Measures to protect renters and landlords affected by coronavirus far from straightforward

The government has announced a “complete ban on evictions and additional protection for renters” but what this means in practice remains unclear. Find out why.

Precisely what the government’s announcement means will not be clarified until the emergency legislation has been published which, as at the time of writing, it has not been.

We will, of course, be providing regular updates as and when the legislation is published and as matters evolve.

Our understanding, however, is that the government is proposing that:

• New evictions from social or private rented accommodation will be suspended during the outbreak;
• No new possession proceedings may be issued at court during the outbreak;
• Landlords will be able to have a three-month mortgage payment holiday (which will include Buy to Let mortgages).

If this is what the new legislation entails, it would appear to go significantly further than the proposals which Labour put forward earlier in the week. Those proposals sought to stop evictions for non-payment of rent (that is, in the case of assured tenancies, under the section 8 procedure, grounds 8, 10 and 11) during the period 1 March 2020 to 1 September 2020 and money judgments for the same, where the cause of non-payment was in any way related to the effects of coronavirus. The proposals did not seek to halt proceedings currently afoot, to prevent evictions for rent arrears arising prior to 1 March 2020, or for any other breaches of covenant whether prior to or during the outbreak. They also did not seek to limit in any way no fault evictions under the procedure set out at s21 of the Housing Act 1988 (which is perhaps surprising given the party’s in principle opposition to no fault evictions).

In truth, it is not surprising that both the government and Labour are grappling with this problem. Both are plainly trying to do the right thing. Quite how this is achieved is far from straight-forward. For example, if a tenant is already in breach of covenant, whether in respect of significant rent arrears or any other covenant, prior to the outbreak beginning, the existence of the outbreak is plainly not causative to the landlord’s right to recover possession arising. Why, in those circumstances, should the landlord not be able to recover possession of its property? The answer, so far as we suspect the government is concerned, is a practical rather than a legal one:

1. Firstly, the outbreak may prevent the tenant from being able to work so as to catch up with the rent arrears or to remedy the breached covenant.
2. Secondly, if the claim is contested, then court hearings will have to take place (Labour’s above proposals as to amending the s8 procedure would be likely to increase the number of contested hearings as it would move non-payment of 2+ months’ rent from being a mandatory ground for possession to essentially a discretionary ground where the Court would have to consider the cause of the arrears arising). Possession lists at county courts are notoriously crowded affairs involving multiple parties, their legal advisers, the duty solicitor and court officials. Whilst at present HMCTS has not formally announced that county courts will be closing, all the facts are pointing in that direction. In that event, how is a crowded possession list to be administered? Telephone or skype hearings in these sorts of claims will be at best challenging and will often be impossible.
3. Thirdly, if a possession order is made it has to be enforced. This would involve bailiffs having to incur the risks of infection in carrying out their duties. Not an attractive position for the government to take, or for employers.
4. Fourthly, if tenants are evicted, they will have to be rehoused. The private letting industry will face great challenges in the present climate with landlords, prospective tenants and agents being concerned about the risks of infection during the re-letting process, and local authorities and social housing providers’ resources are likely to be stretched during this period.

One avenue which the government could have gone down (and may still do) would be to take a business as normal approach, particularly to uncontested hearings whether following the s21 procedure or otherwise, to suspend the date of possession until the date on which the government stipulates the outbreak has passed or otherwise lifts the ban. While not a panacea, this would at least give landlords a degree of certainty that possession is to be given up and may help clear the inevitable sizeable backlog of cases when the ban is lifted (the additional proposal to extend an existing pre-action protocol to all new possession claims would appear to be an attempt to limit, or at least delay, the impact on the court system whilst the backlog is cleared).

The government’s apparent answer to the issues the suspension will cause for landlords – loss of rent, risk of damage to their property if a tenant is particularly difficult, and the plain fact of being deprived of their property – is to extend the proposed mortgage payment holiday. This does not help those landlords whose rental property is not mortgaged or who otherwise rely on the rental income stream to live or to fund their business.

Moreover, the question must arise as to what happens to the rent arrears when the ban is lifted? Landlords could find themselves still having to repay the mortgage lender for the holiday payment period, but also not having received any rental income for the whole of that period (and potentially, before then as well) with little prospect of being able to recover any such money judgment from the out-going tenant. This will be inequitable to the landlord in circumstances where the reason for non-payment of the rent is entirely unconnected to coronavirus.

This is an unprecedented situation which is going to impact on the residential housing sector in an unprecedented way. The effects of it are likely to outlast any short-term ban and may well hasten the proposed legislative changes which were already in progress.