Coronavirus Act 2020
The Coronavirus Act 2020 ("CA 2020") received Royal Assent on 25 March 2020, and contains provisions which impact on the ability of Landlords to recover possession of rented residential and commercial properties. The following is intended to be a summary of the relevant provisions as at the end of March 2020, with further articles to be produced if and when the position changes.
Residential Property - section 81 CA 2020
The relevant parts of CA 2020 in relation to residential rented properties are found at Section 81 CA 2020, and, more particularly Schedule 29 (Section 81 CA 2020 simply records that "Schedule 29 makes provision about notice periods in relation to possession proceedings in respect of certain residential tenancies etc.")
As expected, Schedule 29 covers, amongst other arrangements, Rent Act tenancies, assured tenancies and assured shorthold tenancies (the latter being the current default type of residential tenancy that most 'private' tenants will be occupying their properties under).
Initial Press Releases suggested that Tenants who as a result of the Coronavirus Virus found themselves unable to pay their rent would not need to worry about being removed from their homes. This led to some believing that a Scheme of some sort would be put in place which could be utilised by Tenants or Landlords to meet any rent arrears in circumstances where Tenants could show that their financial dire straits was due to Coronavirus, with the result that the Tenant would not then be in arrears. That is not the case.
The crux of Schedule 29 is that any notice served by a Landlord on a Tenant during what is termed the Relevant Period - being in the context of rented residential properties, the period 26 March 2020 until 30 September 2020 - that requires the Tenant to vacate a residential property, must give not less than 3 months notice of the date by which the Landlord requires the Tenant to vacate.
CA 2020 also makes clear that this 3 month notice period could be extended to 6 months, although how that would work in practice in relation to notices already served during the Relevant Period is as yet unclear. Presumably any 3 month notice served will be valid, but a Landlord will not be able to rely upon it until 6 months has passed. We will have to wait and see.
The restrictions imposed by CA 2020 only apply to notices served by Landlords during the Relevant Period. Some Tenants may, therefore, be concerned that in they have been served with a notice prior to the Relevant Period, that they could soon be served with possession proceedings if they do not vacate the their home on the expiry of the notice. However, from 27 March 2020, all ongoing residential possession claims have been suspended, and no new claims are to be processed. Currently, this freeze on possession actions will last 90 days, but again this period can be extended if the powers that be consider it appropriate to do so.
So, if a Landlord has, for example, issued a section 21 notice (aka a 2 moth notice) that was served in early February 2020 that requires the Tenant to vacate a residential property by 15 April 2020, if the Tenant does not vacate, the Landlord will, for the time being, be unable to take any action to recover possession of the property.
That's it, from a Tenant's perspective. CA 2020 does not alter a Tenant's obligation to pay rent, or wipe the slate clean in respect of any rent arrears that may be accrued over the coming months. Instead, CA 2020 simply prevents a Landlord from being able to take any action to recover possession based on any rent arrears, or indeed on any other ground, for the time being.
Some Landlords may be concerned that the imposition of a blanket 3 month notice period, coupled with the freeze on possession actions, will mean that there is nothing that can be done about "Tenants from Hell", being those Tenants that play music and bang on the walls at all hours, scream and shout at all and sundry, and threaten with violence their neighbours and any third parties in the vicinity of the property. However, whilst it may, for the time being, not be possible to secure a possession order, the new Practice Direction 51Z supplementing the Civil Procedure Rules 1998 (which govern civil proceedings in England and Wales), which came into force on 27 March 2020, offers some comfort to Landlords.
Practice Direction 51Z, in addition to recording that all possession claims in respect of residential properties and applications to enforce an order for possession are stayed for a period of 90 days from 27 March 2020, also makes clear that this stay does not apply to claims for injunctive relief. Therefore, it remains open to Landlords to apply for an injunction against any nuisance/anti-social Tenant. Whilst injunctions are not a low cost option, they do provide a means of addressing a Tenant's anti-social behaviour and could even, if the conduct is sufficiently serious, prevent them from occupying the Property.
Commercial Property - section 82 CA 2020
Section 82 CA(1) provides that
"A right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period."
"Relevant business tenancy" means a tenancy to which Part 2 of the Landlord and Tenant Act 1954 applies, or a tenancy to which that Part of that Act would apply if any relevant occupier were the tenant whilst "relevant period" means the period 26 March 2020 - 30 June 2020, or such later date as may be specified.
The Relevant Period insofar as it applies to the commercial property sector is, therefore, a much shorter period than applies to residential properties, but CA 2020 makes provision for that period to be extended. That being the case, reference to 30 June 2020 below is made on the assumption that the Relevant Period expires on that date.
CA 2020 introduces a moratorium (a freeze) until June 2020 on the issuing of new forfeiture proceedings for non-payment of rent or other monies due under the Lease. This freeze on the issuing of proceedings applies regardless of whether a Tenant's reasons for not paying the rent relates to the Coronavirus or not.
In those cases where forfeiture proceedings have already been issued but have not yet been determined, CA 2020 provides that any possession order subsequently made in those proceedings must not require the Tenant to give up vacant possession before 30 June 2020.
Where a possession order has already been made, CA 2020 makes provision for a Tenant to be able to apply to the Court to vary the possession order. Should such an application be made, the Court will amend the Order so as that the Tenant will not have to give vacant possession until at least 30 June 2020.
The wording of Section 82 CA 2020 is such that it does not just restrict a Landlord's right to issue forfeiture proceedings, but is sufficiently wide to also restrict a Landlord from forfeiting a lease by peaceable re-entry.
A point to note for commercial landlords is that section 82(2) CA 2020 provides that
"during the relevant period, no conduct by or on behalf of a landlord, other than giving an express waiver in writing, is to be regarded as waiving a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent".
This provides some protection to Landlords against inadvertently waiving the right to forfeit for non-payment of Rent or other charges during the moratorium period due to dealing with for example, a Tenant's request for Consent to do works to the Property. Landlords must note, however, that this protection only applies to the right to forfeit on the basis of non-payment of rent. If a Landlord wished to rely on some other breach as a ground to forfeit the lease, any demand for, or acceptance of, rent, or other conduct that evidences the Landlord's acceptance of the continuation of the Lease despite knowledge of a breach, would amount to a waiver of that breach.
As stated at the outset, as and when there are further developments in this area, we will endeavour to produce further articles to keep you updated. If you have any queries arising from this article, or would like to suggest a topic for a future article, please contact Chris Drinkall on 01482 337367 or firstname.lastname@example.org Chris can also be followed on Twitter at @drinkall_chris and on LinkedIn.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.