How does the new law affect evictions?
- Government has brought in the Coronavirus Act 2020 which confirms what are temporary measures for residential tenancies. The new provisions will apply from now until 30th September 2020. It can be extended if necessary.
- The vast majority of ordinary residential tenancies are brought to an end by way of what is known as the Section 21 Procedure or the Section 8 Procedure.Section 21 tends to be non-fault based, i.e the fixed term of the tenancy has come to an end and the landlord wants the property back.Section 8 tends to be used for fault-based evictions such as non-payment of rent or other breaches of the tenancy agreement.
- The new legislation does not prevent eviction proceedings being commenced and furthermore, it does not prevent courts from granting eviction orders. However, as landlords will probably be aware, before commencing eviction proceedings, the landlord is required to serve a notice on the tenant which gives them warning that the landlord is seeking possession of the property and the tenant is required to leave before a certain specified date.If the tenant does not comply with the notice and move out of the property, the landlord can apply to court to start eviction proceedings from the end of the notice period. For Section 21 claims, the notice period was two months. For Section 8 rent arrears claims, the period was two weeks. Under the new legislation, all notice periods are now three months which allows the tenants more time.
- At Smith & Co Solicitors, our experience of court possession cases following the coronavirus is that the court is still willing to grant possession orders but the process is taking longer. The court does have discretion in possession claims to delay eviction for up to 6 weeks based upon exceptional hardship.
In simple terms, if the tenants will suffer exceptional hardship by being evicted, the court will delay the eviction for up to the maximum six-week period. In many ways this make sense, when the whole country has been told to stay indoors and only leave their homes for essential reasons, it does not make much sense for someone to be made homeless.
Wilst this is harsh on landlords and affords the tenants more time which they may not be deserving of in all the circumstances, unfortunately in this time of national crisis, the vast majority of the people in this country are being severely prejudiced and landlords, it seems, are no different.
If the landlord obtains the eviction order, the problem we have found so far is that it appears, for the time being at least, if the tenants do not comply with the order and leave the property by the eviction date, there is currently nothing that the landlord can do to enforce the order. In ordinary circumstances, the land applies to court to instruct the court bailiffs to remove the tenants from the property.
At the present time, although there is nothing in the new Coronavirus Act regarding this, it appears there has been a directive from the Ministry of Justice which means that the landlords cannot instruct the court bailiffs. As a result, the landlord may well have an eviction order but there is nothing that can be done to actually enforce it and remove the tenants from the property. It appears for the time being at least that this is not going to change.
However, our advice is that for landlords who want to evict their tenants, it is much better to start the process as soon as possible. It is better to have the eviction order and not be able to use it, rather than waiting until the crisis has passed and then applying to court for the order. We fully expect that at the end of the lockdown, there will be a considerable backlog of possession cases for the courts to deal with. We suggest that landlords will be in a far better position if they already have the eviction order so they can at least be at the ‘front of the queue’ to instruct court bailiffs.
How does the new law affect rent arrears?
- Landlords concerned about tenants being unable to pay their rent due to the crisis do certainly have cause for concern. The government have made it clear that for people who have a mortgage, there is the facility for what is known as a payment holiday meaning that you are not required to pay the mortgage for a period of time. However, the mortgage debt still exists and interest on the mortgage will continue to accrue during this period. There is no such facility available for rental properties. Regardless of the tenant’s circumstances brought about by the coronavirus, the tenancy agreement still stands and the tenants are still bound by all of the terms, to include the obligation to pay rent throughout this period.Should it be the case that the tenant does not pay the rent for any reason, this is a debt owing to the landlord that will need to be paid. If the tenant is unable to pay their rent or make up the arrears, the landlord is entitled to apply to court for an eviction order which will also provide a county court judgment against the tenant for the amount of rent arrears owing at the date the tenant is evicted.The Section 8 procedure is very helpful for this as the basic rule is that if the tenant is at least two months in arrears when the Section 8 notice is served and is still two months in arrears at the date of the court possession hearing, the court must grant the eviction order and award a County Court Judgment to the landlord. The court does not have discretion, there is no defence to this claim and therefore the fact that the tenant may have lost income because of the coronavirus, does not change anything in this regard.
However, from the experience at Smith & Co Solicitors based on numerous court possession cases, it is quite rare for the landlords to actually recover any of the rent owed by the tenant once they have been evicted from the property.
Notwithstanding this, it should be borne in mind that many people who would not ordinarily have a difficulty paying rent, those who were securely employed and don’t already have issues with debt are likely to be very concerned by the effect that a county court judgment will have on them. People often fail to realise that a county court judgment will compromise their life in a very meaningful way. It is likely to mean that they would not be able to obtain any kind of credit, such as mobile phone contract, the ability to pay by direct debit or to apply for a mortgage.
This being the case, we suspect that for the majority of landlords, whilst there will certainly be people who will lose their rental income for a period of time, we would hope that this may only be a temporary situation and the tenants would take steps in order to repay arrears (such as taking out a loan etc) in order to avoid court proceedings and the inevitable county court judgment that follows. Furthermore, it should also be remembered that landlords who rely on the rental income in order to repay a buy to let mortgage are still entitled to a payment holiday on this to relieve the pressure of a loss of rental income.
For more information on landlord and tenants issues, call Keith Holland at Smith & Co Solicitors on 01473 228016.