The Coronavirus Bill - what it means for landlords and tenants (part 1)
25 March 2020
The Coronavirus Bill will be enacted imminently. It is a comprehensive and far-reaching piece of emergency legislation to deal with the consequences of Covid-19. If it is enacted in its current draft form, sections 81 and 82 will affect the landlord and tenant relationship under certain residential and business tenancies in England and Wales.
This article is part one in a two-part series. This part focuses on the effect of the bill on residential tenancies.
Section 81 provides that Schedule 29 sets out temporary amendments to increase the protection for private residential tenants, with new measures to be in place initially for a period until 30 September 2020, but with scope for the period to be extended. It is too early to tell whether the period will be extended at the end of September 2020.
In relation to assured tenancies (including assured shorthold tenancies) under the Housing Act 1988, a notice under section 8 must now give three months’ notice before proceedings for possession may be brought. This applies in respect of any of the grounds, including rent arrears (which until this legislation is enacted only requires two weeks’ notice to be given).
Section 21 notices requiring possession of assured shorthold tenancies on non-fault grounds must now give three months’ notice instead of two.
Notices to quit under the Rent Act 1977 must also give three months’ notice rather than four weeks.
The prescribed forms are to be read as per the above changes.
Unless the bill is substantially amended, it seems as though the protection for private residential tenants amounts to little more than providing a three-month notice period before action can be taken. Perhaps of concern is the fact that this blanket amendment will apply irrespective of whether the breach is for rent arrears caused by the coronavirus or unrelated breaches such as antisocial behaviour.
Additionally, contractual common law tenancies are not provided for in this bill, so tenancies at a rent of £250 per year or less (£1,000 in Greater London) or more than £100,000 per year are not affected.
There is nothing in the draft providing for a suspension of court proceedings (including enforcement action) once that longer notice period is up. However, in reality enforcement may take longer in any event, depending on whether courts remain shut or unable to operate at normal capacity due to staff absences.
In his statement to judges in the civil and family courts on 19 March 2020 the Lord Chief Justice commented that in relation to possession proceedings “particular sensitivity is needed” and that judges “dealing with any possession claim during the crisis must have in mind the public health guidance and should not make an order that risks impacting on public health”.
Many judges are likely to interpret this as an instruction to avoid making possession orders where possible. This may mean that, where the law prohibits the use of discretion, for example on ground 8 of Schedule 2 (rent arrears), or under section 21, any technical error might be used to cause claims to fail.
Furthermore, whilst the Government recently announced providing mortgage payment relief, the bill (in its current form) does not make any mention of this or how such relief would operate. The current proposed provisions therefore may well have a serious detrimental impact on those landlords who rely on rental income to pay the mortgage.
If you have any questions please don't hesitate to get in contact using the form below.