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Further important developments for commercial and residential possession actions

Further  to my previous briefing Tenant protections extended and expanded, this month has seen further changes to the possession claims regime in England and Wales for both commercial and residential properties, some of which come into force today, 21 September 2020.

Restrictions regarding commercial leases extended

On 16 September 2020, the government announced that it was extending the current restriction which prevents landlords of commercial premises from evicting their tenants for non-payment of rent until the end of the year.  For the rest of 2020, under the Coronavirus Act 2020, landlords are unable to take steps to forfeit a business tenancy by peaceable re-entry on grounds of non-payment of rent or other sums due under the lease before expiry of the relevant period or, where forfeiture proceedings have been issued at Court, to obtain a date for possession of commercial premises before expiry of the relevant period.  The “relevant period” is now the end of December this year.

At the same time, the restriction on Commercial Rent Arrears Recovery was also extended until the end of the year.

As to any counter measures to assist landlords directly, the government appears to be hoping that parties adhere to the voluntary code of conduct.  The government has repeatedly emphasised that landlords and tenants should be working together to agree rent payment options if businesses are genuinely struggling.

Support for those living in rented accommodation

On 10 September 2020, Housing Secretary Robert Jenrick confirmed further measures aimed at helping those renting residential property.

The measures include increasing the notice period to six months, to give residential tenants more time to find new properties or financial support.

The new measures were contained in the Coronavirus Act 2020 (Residential Tenancies: Protection from Eviction) (Amendment) (England) Regulations 2020, enacted under the Coronavirus Act 2020.  The regulations came into force on 29 August 2020.

Before the Coronavirus Act 2020, the notice period required under section 21 of the Housing Act 1988 was two months.  Paragraph 7 of Schedule 29 to the Coronavirus Act 2020 extended to three months for notices served after 25 March 2020.

Under section 4, the new notice periods imposed by the regulations do not apply to notices given or served before 29 August 2020.  Any notice served between 25 March 2020 and 28 August 2020 is still subject to the notice periods in place at the date of service (typically, three months).

Pursuant to section 3(7)(a) of the regulations, the notice period for section 21 notices given on or after 29 August 2020 is now six months.  In addition, under section 3(7)(b), the four-month window in which landlords can bring possession proceedings following the notice period has bee restored.  Proceedings may be issued up to 10 months from the date of service of the notice, rather than the previous six month period.

Changes also apply to notices under section 8 of the 1988 Act.  The notice periods vary depending on the grounds specified.

Notice periods in the most serious situations have been reduced.  If the notice is served on the grounds of six months’ rent arrears, the notice period depends on the time over which arrears have accrued.  Where the tenant is in arrears of six months’ rent or more, the notice period is four weeks.  Where the tenant is in arrears of less than six months’ rent, the notice period is six months.  As we are now approaching six months since lockdowns were imposed, landlords who have not been paid rent during that period will shortly be able to give notice with the shorter period.

Prior to the regulations, the Coronavirus Act 2020 had imposed a three month notice period for notices relying on anti-social grounds. This has now been suspended and these notice periods revert those which applied before the lockdowns (no more than a month).

Reliance on the death of a former tenant or the tenant’s breach of immigration rules results in a notice period of three months.  In cases of domestic violence, a conviction for rioting or the tenancy being granted in reliance on a false statement, the period is two weeks.  In all other cases, the notice period is six months.

Additionally, if an area is subject to a local lockdown, evictions will not be enforced by bailiffs.  This is in addition to a “winter truce” on the enforcement of evictions.  No evictions are permitted in England or Wales before or over Christmas except in the most serious cases involving anti-social behaviour or domestic abuse.  Guidance will be issued to bailiffs that they should not enforce possession orders during the “winter truce”.

Some limited good news for landlords

The good news for landlords is that from 21 September 2020, Courts will start to hear possession hearings again, albeit that they are subject to new Court processes and procedures.  Evictions can start from 6 October 2020.

The Working Group on Possession Proceedings has considered how the backlog of cases should be dealt with and has published its conclusions in “Overall Arrangements for Possession Proceedings in England and Wales”.

The arrangements summarise the procedures applicable from 21 September 2020.  We are told to expect:

  1. Further amendments to the Civil Procedure Rule and Practice Directions
  2. A scheme of prioritisation for listing
  3. Further guidance for possession claims from the Court Service, the Ministry of Housing and the Financial Conduct Authority
  4. A pilot for a new independent mediation scheme for possession claims.

The prioritisation of cases

The arrangements set out criteria for prioritising cases, specifically (not in order of priority):

  1. Anti-social behaviour
  2. Domestic violence where possession of the property is important
  3. Fraud or deception
  4. Extreme rent arrears, that is, arrears equal to at least 12 months’ rent or 9 months’ rent where that amounts to more than 25% of a private landlord’s total annual income from any source
  5. Squatters, illegal occupiers or persons unknown
  6. Unlawful subletting
  7. Abandonment of the property, non-occupation or the death of the occupier
  8. Cases involving what has been allocated by an authority as ‘temporary accommodation’.

Such cases will be given equal priority for listing.  There is no distinction between residential and commercial cases.  Subject to the criteria, priority will otherwise be given to listing claims issued before the stay started in March 2020.

Cases from before 3 August 2020 will have to be “re-activated”

As set out in Practice Direction 55C, claims brought before 3 August 2020 will not be listed, relisted or referred to a judge until a party files and serves a “reactivation notice” confirming that they wish the case to proceed.  These notices can be served at any time until 29 January 2021.

The notice requires a rent schedule for the last two years to be enclosed (for claims based on rent arrears), and any existing case management directions, with an indication whether an existing hearing date can be met and what other directions are needed.  It also requires the notifying party to indicate whether the case falls within one of the priorities referenced above.

New review at least four weeks before a substantive hearing

The Court will no longer list a hearing date upon issue of the claim form.

Instead, unless a trail has already been listed, in all cases (other than in some accelerated possession claims) stayed or new there will be a review date and a second substantive hearing date at least 4 weeks after the review date.

The review date is not a hearing but will require similar preparation and potential availability.  The claimant will be required to produce an electronic bundle for the Court and a paper document bundle for the defendant 14 days before the review date.  The Court will consider the papers and either list the case for a substantive hearing date, dismiss it or make other directions.

The first review dates will be by 19 October 2020.

If the case proceeds to a substantive hearing, this will be listed for 15 minutes.  The substantive hearing date will, therefore, function in the same way as the first hearing date which was typically listed in possession claims and not trial.

The first substantive hearing dates will be from 16 November 2020.

Landlords need to provide information on how tenants have been affected by COVID-19

The new notice includes provision for the party serving it to provide details of their knowledge as to the effect of the COVID-19 pandemic on the defendant and their dependants.

This is to facilitate “COVID-19 case marking”, a new procedure, the objects of which include to:

  1. Highlight settlement suitability
  2. Bring any particular difficulty as a result of the pandemic to the Court’s attention
  3. Assist with listing and monitoring.

Parties can request that a case be “COVID-19 case marked” at any time and in any form, but must include details, such as the relevant difficulties arising from the pandemic and details of any access the parties may have had to the government’s support schemes.

The government has said that they will be keeping these measures under constant review.


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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