Coronavirus Act 2020: good news for private sector tenants but perhaps less so for landlords
When and to what does the Act apply?
It only applies to notices served on or after this date and so those served before 26 March 2020 remain valid. However, not only is commencing possession claims not advised in the Government’s guidance (and perhaps unlikely there would be the requisite personnel working on these matters anyhow) but for new and existing claims, there is now a stay on possession proceedings and enforcement of possession orders until the end of August.
New notice period
The notice period given by landlords must now be a minimum of three months in either case (and regardless of ground in Section 8 notices) to ensure renters cannot be evicted from their homes during the current circumstances. This means the shorter notice period in a Section 8 notice in the event of rent arrears cannot be relied upon. New prescribed forms must be used until 30th September 2020; Form 6a for Section 21 notices and form 3 for Section 8 notices.
Prior to the Act – quick re-cap
Prior to the changes in legislation, when serving a Section 21 notice, a landlord was required to give a tenant a minimum of two months' notice to leave and, for Section 8 notices, between two weeks' and two months' notice depending on the ground relied upon.
End dates and further changes
The end date of the legislation has been extended by two months until the end of August (and could be extended again) and the notice period can be increased up to 6 months, should the Secretary of State and Welsh Ministers wish to do so. Landlords may also expect to see an updated 'Right to Rent' booklet shortly and should look out for this to ensure the up-to-date version is given to tenants.
Landlords should also ensure that they keep up with any changes when (and if!) the forms and (or booklet) revert back to previous forms from 1 November 2020 in the event that the end date is not extended and notice periods do revert back to former ones prior to the Act.
Is rent still payable?
Tenants should not labour under the misapprehension that rent payments are suspended; this is not the case, rent is due and payable.
The effect on landlords?
Landlords not receiving rent (due to the difficult circumstances that tenants may find themselves in) are in an undesirable situation where they cannot gain possession of their property for a number of months on top of grappling with cash flow issues.
As ever, a dialogue between landlords and tenants is encouraged to address issues early on and even agree a payment plan with a tenant to keep some rental income flowing in.
In the event of rent suspension event, landlords who have financed the property may wish to consider mortgage payment holidays if offered by their lender and check their insurance policies to ascertain if a claim for lost rent may be submitted. The former may buy some time in the short-term but (as with agreeing a payment plan with a tenant) must be carefully assessed with a measured and prudent scrutiny of finances, otherwise this may only serve to delay the pain for a few months and bank up future increased cash-flow issues.
[this article was updated on 24 June 2020 to reflect an extension of the legislation]