The Coronavirus Act 2020 – issues for residential landlords and tenants

The coronavirus pandemic – and its expected economic and social impact on residential tenants across the country – resulted in the swift enactment on 25 March of The Coronavirus Act 2020. The Act introduces an extensive package of measures designed to protect tenants, and to a lesser extent landlords, as they prepare to navigate the challenges of the coming weeks and months. The key provisions include:

• Protection for landlords against potential loss of rental income in the form of the extension of the 3 month mortgage holiday (already rolled out to home owners) to buy-to-let mortgages.

• An extension to the notice period (to 3 months) for all notices served by landlords seeking possession of a property.
• The enforcement of all possession orders is suspended for at least 90 days from 27 March; this includes mortgagee possession claims.
• No new possession proceedings are to be instigated by landlords during the 90 day period.

The measures in detail

The Act applies to the vast majority of private and social housing tenancies, the most common of which are assured shorthold tenancies (ASTs). It does not apply to licences to occupy or service occupancies, or to tenancies where the rent exceeds £100,000 per year.

Before the Act was introduced, a landlord could serve a "no fault" notice under section 21 of the Housing Act 1988 in order to bring an AST to an end. These notices required a tenant to vacate on 2 months' notice without any requirement for the tenant to have breached any of its obligations under the AST. The Act has now extended this notice period to 3 months for any notices that are served between 26 March and 30 September 2020 (referred to as "the relevant period").

The Act also changes the notice period under s8 of the Housing Act 1988 where a landlord wishes to obtain possession during the term of the tenancy due to a breach by the tenant, such as non-payment of rent. The Act extends the notice period to 3 months. Again, this applies to any notices that are served between 26 March and 30 September 2020.

From 27 March, courts will no longer issue possession proceedings for a period of 90 days from 27 March (and this period may be extended by the Secretary of State). All existing possession proceedings are suspended and bailiffs have ceased the enforcement of possession orders for the moment.

This essentially means that neither cases that are currently in the system, nor those about to go into it, can be progressed to a stage where the tenant is evicted. If there is an existing claim in the system, it will simply remain in the position it is now until the expiry of the 90 days (or any extended period).

It is worth noting that the Act does not invalidate notices that were served prior to the Act coming into force. The Act only affects notices that were served during the relevant period of 26 March - 30 September. However, in practice, if a tenant fails to vacate the premises on the due date, there will be a delay in obtaining a possession order required to evict the tenant due to the 90 day suspension of proceedings.

Points for landlords

• Those landlords with an existing possession order awaiting enforcement need to be aware that enforcement will not take place until 26 June at the earliest.
• Landlords retain their existing statutory and contractual responsibilities for repair and health and safety compliance. Government guidance recommends that both landlords and tenants take a pragmatic and common sense approach to any non-urgent repairs. Urgent health and safety issues that affect a tenant's ability to live safely should be addressed. Examples provided include boiler repairs, roof repairs or repairs to essential white goods.
  
  It is acknowledged that the current restrictions may prevent compliance with routine obligatory regulations and testing. Landlords should make every effort to comply with existing gas safety regulations and electrical safety regulations, although local authorities have been encouraged to take a pragmatic approach to enforcement in these times. Landlords are advised to keep a log of their attempts to comply with their obligations if, for example, a tenant refuses access to a property due to safety concerns or a contractor cannot be engaged to do the required work.
• Landlords may want to check the terms of any rental guarantee arrangement or loss of rent insurance policy they may have in place to ensure it covers the current unprecedented circumstances.
• Early and regular dialogue with tenants is recommended to establish in good time potential issues regarding the tenant's financial situation, welfare and likely barriers to accessing the property.
• Government guidance recommends that there should be no viewings for potential new tenants or buyers during the current period of restrictions. No one should visit the property unless it is for serious or urgent issues.

Points for tenants

• Tenants should communicate at an early stage with their landlords if they are unable to pay their rent due to the impact of coronavirus. Landlords may be willing to consider a payment plan or temporary rent reduction. The provisions of the Act delay the landlord's ability to recover possession of a property but any rent arrears will continue to accrue in the meantime and will still be payable.
• It is important that tenants notify their landlords at an early stage when essential repairs are required to the fabric of the property, the electrical or heating systems or essential white goods.

The key message from the government is that landlords and tenants should, wherever possible, keep the lines of communication open at this time. There seems every possibility that the extension period on possessions may be extended further, beyond the current 90 days. The government also retains the power to extend the notice period for possessions from 3 months to 6 months. We can probably expect some further measures as the situation develops in the coming weeks.