Coronavirus: The impact on Landlords & Tenants
The coronavirus pandemic has had an untold impact on all our lives in many respects and appears likely to change the way that we live in future.
The extent to which it is going to impact upon our family lives and the economy is yet to be fully calculated.
This article looks at the provisions that the Government has put in place in relation to commercial leases and residential tenancies and the issues which are facing landlords and tenants at present.
Section 82 of the Coronavirus Act 2020 prevents landlords of business tenants (with the protection of the Landlord and Tenant Act 1954) from forfeiting a lease for non-payment of rent from the commencement of the Act until 30 June 2020.
Under the Act landlords are unable to take action to forfeit for non-payment of rent which includes service charges and insurance rent.
Further under section 82(2) no conduct by the landlord during that three month period shall be regarded as waiving the right to forfeit for non payment of rent except an express waiver in writing.
Further it should be noted that the period may be extended beyond 30 June 2020 and we shall have to await further update from the Government in that respect.
Although this eases the pressure on tenants, it is important to bear in mind that the landlord is still entitled to be paid the rent and therefore the tenant should not assume that they will not be required to pay the rent.
The coronavirus lockdown has therefore led to many landlords and tenants seeking to agree a suitable arrangement to alleviate the pressure on tenants during this period of time particularly where many of them are unable to presently trade.
Many of our client landlords have reached agreements with their tenants and typically tenants have been granted a payment holiday in relation to the present quarter from March to June upon the basis that the rent is deferred and shall be spread over an agreed period of time thereafter. Each landlord and tenant shall have to consider for themselves whether such an arrangement is workable and take into account whether the tenant is trading and the impact of the lockdown on their ability to trade in future.
There are further proposals by the Government to prevent Landlords serving a statutory demand or winding up a tenant company premised on non payment of rent albeit these are not yet law (with additional limitations on recovering unpaid rent via commercial rent arrears recovery (CRAR)).
In relation to residential tenancies, landlords are now required to serve a 3 month notice prior to commencing any possession proceedings. The 3 month notice period shall continue until 30 September 2020 and that also may be extended in future. Therefore if a landlord seeks to serve a Section 21 Notice or Section 8 Notice under the Housing Act 1988 they will initially have to serve a 3 month notice. This is a considerable difference compared to the 14 day notice which is normally prescribed to a Section 8 Notice for unpaid rent.
In addition all current possession proceedings are suspended for at least 90 days from 27 March 2020 and that also includes any warrant for possession in relation to possession orders which had already been obtained.
Once again tenants should be aware that there is no provision which means that they are not obliged to pay rent. We are aware that some residential property landlords and tenants are reaching agreements to defer rent payment or in certain cases to agree a reduction for the present period.
In the event that a residential landlord wishes to serve a notice they now must use the updated new prescribed forms in relation to Section 8 and Section 21.
There are also additional provisions which have come into effect for social landlords and they must now adhere to a Pre-Action Protocol prior to commencing any court proceedings.
Further a property owner can still pursue possession proceedings against trespassers.
In summary this is an unprecedented period of time which has placed a strain on landlords and tenants in terms of their respective obligations. We are on hand to assist with any advice required in relation to the implementation of the Coronavirus Act 2020 or in respect of the provisions of your lease or tenancy.
We would be pleased to assist with any advice required regarding negotiations between landlord and tenant as applicable. Should you have any questions, please do not hesitate to contact me on 01227 643270 or firstname.lastname@example.org