Possession of residential property – an update
The Coronavirus Act 2020 received Royal Assent on 25 March 2020 and came into force on 26 March 2020. This legislation is wide ranging and this article focuses on how it affects private, residential landlords.
The usual process for possession of residential property from tenants begins with the landlord serving a “notice to quit” on the tenant, either under section 8 or section 21 Housing Act 1988. Ordinarily, service of such a notice marks the beginning of a notice period that can range from two weeks to two months, depending on the grounds upon which the landlord relies for recovering possession, after which the tenant must vacate the property or the landlord may apply to Court for a Possession Order. Applications for possession must be made within 6 months of a section 21 notice or 12 months of a section 8 notice, or the landlord must restart the process.
For more information about the normal procedure for recovering possession please see our guide to obtaining possession.
Notices to Quit
The new legislation does not prevent landlords from serving notices to quit on tenants. However, all the statutory notice periods for notices to quit that are served from 26 March 2020 until at least 30 September 2020 (there is scope to lengthen this period if necessary) have been extended to three months. This extended notice period applies irrespective of the grounds upon which the landlord seeks possession.
However, the notice periods given by any notices to quit that were served before 26 March 2020 remain unaffected.
The prescribed forms for notices to quit have been updated on the gov.uk website (Form 6A for a section 8 notice or Form 3 for a section 21 notice) and the new versions must be used until at least 30 September 2020.
These changes apply regardless of whether the notice to quit is to be served for reasons related to coronavirus.
The Act does not prohibit landlords from starting possession proceedings. However, the Master of the Rolls has agreed with the Lord Chancellor that all new and ongoing housing possession proceedings will be suspended from 27 March 2020 for an initial period of 90 days. The suspension period may be extended if necessary.
In practice, this means that landlords can still apply for Possession Orders after the expiry of the relevant notice period, but those applications will not be allowed to reach a stage in which the tenant can be evicted until at least 25 June 2020. Housing possession proceedings that started before the Act came into force and those relating to housing occupied under a licence will also be suspended. It is not clear how this will affect the enforcement of Possession Orders that have already been granted, but there may be practical difficulties for bailiffs to maintain social distancing while carrying out such enforcement.
Time Limits for Issuing Applications for Possession Orders
The Act does not affect the existing time limits for starting possession proceedings after serving a notice to quit. If that time limit is due to expire while the Act is in force, landlords are likely to be faced with the following choice:
- Issue proceedings that will be immediately suspended;
- Give the tenant a new notice period of three months by serving a new notice to quit; or
- Wait until the Act is no longer in force then give the tenant a new notice period of between two weeks and two months, depending on the grounds upon which the landlord seeks possession.
Which of the above options is best will depend on a number of variables, including when the landlord must make the decision and whether the suspension of possession proceedings, and the time in which the Coronavirus Act remains in force, are likely to be extended.
If the tenant remains in occupation after the relevant notice has been served, even if the notice period has expired, rent will continue to accrue and become due pursuant to the terms of the lease (or pursuant to a statutory periodic tenancy if the tenant does not vacate the property after the lease term ends). After the property has been returned to the landlord, or after the Coronavirus Act ceases to be in force, landlords and tenants will be expected to co-operate to establish an affordable repayment plan in relation to any overdue rent.
In order to alleviate the impact non-payment of rent is likely to have on landlords, the government and the FCA have suggested that lenders offer a three-month “mortgage payment holiday” to buy-to-let mortgages. This has not been written into law, but many lenders have committed to honouring the suggestion and landlords should discuss any financial difficulties they face with their lenders.
Residential landlords seeking possession of their property can take action but should be prepared for lengthy delays.
The process of obtaining possession may be started, but a notice period of three months must be given before the tenant is required to leave. Where notice to quit has already been served and the notice period has expired, possession proceedings may be issued in Court, but no Possession Order will be given until at least 25 June 2020. Those time periods are liable to be extended.
However, rent will continue to accrue and fall due while the tenant occupies the property, and financial assistance should be available to landlords from their lenders.