Landlords and Corona – Covid-19 virus Free Advice.
The Virus situation has thrown most of life into turmoil and various measures have been put in place by the government. Some are more helpful to sections of society than others. ( i.e. Tenants rather than Landlords )
The focus for this article is on how Landlords are faring under the measures that government have introduced. ( see below )
I’m going to set out in summary and comment on those measures and I realise that what landlords ( myself included ) need is some hope or positivity and I will get to that eventually. However it would be dishonest and patronising if I didn’t level with you and share what I believe Landlords are facing.
To use the words of the Prime Minister recently when he spoke of the virus, which is certainly apt for Landlords, is that ‘ its going to get worse before it gets better. ‘ and some Landlords, justifiably are asking themselves if its ever going to get better. I’ll come on to that.
I’ll also be outlining what Possession Friend are going to be doing FREE of charge for Landlords during the Corona period.
What the Government ( in England & Wales ) have done. ( 1. ) & ( 2. ) see full references at end.
[ But more seriously and not widely reported ( 3. ) Assured Tenancies, see later. ]
Stopped all On-going Possession cases, and
Created a 3 month Notice period for any cases [ either Section 21, or Section 8 ] from 27th March, 2020. The government have reserved the right to continue this until 30th of September, should the virus conditions dictate necessity.
MHCLG said, “At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants individual circumstances.” ( in other words, ‘play nicely’ )
What Should the Government have done ?
Allowed existing cases to continue, as they have nothing whatsoever to do with the Corona virus. If a tenant who has earned the courts decision that eviction is lawfully justified, ( not easy ) the ‘natural course of justice, which everyone is subject to, should continue. Evicted tenants would either have to find their own alternative rented property, or become the responsibility of the Local Authority if qualifying in priority need.
New cases should be allowed where the judge is satisfied that more than 2 months worth of rent lawfully due, is outstanding Without the impact of the Corona virus.
In terms of issuing new Section 21 notices, these take an average of 7 to 8 months from service of notice, so would not take effect during the virus strategy period.
Why didn’t the government do this ?
In my view, because they needed all available resources from L.A’s to fulfil another part of their strategy of finding accommodation for every rough sleeper.
Having totally suspended and removed all civil justice for Landlords, several implications have resulted and its yet again shown a total lack of understanding of the Private rented sector.
What has the government done ?
Well, to be fair, they have put a number of measures in place to safeguard tenants but very little for landlords.
A } Employed renters will receive 80% of wages, up to £2.5 k / month
B } Self-employed will receive income support. ( Landlords are not classed as self-employed ! )
C } Universal Credit increased by £1 k / year.
D } Housing allowance ‘increased’ to cover the lower 30% of market rent. [ It was at 30% when in 2015, the Government imposed an increase freeze, whereupon it started to decline. Shelter calculated 2019 that 95% of Housing benefit did not meet market rate. ]
For Landlords, the only measure was to seek a 3 month mortgage deferral, incur interest charges, [ interest on o/s rent being rigidly controlled by the Tenant Fee Act 2019 ] and credit rating damage for subsequent re-mortgaging.
Some lenders have agreed to offer a deferment period of up to 3 months for buy-to-let mortgages. This very unhelpfully, has been publicised by the government as a mortgage ‘holiday’
Such careless terminology has led many tenants to believing that landlords have been given 3 months relief from paying their mortgage and are campaigning ( even the labour party has joined them ) in demanding 3 months rent-free. Students in Bristol have been making demands for free rent or abandoning Tenancy agreements, besieging a letting Agent ( see – https://thebristolcable.org/2020/04/bristol-coronavirus-students-letting-agents-rent-strike/ )
London Renters Union are hosting a petition of 103,000 signatures to government demanding a rent amnesty during Corona.
Not all lenders are offering the mortgage deferment, and where it is available, the interest accrues and there are credit implications for re-mortgaging. Barclays, for example refuse. A survey of Landlords on Landlord Today reveal 76% of Landlords expect to be seeking a mortgage deferral.
Housing secretary Robert Jennick said, [ in MHCLG Press release 18/3/20 ( 4. ) ] … ‘no renter who has lost income due to corona virus will be forced out of their home, nor will any landlord face unmanageable debts.’ Absolutely nothing has been done by the government to financially mitigate Landlords expenses. ( other than the limited support mentioned above that some tenants may access to possibly part fund their rent. The withdrawal of Justice however has made it impossible for Landlords to pursue the deliberate but capable, non-payers. )
The government suspension of housing justice however goes far further. It prevents anyone previously lawfully liable to eviction, totally unrelated to the virus, and a number of possession applications during the virus period that are NOT related to financial circumstances, to be postponed. Its estimated there are 20,000 such cases pending that have been postponed for at least three months.
Possession applications include grounds such as Domestic violence, Damage to the rented property, Anti-social behaviour which blights neighbouring residents. Such tenants do not deserve any postponement and neither does it warrant further suffering by the victims. Had the Labour party been in government, there wouldn’t have been much surprise, but two shocks were that ;
The Labour party had prepared a draft piece of legislation written mainly by Justin Bates and Giles Peaker ( of Fitness for Human Habitation Act fame ) that actually proposed what I set out above in ‘What the government should have done’ viz ; that the court decide if rent due between the period 1/3/20 – 1/9/20 is Coronavirus -related may not be treated as lawfully due for the purposes od Sections 8, 10 & 11. [ although still a financial debt. ]
The second shock that it was actually a Conservative government that went as far as totally suspending justice !
Government publication 18th March, 2020 announcing at that time, suspension of new evictions and no new possession proceedings ( under Any grounds ) was commented by the Chief Executive of the National Residential landlord Association, Ben Beadle who said, “ Landlord groups welcomes government support. ! We recognise the exceptional circumstances and we will work collaboratively with government to ensure these measures protect both landlords and tenants. “ !
We would like to hear from any landlords who ‘welcome government support’ but don’t all email at the same time in case you crash our web site.
The MHCLG Coronavirus (Covid-19) Guidance for Landlords and Tenants, 28/3/20 ( 1. )
In summary, its about what tenants can do, what landlords can’t, together with a reminder of our responsibilities. There are a number of FAQ’s and answers.
Who are Landlords ?
45% of Landlords are single property owners, many blue-collar workers. Shop assistants, health workers, public sector employees etc who have inherited a family property and are maintaining it as a pension supplement. ( ask the government why they do this ! )
What are the early effects ?
Comments I read on property forums from Landlords is they’re angry that the rhetoric ‘Landlords ‘and’ Tenants’ has been used again when really its all about Tenants. The typical phrase many have written is ‘landlords thrown under the bus, again’
On the positive side, there are reports of a number of tenants making effort and paying their rent or volunteering short and manageable arrangements. The English Housing survey shows that 87% of tenants are satisfied and no doubt a similar number of landlords.
The problem in the PRS is lack of effective means of dealing with the small number of can’t pay, won’t pay, particularly serial rent defaulters who flit between rented properties defaulting on £ 000’s of Landlords money. This is why an effective civil justice system is needed, not that I’m saying the justice system before its recent suspension was effective, as landlords know.
One story we’ve heard is that ‘ tenants in some cases of genuine hardship are working with landlords to make payment plans and manage arrears, as they don’t want to build up a load of debt while this situation continues. ‘
Another tenant, referring to the landlords’ ‘mortgage holiday’ stating that as the landlords was getting 3 months off, so should they. One tenant admitting that he and his girlfriend were both on the 80% top up but only to the limit of £2.5 k / month ! extorting ‘we earn much more than that’ They informed they would not be paying their £700 rent, as they needed the money for other things !
Its these circumstances that governments ‘ play nicely’ strategy is useless and legal measures are needed. The virus hasn’t made anything Free.
The Times newspaper 3rd April 2020, section ‘ Can landlords evict tenants during corona virus.’
Tales of woe from many landlords who have been significantly impacted by the withdrawal of justice and left stranded by the governments ‘help for landlords and tenants.’
See Property forum – Property118 for many other stories. E.g.
https://www.property118.com/government-have-created-chaos-in-the-prs/#comments
Government figures state there were approximately 20,000 possession cases already in the court system before the corona virus.
How many notices, albeit with a delayed 3 month notice period will accrue by the end of court suspension ? From the end of suspension new cases will continue to be submitted.
Currently a 5 or 7 month waiting time for a possession order will likely be doubled, and take a considerable time to work through the backlog.
The increased court work load is unmanageable ( can barely be managed at present )
A lot of evicted tenants are going to be seeking accommodation that just won’t be available.
Local Authorities current emergency accommodation figure, on an exponential rise, will explode, as will their budgets. Will this financially encourage more to use licensing schemes and will the impossible position they’re in, persuade government to rubber stamp their approval. Would it be the tipping point for a National Licensing scheme ( well, its another tax-raising scam to hit the fall-guys – landlords with ? ) God knows the governments going to need the finances after the cost of this pandemic.
This is where it might get better for landlords. Property will be in more demand and landlords will have more choice of ‘wheat from chaff’. The chaff will have to be picked up by the already creaking Local Authority, might well see some more up front payments to take on certain tenants. With the extra choice of tenants ( more of them ) Guarantors, whether it be Local Authority or anyone else, will be a demand from landlords, especially if Section 21 disappears. To be honest, I don’t ever see it going back to 2 months notice.
The best landlords could hope for, and the above scenario might help ’swing-it’, is retaining the 3 month Notice for Section 21, or possibly 6 months such as the Welsh government are introducing.
However, the less widely reported step MHCLG have take is in a document published on 26th March, 2020. ‘ Government support available for landlords [sic] and renters reflecting the current coronavirus ( COVID-19 ) outbreak ‘ ( 2. )
This two page document goes much further than merely delaying a Section 8 rent arrears claim for 3 months. MHCLG say… ‘We are working with the Master of the Rolls to strengthen the pre-action protocol requirement and also extend this to the private rented sector.’ This will help [ Read -Force ] Landlords and Tenants to agree reasonable repayment plans.
The Pre-Action Protocol for Possession claims by Social Landlords ( 3. ) [ who operate Assured tenancies ] is very onerous on the processes for possession for outstanding rent, far moreso that a Section 8 claim for Assured Shorthold tenancies.
Just a quick summary:
- After service of statutory notices ( Section 8, Form 3 ) but before the issue of proceedings, landlords should send the tenant a copy of this protocol ( 4 pages. Note the word ‘should’ is frequently used, but where a court finds the landlord hasn’t complied, there are possible outcomes, one of which is case can be dismissed. So safer to ‘read Should, as Must’)
- If the tenant agrees to pay a ‘reasonable’ amount towards arrears, landlord should agree to postpone issuing court proceedings. For so long as tenant keeps to the agreement.
- Parties may be required to provide evidence that alternative means of resolving the dispute were considered. Courts take the view that litigation should be a last resort.
- Not later than 10 days before any court proceedings, landlord should
- ) Provide the tenant with up to date rent statements.
- ) Disclose what knowledge it possesses about tenants Housing benefit or U.C.
- Landlord inform tenant of date and time of court hearing and provide an up to date rent statement and terms of the order being applied for. Should also advise tenant to attend the court hearing as their home is at risk. Records of such advice should be kept.
- If the Landlord unreasonably fails to comply with terms of the protocol, the court may ;
- ) Make order for costs.
- ) An order adjourning the claim, or
- ) Order a striking out or dismissing the claim ( other than a claim based on a mandatory ground.
- If the landlord proves its case the court must, in principle { this isn’t inspiring me, I don’t know about you ? } grant possession.
To summarise, Section 21 is suspended for 3 months, requiring 3 months notice, and Section 8 is going to be ( when the Master of the Rolls approves ) the same as a Social housing ( Assured Tenancy ) As mentioned earlier, the government have previously given an undertaking to abolish Section 21 and I can foresee this happening sooner rather than later given the alignment with Social tenancies. ( Pre Action Protocol – I don’t see that ending after Corona either ;-(
For Section 8 rent Arrears – Notice from 27/3/20/- is at least 3 months since issue not 14 days ( and this might continue until 30/9/20 )
At that stage, ( Pre Action Protocol ) all private rented sector tenancies will effectively become Assured tenancies.
So, I promised some uplift to the doom and gloom. ( well, some )
MHCLG have published ;
Coronavirus (COVID-19) Guidance for Landlords and Tenants. ( 1. )
A number of FAQs, quite useful.
COVID-19 (Coronavirus ) and the enforcement of standards in rented properties. Non-statutory guidance for local authorities on enforcing standards in rented properties during the COVID-19 outbreak. ( 5. ) This suggests authorities take a ‘pragmatic’ approach and inspections for Category 1 hazards should continue, alternative inspections methods suggested ( tenants providing photographs etc. )
New Electrical Safety Standards in the Private Rented Sector will continue ! to apply to all new tenancies from 1/7/2020 and for existing tenancies from 1/4/2021 &
Gas safety inspections. … ‘ if a landlord can show they’ve taken reasonable steps to comply, they will not be in breach of their duty. ‘ evidence of such steps is required.
Licensing, authorities should ‘consider’ pausing these at an appropriate point. Continue with existing schemes, taking landlords circumstances into account.
Coronavirus Act 2020 and renting Annex A – technical guidance for landlords on the provisions of the Coronavirus Act 2020. ( 6. )
Contains the detail of 3 month suspension and notice periods for Section 21 and Section 8.
If landlords are:
Experiencing rent problems with tenants,
Tenants wilfully withholding rent, or
Landlords require possession of their property for any reason.
Options for the foreseeable future are limited, ( But, not non-existent )
Depending on the particular individual circumstances, there are some [legal] strategies that we can use to help landlords get out from ‘underneath the bus.’
What Possession Friend are doing during this stressful time for landlords ( and during this time only ) is offering Free advice on a case by case basis.
We will advise you and can assist where possible.
To get Free advice, email ‘ YourCase@PossessionFriend.uk ‘
subject heading “ Your surname – Corona “ and leaving your telephone contact number with a best time to contact during next 24 – 48 hours. And short summary of your situation.
( Call back will be from a withheld number )
We post regularly on Facebook – https://www.facebook.com/possessionfriend
To forward your views – opinions, please email ‘ YourCase@PossessionFriend.uk with subject heading “ Corona – your surname “ [ views / opinions subject Corona first, then your surname ]
( 1. ) The MHCLG Coronavirus (Covid-19) Guidance for Landlords and Tenants, 28/3/20
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876500/Consolidated_Landlord_and_Tenant_Guidance_COVID_and_the_PRS_v4.2.pdf
( 2. ) Government support available for landlords [sic] and renters reflecting the current coronavirus ( COVID-19 ) outbreak
https://www.gov.uk/guidance/government-support-available-for-landlords-and-renters-reflecting-the-current-coronavirus-covid-19-outbreak
( 3. ) Pre-Action Protocol for Possession claims by Social Landlords
https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-possession-claims-by-social-landlords
( 4. ) MHCLG Press Release, 18/3/20 Complete ban on evictions and additional protection for renters.
https://www.gov.uk/government/news/complete-ban-on-evictions-and-additional-protection-for-renters
( 5. ) COVID-19 (Coronavirus ) and the enforcement of standards in rented properties
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876501/Local_authority_rented_property_COVID_enforcement_guidance_v2.2.pdf
( 6. ) Coronavirus Act 2020 and renting Annex A – technical guidance for landlords on the provisions of the Coronavirus Act 2020
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/877744/Technical_Guidance_COVID_19_PRS_v4.pdf
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