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Coronavirus - Possession Claims Explained

Coronavirus - Possession Claims Explained

The Government have stated their intention to protect tenants during the coronavirus outbreak by stopping any new possession claims from being issued at court.

At the time of writing (Monday 23rd March), the final wording of this legislation has not been drafted and so the precise details are not known. However, we can extrapolate from the Ministry of Housing, Communities & Local Government’s statement about what the effect might be.

The assumption with this announcement is that there are going to be vast swathes of the renting public who will be out of work, or on some kind of reduced pay for the duration of the outbreak, and may find it difficult to pay rent as a consequence. As a result, landlords will be wanting assurances that they will not be out of pocket, whilst tenants will want to be secure that they will not be evicted during this time of flux.

No new possession proceedings

Firstly, the wording used is ‘no new possession proceedings through applications to the court to start during the crisis’.

This does not appear to prohibit the serving of notices, as a notice is not an application to the court. The timeframe of ‘during the crisis’ would suggest that this period could be variable and extended if necessary. Current cases would still be able to proceed (subject of course to the Court’s ability to progress them) - bearing in mind the potentially imminent implementation of this legislation, if you have an expired notice you should act upon it now.

Mortgage holidays for buy to let properties

The three month ‘mortgage holiday’ has been extended to buy to let mortgages, which should mean that a tenant’s inability to pay rent should not be as hard-hitting as it might otherwise be. However, this does not assist landlords who own their house outright and depend on the house as their sole source of income. This group of people appear to be like the self-employed, who the government have found it difficult to provide adequate remedy for their losses. We can only wait and see, if or when, further clarification on this is provided in the coming days.

Repayment plans

At the end of the crisis period, ‘landlords and tenants will be expected to work together to establish an affordable repayment plan’. This wording hints that it is unlikely to make it into legislation because there is no effective way for the state to force parties to cooperate. However, it could lead to a change in the civil procedure rules, or a temporary amendment to the Housing Act 1988. This could mean that Section 8 Notices served on rent arrears that accrued during the crisis cannot be enforced, or are at least subject to the court’s discretion.

This view is supported by Housing Secretary Robert Jenrick MP who said “no renter who has lost income due to coronavirus will be forced out of their home”. This could mean that an innocent tenant who lost their job as a result of the crisis might not be evicted, whereas a problem tenant who was already in rent arrears when the crisis began (and was not evicted because of the ban on court proceedings) still could be.

Crucially, the ‘affordable repayment plan’ means that this is by no means a rent holiday for the tenant. If landlords want to offer reduced rent for the period then I am sure the government would have no problem with that, however landlords should be careful not to estop themselves from charging the full rent once the crisis has passed – any reduction should be for a set period of time and then reviewed from time to time.

Changes to pre-action protocol

Lastly, changes to the ‘pre-action protocol’ have been suggested encouraging ‘necessary engagement between landlords and tenants to resolve disputes’. This suggests an encouragement of alternative dispute resolution to avoid a court case entirely. Expect costs sanctions for landlords who ignore this advice.

Need further advice?

We appreciate that this is an uncertain and concerning time for both landlords and tenants. Things are changing literally hour by hour but our dedicated Landlord & Tenant team are working hard to continue their support with no disruptions to service, passing on the latest guidance available.

If you would like to speak to a member of our Landlord & Tenant team, regarding legal support relating to a landlord or tenant issue, please call us on 02380 221344 or email contact@duttongregory.co.uk.