In response to the Covid-19 pandemic, Parliament passed the Coronavirus Act 2020 (the “Act”) on 25 March 2020.
Among other things, the Act imposes restrictions, for a temporary period, on landlords’ ability to to recover possession of their rented property (be it commercial or residential) in the usual way.
In addition, a new Practice Direction 51Z to the Civil Procedure Rules (the “CPR”), introduced on 27 March 2020, has effectively put on hold all types of possession proceedings.
In this article, we will be looking only at the impact on residential rented property.
The purpose of the legal changes is to provide residential tenants with a degree of protection against eviction, during this time of uncertainty when many people will be losing income and some tenants may struggle to pay their rent.
The impact of the recent changes is two-fold:
EXTENDED NOTICE PERIODS
Schedule 29 of the Coronavirus Act 2020 requires that, from 26 March 2020 to 30 September 2020 (the “Relevant Period”), landlords will have to give tenants three months’ notice if they serve the following types of notices:
- Section 21 notices.
- Section 8 notices.
- Rent Act 1977 notices to quit.
(Please note this list is non-exclusive.)
As regards section 8 notices, the three-month notice requirement applies across the board to all of the grounds that landlords might want to rely on under Schedule 2 of the Housing Act 1988, irrespective of the ‘usual’ notice period for a particular ground. So, for example, where normally a landlord would only have to give tenants 14 days’ notice of an intention to start possession proceedings based on outstanding rent arrears (grounds 8, 10 and 12), during the Relevant Period the notice period must be three months. Similarly, as regards section 21 notices, the notice period during the Relevant Period is extended from two to three months.
Notably, the following types of tenancy/licence are not covered by Schedule 29 meaning that the new three-month notice period does not apply: Rent (Agriculture) Act 1976 tenancies; assured agricultural occupancies; licences/contractual tenancies; company lets; and/or lodger agreements.
An amended Form 6A has been produced for use during the Relevant Period when serving section 21 notices, and an amended Form 3 for section 8 notices. These can be found here: https://www.gov.uk/guidance/assured-tenancy-forms#form-3
It is also worth noting that Schedule 29 gives Ministers the power to extend the three-month notice period to six months.
The Act does not apply retrospectively. Notices that were served prior to 27 March 2020 are not affected and landlords can rely on them as usual, subject to the following comments about Practice Direction 51Z.
90-DAY STAY ON ALL TYPES OF POSSESSION PROCEEDINGS
*See article dated 23.04.20 for an update on what types of possession proceedings can be issued during the stay.*
Practice Direction 51Z to the CPR came into force on 27 March 2020 and will remain in force until 30 October 2020. It has the effect of staying all proceedings brought under CPR Part 55 for a period of 90 days, i.e. until 25 June 2020.
Because the stay applies to all possession proceedings that would be issued under Part 55, it covers all residential tenancy possession proceedings, including claims against former licensees. It also applies to all non-residential possession proceedings and to proceedings against trespassers, whether for residential or non-residential premises.
Unlike the three-month notice period requirement, the stay applies to all possession proceedings that are currently in the court system, as well as all existing possession enforcement proceedings.
The stay does not prevent landlords from issuing possession proceedings. However, the practical effect is that, once issued, those proceedings will be immediately stayed (i.e. the claim will not even be served on the defendant) until after 25 June 2020.
Despite the 90-day moratorium on possession proceedings and the three-month extended notice periods, tenants remain obliged to pay their rent (the Act does not amount to a rent “holiday”) . It will be down to individual landlords and tenants to discuss options for how to manage a tenant’s inability to pay their rent if that becomes an issue. The government is encouraging landlords to be flexible, and for tenants to talk to their landlords if they are in difficulties, the hope being that landlords might, for example, agree a temporary rent reduction or a rent repayment plan to assist their tenants to remain in occupation long-term.
The government’s guidance for landlords and tenants on the implications of coronavirus can be found here. It contains some practical guidance not only on the above changes but on how to deal with the fact that landlords may still require access to properties in order to carry out their repairing obligations:
If you require any further information about these changes, please contact Bryony Darnell.