COVID-19 ‘Must Knows’ for Residential and Commercial Landlords
The Coronavirus Act 2020 has significant implications for landlords and tenants of both commercial and residential premises. It substantially affects the ability of landlords to recover possession due to extended notice periods and temporary court rules and procedures governing the recovery of possession of property. We have set out all of the COVID-19 ‘Must Knows’ for landlords to understand the changes.
The longer notice periods under section 8 and 21 notices are currently set to end on 31 March 2021. If there is no extension to the regulations (The Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Amendment) (England) Regulations 2020), this means that the section 21 notice will revert to a 2 months’ notice and a section 8 notice period will revert to 14 days’ notice (in cases of rent arrears).
New arrangements have been introduced to assist courts in the current pandemic and how to deal with the large backlog of cases the courts are dealing with. These arrangements are temporary and non-statutory, but if these procedures are not followed by a landlord, their claim for possession may be delayed or adjourned.
The Government are encouraging parties to find alternative means of resolving disputes and issues such as rent arrears. Landlords can still issue a claim for possession of the let property, however.
Until the 28 March 2021 landlords are required to file additional evidence with the court which includes provided a statement setting out how the tenant(s) has been affected by the coronavirus pandemic and further information on the tenant’s financial position.
If the landlord has suffered financial difficulty because of the pandemic the possession claim can marked as ‘Covid-19’ which may assist the court in prioritising your claim.
For standard procedure possession claims the timeline in the court procedures also includes a short review appointment before the substantive hearing. This means that before there is a court hearing at which the landlord and tenant can attend, the court will set a date and time at which the judge will review the case papers without the landlord or tenant attending the court. Once this has taken place, the court will then usually list the claim for a substantive hearing.
Due to Covid-19, the Government are strongly encouraging parties to find alternative means of resolving disputes for example, agreeing a rent payment plan, or using a mediation service. Due to these unprecedented times, issuing proceedings to evict a tenant should be a last resort.
The Government’s non-statutory guidance on understanding the possession process links a ‘Pre-Action Plan’ which states that before a Section 8 Notice is issued:
The landlord should write to the tenants outlining the reasons possession is being sought. If possession is for arrears, then the arrears pre-action plan should be followed.
Landlords must declare if they know of any matters that should be taken into consideration, including if tenants, their dependants, or other occupiers have been affected by coronavirus and, if so, how this has impacted on their ability to pay rent.
Both parties should consider whether it is possible to resolve issues between them through discussion and negotiation, rather than formal legal proceedings (alternative dispute resolution).
The landlord should consider any representations received, and if proceeding with a claim, include any information that has been provided relating to the impact of coronavirus on the tenant’s ability to pay rent.
Landlords must keep copies of all documentation and a record of all correspondence or contact with the tenant, throughout the pre-action process, and provide the information to the court should proceedings be necessary.
The first step for a landlord who wishes to obtain possession of a property based on a breach of contract made by the tenant(s) is to serve a Section 8 Notice upon the tenant(s). A Section 8 Notice gives the tenant(s) formal notice that the landlord intends to seek a court order for possession and judgement for outstanding rent (in the case of rent arrears).
If the tenant(s) fails to engage in any communication, then the landlord will need to apply to the court for a possession order. Currently, possession orders cannot be enforced unless an exemption applies.
Enforcement of Possession Orders in England
From 11 January 2021 until 21 February 2021, the New Regulations prevent attendance at a dwelling house for the purpose of executing a writ or warrant of possession, or delivering a notice of eviction, subject to certain exemptions.
The exemptions include (and residential evictions can therefore still be carried out) where the court is satisfied that the notice, writ or warrant relates to an order for possession made:
- Against trespassers (persons unknown).
- Wholly or partly on the grounds of anti-social behaviour, nuisance, domestic violence or false statements (under grounds 7A, 14, 14A or 17 of Schedule 2 to the HA 1988).
- Wholly or partly on ground 7 of Schedule 2 to the HA 1988 (death of the tenant) where the person attending is satisfied that the dwelling house is unoccupied at the time of attendance.
- Wholly or partly on grounds 8 (substantial arrears of rent), 10 (some rent due) or 11 (persistent delay in paying rent) of Schedule 2 to the HA 1988, where the amount of unpaid rent arrears outstanding is at least an amount equivalent to six months’ rent.
The exemptions are therefore the same as under the Previous Regulations, subject to an amendment to the rent arrears exemption.
Enforcements of Possession Orders in Wales
From 11 January 2021 until 31 March 2021, the New Welsh Regulations prevent attendance at a dwelling house in Wales for the purposes of executing a writ or warrant of possession or restitution, or delivering a notice of eviction, except in certain specified circumstances.
Exemptions apply where the court is satisfied that the notice, writ or warrant relates to an order for possession made:
- Against trespassers to which CPR 55.6 applies (persons unknown)/
- Wholly or partly on Ground 7A (anti-social behaviour.
- Wholly or partly on Ground 7 (death of tenant) in Schedule 2 to the HA 1988, where the person attending has taken reasonable steps to satisfy themselves that the property is unoccupied.
The New Welsh Regulations are subject to a review cycle while they are in force. The first review must take place before 28 January 2021, with further reviews at least once in each subsequent period of 21 days.
The restrictions on enforcing a right to forfeit a commercial lease based on rent arrears is also set to end on 31 March 2021.
The Coronavirus Act 2020 contains express protections for business tenancies that restrict the landlord’s ability to forfeit a lease during the relevant period.
The relevant period began on 26 March 2020 and was due to end on 30 June 2020, but regulations have been made which have extended this period initially to 30 September 2020, then to 31 December 2020, and most recently to 31 March 2021 (section 82(12), CVA 2020) (Relevant Period).
During the Relevant Period, the following restrictions will apply in relation to relevant business tenancies:
A right of re-entry or forfeiture for non-payment of rent may not be enforced, by action or otherwise.
No conduct by or on behalf of a landlord is to be regarded as waiving a right of re-entry or forfeiture for non-payment of rent, unless the landlord gives an express waiver in writing.
If High Court proceedings have already commenced to enforce a right of re-entry or forfeiture for non-payment of rent, any possession order must ensure that the tenant does not have to give possession before the end of the Relevant Period.
Where the High Court has already made an order for possession to enforce a right of re-entry or forfeiture for non-payment of rent which requires possession to be given during the Relevant Period unless the tenant complies with some requirement (for example to clear the arrears by a certain date), the tenant can apply to vary the order and if it does so the High Court must ensure that the tenant does not have to give possession before the end of the Relevant Period.
If County Court proceedings have already commenced to enforce a right of re-entry or forfeiture for non-payment of rent, any possession order made under section 138(3) of the County Courts Act 1984 (CCA 1984) must not specify a date for possession that is before the end of the Relevant Period.
Where the County Court has already made an order for possession to enforce a right of re-entry or forfeiture for non-payment of rent which requires possession to be given during the Relevant Period, the date for possession will be treated as having been extended under section 138(4) of the CCA 1984 so that it expires at the end of the Relevant Period.
What the Coronavirus Act 2020 Does Not Restrict Commercial Landlords From Doing
The protections in section 82 of the CVA 2020 concern the landlord’s ability to recover possession during the Relevant Period where the right to re-enter is due to the non-payment of rent.
The landlord’s right to forfeit in respect of the non-payment of rent will be restored immediately after the expiry of the Relevant Period.
The landlord is not prevented from enforcing a right of re-entry for a breach of other covenants, the landlord could conceivably, therefore, still forfeit by way of peaceable re-entry for breaches other than the non-payment of rent. However, the landlord should have regard to the tenant’s ability to remedy a breach during the COVID-19 outbreak when considering what a reasonable period of time is for the tenant to remedy a breach, give-up possession or apply for relief.
The protection afforded to tenants of commercial leases under the Coronavirus Act 020 do not affect the landlord’s right to pursue other action such as:
Claims for debt, mesne profits or damages.
Exercising commercial rent arrears recovery (CRAR).
Drawing down on a rent deposit.
Claiming against guarantors.
Serving a statutory demand, though landlords should note the restrictions on the presentation of winding-up petitions referred to below.
- The Coronavirus Act 2020 received Royal Assent on 25 March 2020 and came into force on 26 March 2020. The CVA 2020 was passed as an emergency measure in response to the spread of the 2019 novel coronavirus disease (COVID-19).
- The Coronavirus Act 2020 affects the recovery of possession of commercial and residential premises.
- CPR Practice Direction 51Z (PD 51Z) and CPR 55.29, which had the effect of staying most proceedings for possession brought under CPR 55 and most proceedings seeking to enforce an order for possession by warrant or writ, from 27 March 2020 until 20 September 2020.
- CPR Practice Direction 55C (PD 55C), which makes provision, amongst other things, for reactivating stayed possession claims, as well as further details and guidance on the arrangements published by the Master of the Rolls, HMCTS and MHCLG. PD 55C is in force from 20 September 2020 until 28 March 2021.
- On 9 December 2020, the Business Tenancies (Protection from Forfeiture: Relevant Period) (Coronavirus) (England) (No 3) Regulations 2020 (SI 2020/1472) and the Business Tenancies (Extension of Protection from Forfeiture etc) (Wales) (Coronavirus) (No 3) Regulations 2020 (SI 2020/1456) were published, extending the restrictions on forfeiture of business tenancies for non-payment of rent in England and Wales to 31 March 2021. The restrictions on the use of commercial rent arrears recovery (CRAR) will also be extended to 31 March 2021.
- The temporary restrictions on the execution of writs and warrants of possession concerning residential properties in England and Wales by The Public Health (Coronavirus) (Protection from Eviction) (England) Regulations 2021 and The Public Health (Protection from Eviction) (Wales) (Coronavirus) Regulations 2021.
- The temporary restrictions on the use of the procedure for taking of control of goods by landlords imposed by The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 (SI 2020/451) as amended by The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (No. 2) (Coronavirus) Regulations 2020 (SI 2020/614) and The Public Health (Coronavirus) (Protection from Eviction and Taking Control of Goods) (England) Regulations 2020 (SI 2020/1290).
- The restrictions on the use of winding-up petitions against companies in the Corporate Insolvency and Governance Act 2020 as amended.