If you own a residential property and you rent it to an individual, there are new rules about what you can do if your tenant does not pay the rent when it is due. The Government introduced emergency legislation, the Coronavirus Act 2020 (which can be viewed in full here), which among other things, introduced these new rules. The rules mainly protect tenants who it was assumed would increasingly have difficulty paying their rent.
One outcome of the Coronavirus Act 2020 is that the Court rules (known as the Civil Procedure Rules or CPR) have been temporarily changed to suspend any ongoing Court cases for possession of property for 90 days. This means that no matter what stage the possession claim is currently at no further action will occur until the end of June 2020 - or beyond if the Government prolong the suspension. Full details of the new Practice Direction can be seen here.
Advice for landlords renting out residential properties
My tenant hasn’t paid their rent. Do the Coronavirus measures enable me to get my property back?
In the case of a residential property people may not be able to pay the rent because they may have lost their job, seen a reduction of working hours and therefore pay, been furloughed or are self-employed and have seen a significant drop in income.
Up to 30 September 2020 (at present, although this may be extended), landlords may still serve a notice seeking possession on tenants who have not paid rent, however from 26 March 2020 any notices must give a 3 month notice period before proceedings can begin in Court. This is a big change from the usual two weeks’ notice required for possession on the basis of rent arrears. This is in order to reduce the pressure on people who are renting their homes and who may well be facing serious financial difficulty as a result of the Coronavirus situation, but applies whether or not the reason for non-payment is related to Coronavirus.
Once the notice has expired, a landlord must issue a claim at Court seeking a possession order. It usually takes around 2 months between issuing a claim and the hearing being held. There are a number of things which would happen at the hearing:
- If the tenant has paid all the rent by the time of the hearing, then unless there is a history of persistent late paying, it is unlikely the Court would make an order for possession.
- If the sum that the tenant owes is less than 2 months’ rent, the Court is likely to make a suspended possession order, meaning that the tenant must pay by a particular date and pay the sums due as they fall due, otherwise the possession order will take effect.
- If the sum that the tenant owes is 2 months’ or more in rent, then the Court must make a possession order and the date is usually 2 weeks from the date of the hearing, but can be up to six weeks from the date of the hearing, in some cases.
- If the tenant denies that the rent is owing, the Court could adjourn the hearing and instruct to parties to file evidence before another hearing takes place, usually a couple of months later.
If a possession order is made by the Court and the tenant does not comply with it, bailiffs will need to be instructed through the Court to enforce the order and carry out an eviction. It can often take several weeks to get a bailiffs’ appointment.
There is an indication that the Government will expect landlords and tenants to work together to agree a repayment plan before moving to evict the tenant. This plan must take into account each individual tenant’s circumstances, and must be worked on together, before pursuing eviction. The Courts are likely to look unfavourably on landlords who cannot show they have made genuine efforts to have such discussions with tenants, before starting proceedings.
There are some exceptions: the new provisions do not apply to licences or tenancies granted in the course of employment.
My tenant stopped paying their rent before Coronavirus began? Can I continue the eviction process?
If you have not yet served a notice for possession on your tenant, you will be subject to the new provisions. Any notice will have to give the tenant 3 months’ notice, before you can issue the claim seeking a possession order from the Court.
If you already have Court proceedings in progress or a possession order has already been obtained, you will not be able to progress those or instruct bailiffs to enforce the possession order. This is because all proceedings and actions to enforce are put on hold for a period of 90 days from 27th March 2020, by the changes to the Court rules.
While these new regulations help tenants, there may well be negative implications for landlords, many of whom rely on rent from their properties to support themselves and their families. In recognition of this, protections are also available to landlords as well as tenants. Landlords renting out property with a mortgage may wish to seek a mortgage holiday and you should contact your mortgage company as soon as possible to apply.
What if I want to get my property back for reasons other than rent arrears?
The notice for eviction must provide for a 3 month notice period before court proceedings can be started – regardless of what the reason is that you wish to evict the tenant. The new provisions apply to all grounds for recovering a property from a tenant. These include the Section 21 procedure of the Housing Act 1988, which landlords can use in the absence of a specific breach of the tenancy, provided the fixed term of the tenancy agreement has come to an end (or will by expiry of the notice).