act 1977, the Housing Act 1985, the Housing Act 1996 and the Housing Act 1988. After 3 months if the tenant has not moved a landlord needs to apply to court in order to proceed.

From tomorrow (27 March 2020) following a decision by the Master of the Rolls with the Lord Chancellor’s agreement the court service will suspend all ongoing housing possession action – this means that neither cases currently in the system or any about to go in to it can progress to the stage where someone could be evicted.

This suspension of housing possessions action will initially last for 90 days, but this can be extended if needed. This measure will protect all private and social renters, as well as those with mortgages and those with licenses covered by the Protection from Eviction Act 1977. This will apply to both England and Wales.

Tenants are still liable for their rent and should pay this as usual. If they face financial hardship and struggle to pay this, support is available. In the first instance they should speak to their landlord if they think they will have difficulty meeting a rental payment, and in this unique context we would encourage tenants and landlords to work together to put in place a rent payment scheme. However we have also put specific measures in place:

  • We are working with the Master of Rolls to strengthen the pre-action protocol requirement and also extend this to the private rented sector. This will help landlords and tenants to agree reasonable repayment plans where rent arrears may have arisen.
  • We have already made £500 million available to fund households experiencing financial hardship.
  • As part of the workers’ support package, the Chancellor announced the government will pay up to 80% of a worker’s wages, up to a total of £2,500 per month, where workers are placed on the Coronavirus Job Retention Scheme.
  • Both Universal Credit and Housing Benefit will increase and from April, Local Housing Allowance rates will pay for at least 30% of market rents in each area.

The government is also committed to supporting landlords, and maintaining the positive partnership between tenants and their landlords. That is why, in addition to the measures outlined above, we have also agreed with lenders that they will ensure support is available where it is needed for landlords. Landlords will also be protected by a 3 month mortgage payment holiday where they have a Buy to Let mortgages.

Landlords remain legally obligated to ensure properties meet the required standard – urgent, essential health and safety repairs should be made.

An agreement for non-urgent repairs to be done later should be made between tenants and landlords. Local authorities are also encouraged to take a pragmatic, risk-based approach to enforcement.

BBC: Renters need more help to ‘ride out crisis’

Thousands of private renters who have lost their jobs could be facing eviction when the coronavirus lockdown ends, the government has been warned.

Almost half a million people are at “high risk” of homelessness, according to 187 local councils across England.

And charity Shelter says first time benefit claimants face falling behind with payments and ending up in debt.

The government has made housing benefits more generous to help those most in need during the pandemic.

It has also suspended evictions for the duration of the crisis.

Temporary increase

But Shelter says many of the nearly two million people who are applying for universal credit to help them through the crisis are finding that it does not come close to covering their rent.

Many are in a double bind because they can’t move to cheaper accommodation, or get a new job, due to the lockdown.

The charity is calling on the government to temporarily increase the housing element of the benefit – the Local Housing Allowance – to match 50% of the average rent in an area.

At the moment, payments are based on the bottom 30% of rents in an area.

Amy Corker, 32, lost her job as an account executive at a printing firm, when the company was forced to lay off staff just before the start of the lockdown.

She applied for universal credit to cover the £425 a month rent on her two-bedroom house in Barnsley, South Yorkshire, but was “shocked” to receive just £141 in total, including housing allowance, and minus three days pay from her final wage, for the month. Her landlord, who knew she was struggling, waived her rent for a month, but she has now run out of money.

“I have always paid my rent. I have always paid my bills,” said Amy.

“It is not my fault I have lost my job if I didn’t have an understanding landlord I don’t know what would have happened. I don’t know what’s going to happen next month.”

Amy, who had only started her job at the printing firm in January, is now doing a commission-only telesales job from home and is trying hard to find another full-time role.

“I am coming to terms with it. That this is what is. But these past seven weeks have been immensely tough mentally. Sometimes I can laugh about it. Sometimes I get really upset and emotional. I start thinking ‘am I going to have pack everything up and leave?’, or will I be able to find a job and stop that?”

Shelter says hard-hit renters relying on universal credit must find an estimated £13m a week in total to keep up with their rent payments, which could add up to a £660m black hole in their finances over the next 12 months if the government fails to act.

Chief executive Polly Neate said she hoped the government would listen because the country needed people to get back on their feet to help economic recovery, rather than being crippled by debt and insecure accommodation.

“With just a bit of help, they can ride out this crisis, they get can get a new job, and move somewhere cheaper.

“Without that help, we are just going to see a tsunami of evictions once the lockdown ends.”

‘Over the edge’

Ms Neate is delivering a 140,000 signature petition, compiled jointly with campaign site 38 Degrees, to Downing Street on Thursday, calling on the chancellor to take action.

The District Councils Network has, meanwhile, produced research which suggests more than 486,242 households are spending over half their income on private rented housing, and which could be at risk when the evictions ban is lifted.

The network, which represents 187 local authorities in England, says lone parents with children, young people and households on low incomes are particularly in danger of being tipped “over the edge” into homelessness.

It is calling for a permanent boost to housing benefits for those in private rented homes, and more funding for councils to fight homelessness, build homes and create jobs.

Councillor Giles Archibald, the network’s Better Lives spokesman, said: “The government has already rightly acted to support businesses and residents, but to avert a huge rise in homelessness it must now put the housing crisis at the centre of its exit strategy and recovery effort to support people as the scale of the economic impact becomes clearer.”

Government support

A government spokesperson said: “We’re committed to supporting all those affected by Covid-19 through these unprecedented times and we’ve implemented an enormous package of measures to do so.

“We’ve injected more than £6.5bn into the welfare system, including helping over one million households by raising Local Housing Allowance rates for universal credit and housing benefit claimants.

“And we’ve increased protections for renters to prevent evictions due to difficulties caused by Covid-19.

“We’ve also provided £180m in Discretionary Housing Payments to local authorities this year to further support those most in need.”

Communities Secretary Robert Jenrick said at Wednesday’s Downing Street press conference the government would ensure councils “have the resources that they need to carry out the absolutely critical functions that they are playing in our national response to coronavirus”.

Millions in UK having to choose between paying rent and eating, poll suggests

Renters’ unions are calling on the government to suspend rents for the duration of the coronavirus crisis, as research suggests millions are having to choose between paying landlords and putting food on the table, or have already been forced to leave their homes.

Polling conducted last weekend, after rent payments came due for many renters for the first time since the coronavirus shutdown began to affect incomes across the country, showed many renters were either already in or on the brink of crisis, with one in six forced to seek extra financial help to stay afloat.

About one in five UK households – 4.5 million families – live in private rented accommodation, with a similar amount in social housing, according to the most recent figures.

According to research carried out for the Guardian by Opinium, six in 10 renters said they had suffered financially as a result of the UK-wide shutdown that began three weeks ago. Of those, one in five had been forced to choose between food and bills or paying rent, and one in four said they had already had to voluntarily leave their home, move in with friends or parents, or request an earlier end to their tenancy because of the crisis.

The findings of the survey throw into doubt the efficacy and reach of government measures to support people who rent their homes, with almost half saying they were worried about the stability of their living situation despite increases to housing benefit and a temporary ban on evictions. “With these in force,” the government has promised, “no renter … will be forced out of their home.”

But while homeowners – including buy-to-let landlords – are able to take advantage of government-mandated mortgage holidays, advice for renters tells them they remain liable for their rent throughout the crisis. Kat Wright, national organiser for Acorn, which campaigns for tenants’ rights, said this stored up problems for the future.

“We’re facing a huge surge in evictions once restrictions are lifted, and renters across the UK are already unable to pay their rent,” she said. “Tenants need protection from evictions post-emergency and from rent debt accrued during the crisis.”

Despite the government’s measures, and guidance to landlords asking them to “be compassionate”, tenants who spoke to the Guardian said they had already faced threats of punitive action from their landlords. One self-employed renter, who preferred to remain unnamed, told the Guardian that when he approached his landlord to ask for a deferment of rent, he was served with an eviction notice in reply.

Others who have lost income are being forced into taking whatever work they can in order to continue to pay their rents, often in front line jobs in the gig economy, such as driving taxis or delivering takeaway food, potentially exposing themselves to infection with coronavirus.

“Many renters feel they have no choice but to break social distancing guidelines and go out to work, just so their landlords can continue to profit,” said Amina Gichinga of the London Renters Union. “How are people supposed to pay rent with no income and at least a month’s wait for any government assistance? How are people in low-paid jobs meant to clear hundreds or thousands of pounds of rent arrears in the future?

“During this global pandemic, people should be able to prioritise their safety and paying for food and other essentials. All rent payments need to be suspended and rent arrears need to be waived urgently to keep renters safe from eviction and from debt, and to prevent the further spread of the virus.”

An online petition calling for rents to be suspended has already reached 100,000 signatures, and the LRU wrote to Robert Jenrick, the housing secretary, at the end of March calling him to act on its demands. Opinium’s polling found overwhelming support for a rent suspension, with three in four renters – and even a slight majority of landlords – in support.

A spokesman for Jenrick’s department, the ministry of housing, communities and local government, said: “We understand that the Covid-19 outbreak has left many facing uncertainty and feeling worried. Emergency legislation and the suspension of housing possession action means that no tenant in either a social or private rented home will be forced out.”