10 April 2020
Coronavirus: Effect on the Landlord and Tenant Relationship
In an attempt to cushion businesses and individuals from the economic effect of the “Stay at Home” rules imposed by the Government during the Coronavirus crisis the Chancellor, Rishi Sunak announced a number of measures which impact the legal relationship between Landlord and Tenant some of which were enacted within the Coronavirus Act 2020 (“the Act”).
There have been a number of modifications and additions to these measures over the last 10-14 days and no-one can rule out further changes but as things stand at the time of writing, the Act together with edicts in the form of Practice Directions from the Master of the Rolls and the Lord Chancellor have resulted in the following – which is stated here by way of summary only:
- Assured Shorthold Tenancies, Assured Tenancies and Rent Act Protected Tenancies all now require 3 months notice to end the tenancy whether on grounds of breach of the lease or any other ground including s21 notices.
- The Act gives the government the power to extend this notice period from 3 months to 6 months.
- Any notice served before the Act came into force on 25 March 2020 is not affected so will be valid despite not giving three months notice (provided it is otherwise valid).
- These provisions are in force until 30 September 2020.
- There is no mention of any changes for tenancies which do not fall under the various statutory provisions such as contractual tenancies with rents greater than £100,000pa or which have the named tenant as a company. Neither is there any additional protection for lodgers or those with resident landlords.
- All possession claims in all civil courts are suspended for 90 days from 27 March 2020 following the 117th Update to the Civil Court Practice Directions (PD51Z). This means that new Claims may be issued but will be immediately stayed and existing claims will be frozen until 25 June 2020.
- This covers not only possession claims themselves but also enforcement procedures, so if a possession order has been granted but not enforced then the request for the warrant will be stayed until after 25 June 2020.
- Rent remains payable and there are no provisions as yet giving specific protection to residential tenants regarding non-payment of rent but there are discussions ongoing to introduce a pre-action protocol firmly encouraging landlords and tenants to agree a repayment schedule for rent arrears before issuing a possession claim.
- The Act provides that a landlord cannot forfeit a lease for non-payment of rent. Rent in this context includes any payments that are due to be paid by the tenant to the landlord under the lease, for example insurance contributions, or service charges
- The Courts cannot make any possession order in proceedings relating to a business tenancy which would be effective before 30 June 2020. This has been superseded somewhat by the suspension of possession claims under PD51Z referred to above, which applies to all tenancies whether commercial or residential (and in fact also applies to mortgage repossession claims and, rather surprisingly, squatters).
- A business tenancy in this context is one to which Part II of the Landlord and Tenant Act 1954 applies. This includes contracted out tenancies but doesn’t cover Tenancies of less than 1 year term, Licences or Tenancies at Will.
- The Act does not prevent forfeiture for other breaches of the lease but this is perhaps made virtually otiose by PD51Z. There is nothing stopping the service of a s146 notice in relation to other breaches.
- Enforcement of rent arrears by other means is similarly unhindered by the Act or by PD51Z. A landlord may enforce by way of the Commercial Rent Arrears Recovery process ("CRAR"), a money claim or the issue of a statutory demand against the tenant or indeed any guarantor. The landlord is also not prevented from utilising any deposit (subject to the agreed provisions of the deposit) and then seeking a top up from the tenant.
- UPDATE: THE GOVERNMENT HAVE ANNOUNCED FURTHER PROTECTIONS FOR TENANTS WHICH SUPERSEDES THIS NOTE. READ MORE HERE
The Government has produced a fairly comprehensive Q&A for residential tenancies which is available online here:
Each situation and each lease is different and advice should be sought from an appropriately qualified advisor on the particular terms of your lease.