The government announced on the 18 March 2020 a radical package
of measures to protect renters and landlords affected by coronavirus. The aim
is to ensure that no renter in either social or private residential
accommodation will be forced out of their home during this difficult time.
Emergency legislation is being taken forward as an urgent
priority, so that landlords will not be able to start proceedings to evict
tenants for at least a three-month period. The aim of these measures is to
ensure that no renters in private or social accommodation needs to be concerned
about the threat of eviction. The scope of the provisions is not yet clear.
This may only cover those in financial difficulties and rent arrears, leaving
options open to still deal with problem tenants. We will know more as the draft
legislation is published.
The government has also recognised the additional pressures the
virus may put on landlords and have confirmed that the three month mortgage
payment holiday announced earlier this week will be extended to landlords whose
tenants are experiencing financial difficulties due to coronavirus. Again, it
is not yet clear what the mechanism will be for claiming this relief.
This aim is to alleviate the pressure on landlords, who will be
concerned about meeting mortgage payments themselves. So it is expected that no
unnecessary pressure should be put on tenants as a result.
At the end of this period, it is expected that landlords and tenants will work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances. These arrangements will need to be properly documented to ensure adherence and no knock-on impact longer-term on the rights under the Lease.
The ‘pre-action protocol’ on possession proceedings is now being
extended to include private renters and to strengthen its remit. This will
support the necessary engagement between landlords and tenants to resolve
disputes. Critically, it will put an onus on Landlords to reach out to tenants
to understand the financial position they are in.
The government are also expected to issue guidance which asks
landlords to show compassion and to allow tenants who are affected by this
crisis to remain in their homes wherever possible.
New measures are being issued daily and these remain uncertain
times. While we wait for clarification of the new measures, Landlords are
encourages to reach out to their tenants and open a dialogue to work together
through the crisis. It is better to have a proactive and planned approach that
safeguards the interest of both parties, rather than allowing tenants to drift
into arrears and panic.
If you make any temporary arrangements with tenants, these should be recorded in writing and include the following considerations:
- Any arrangement should be specified to be ‘agreed without
prejudice to the terms of the lease’
- You need to have what is to be paid and when clearly recorded to
avoid future disagreement. There is an expectation for Landlords to be flexible
and fair in what is agreed.
- If there is to be a payment holiday to coincide with a 3 month
mortgage holiday for the landlord, then either a repayment plan or provision
for one to be put in place upon review at the end of 3 months should be
recorded. The expectation is that the rent should still be repaid by the tenant
over time.
- If there is a reduced rent or alteration to the timing of
payments, then a time period for which the arrangement will be put in place
should be recorded. For example, it may be in place for 3 months and then
subject to review.
If you need assistance putting arrangements in place with
tenants please contact our Claire-Elaine Arthurs at claire-elaine.arthurs@gunnercooke.com.