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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.

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.