The Coronavirus Act 2020 (CVA) came into force at the end of March 2020 and provides some protection from eviction for commercial and residential tenants in England and Wales by prohibiting or delaying landlords from starting possession proceedings or otherwise determining a tenancy.
Other measures have also been put in place to protect struggling tenants or companies generally, which are discussed elsewhere.
On 5 June 2020, the Housing Secretary, Robert Jenrick, announced that the moratorium (or ban) on evictions which started on 26 March 2020 and was due to come to an end on 25 June 2020 would be extended by a further two months until 23 August.
As a result landlords are unable to bring or continue possession proceedings until the end of August.
The government is also working with the judiciary to ensure that those tenants who are most vulnerable have appropriate protection from eviction, but more guidance on the measures to protect vulnerable tenants is awaited. During this period, it is important for landlords and tenants to negotiate suitable temporary arrangements that protect both parties’ interests should a tenant face difficulties paying rent.
This article very briefly explores the some of the measures employed by the CVA to protect struggling tenants, and partially to avoid tenants having to move home during the pandemic, in circumstances where a landlord might wish to re-possess a leasehold property.
These measures are additional to, and seek to complement, the general moratorium referred to above.
Residential Tenants
A residential Assured Shorthold Tenancy can only be brought to an end by serving what is known as a Section 8 notice or a Section 21 notice upon the tenant and thereafter issuing court proceedings for an Order for Possession. Changes have been made to length of such notices.
Section 8 Notices
Legislation provides certain limited grounds upon which a Section 8 notice can be served on a tenant.
These notices are usually used where terms of the tenancy agreement have been broken, such as non-payment of rent or breach of a requirement to keep the property in good repair.
If you are considering serving a Section 8 notice, whilst you would usually be able to start possession proceedings two weeks after service of the notice, this period has now been extended and court proceedings may now only be initiated three months after service.
Section 21 Notices
This notice differs from a Section 8 notice because there need be no reason for re-possession, the only requirements being that that certain documents were provided to the tenant at the start of and during the tenancy, and it must not be a ‘revenge eviction’, i.e. because a tenant complains about the disrepair of the property.
Section 21 notices can only be served after the first four months of the term and must expire after the end of the fixed term of the tenancy.
Possession proceedings cannot usually be started until two months after service upon the tenant of a Section 21 notice, but this has now also been extended to three months.
The three-month extension for either notice may also be extended by up to six months if this is deemed necessary in the circumstances.
If a Section 8 or Section 21 notice was served prior to 26 March 2020 this would still be capable of being relied upon but the moratorium that is in place will stay any proceedings issued for its duration.
An important point for landlords is to remember that other claims such as debt claims to recover the non-payment of rent are still possible.
Commercial Premises and Forfeiture
Under Section 82 of the CVA, protection is provided for business tenants by prohibiting landlords from taking any action to forfeit a lease for reason of non-payment of the rent, including by effecting peaceable re-entry, for the relevant period. The relevant period was to run from 26 March 2020 until 30 June 2020 but on 17 June 2020 the relevant period was extended to 30 September 2020.
For any proceedings for forfeiture already commenced prior to the CVA coming into force, those proceedings will have been stayed until after the moratorium expires.
A commercial landlord is able to forfeit a lease if the tenant has breached the terms of lease other than by failing to pay the rent. However, before it can do so a notice under Section 146 of the Law of Property Act must be served upon the tenant requiring the tenant to remedy the breach complained of within a reasonable time, if it is possible to do so.
Before serving a Section 146 notice during the lockdown, landlords need to consider whether the tenant can feasibly remedy the breach complained of during the pandemic, within the time allowed or at all. This article contains more information about measures that have been introduced to help tenants during the coronavirus outbreak:
If you are a landlord or tenant and require any assistance with the matters dealt with in this article please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.