Sara Malik, solicitor with Hay & Kilner Law Firm, considers questions arising about business and residential tenancies relating to the coronavirus pandemic.
The Coronavirus Act 2020 addresses many issues relating to business and residential tenancies. This is a fast-changing situation, with new regulations being announced as different needs arise, so it’s important to check the latest government guidance and consider seeking professional advice before taking any specific actions.
Business Tenancies
If my tenant says they are unable to pay their rent during the coronavirus period, can I forfeit their Lease?
No, the Government is prohibiting all forfeiture of commercial leases on the grounds of non-payment of rent. This stipulation currently covers the period up to 30 June, with the option available to the government to extend it if required.
The government’s definition of ‘rent’ also includes non-payment of service charges and insurance premiums. Also, landlords are unable to enforce the right of re-entry whether by closing the premises or obtaining a Court Order until the relevant period is over. The government’s provisions state that landlords must expressly waive their right of forfeiture for non-payment of rent during the period for the tenant to rely on an argument of waiver at a later date.
Even if forfeiture proceedings were ongoing for non-payment before the new rules came into force on 26 March, the court cannot order a tenant to give up the property before 30 June (or before the end of any extended period that’s introduced).
Tenants remain liable for the rent that they owe, including any sum they are liable to pay under a relevant business tenancy, while a landlord being unable to take action on non-payment during this period doesn’t mean they can’t do so after the emergency measures are lifted.
The temporary restrictions don’t, however, apply to a landlord’s right to forfeit for any other type of breach of covenant, although any order for possession will have to take effect at a later date. In situations where a landlord opposes the renewal of a lease on the grounds of breach for persistent delay in paying rent, any failure by the tenant to pay rent during this current period is to be disregarded by the Court.
Does a Landlord still have their other usual remedies for enforcing breach of requirement to pay rent against commercial tenants?
Up until 23 April this year, landlords had the usual options available to them, including pursuing a County Court Judgment claim, accessing the Commercial Rent Arrears Recovery Scheme, and using statutory demands and winding up petitions where they could show a tenant was insolvent.
However, measures included in the Corporate Insolvency and Governance Bill which is currently being passed through parliament temporarily ban the use of both statutory demands made between 1 March and 30 June 2020 and winding up petitions presented from 27 April 2020 to 30 June 2020 where a company cannot pay its rent due to Coronavirus.
Further legislation will also provide tenants with more breathing space to pay rent by preventing landlords from using the Commercial Rent Arrears Recovery Scheme (unless they are owed 90 days of unpaid rent).
Landlords can still pursue claims for unpaid rent that arise during this period but given considerable current court delays caused by lockdown measures and a lack of Court staff, it is very unlikely that any new claims would be resolved for quite some time, which gives even more reason for landlords and tenants to try to work together to resolve their particular situations amicably.
Residential tenancies
Can a landlord evict a residential tenant during the Coronavirus period?
The Coronavirus Act has brought several restrictions in relation to possession proceedings against residential tenants, with the notice period required for Section 8 and Section 21 Notices lengthened to at least three months in all circumstances.
The government’s changes only cover assured short hold tenancies under the Housing Act 1988. Other private sector tenancies which do not fall under the Rent Acts or Housing Acts remain unaffected.
What if I am a Landlord and I have already started possession proceedings against a tenant?
All hearings for possession against residential tenants and homeowners that were initially listed between 1 March and 30 June 2020 have been automatically stopped, with a view to being relisted when further information is known about any government plans to extend its lockdown measures.
Up until 25 June 2020, the Court is suspending the issue of any new housing possession claims. The government is advising landlords not to commence new claims or serve new Notices seeking possession without a very good reason, as they will not be dealt with by the Court until the pandemic measures are lifted.
As a Landlord, am I still required to carry out repair and maintenance on my tenant’s property?
Landlords must still comply with their obligations to the tenant under their leases to undertake repair and maintenance work to keep rented properties safe, with a pragmatic, common sense approach to resolving issues being recommended.
Landlords are being encouraged to carry out work while respecting social distancing measures and must provide a good reason for not undertaking work requested by a tenant if they are unable to attend the property or to instruct another person to do so on their behalf.
Government guidance also requires landlords to make every effort to abide by gas safety and electrical safety regulations, and to be able to demonstrate they’ve taken all reasonable steps to comply with their obligations if they’re unable to engage a contractor to access the property due to lockdown restrictions.
Am I still obliged to pay my landlord rent during this period?
Yes, tenants must still pay their rent during this period, and if they are unable to do so, they need to be able to show that this is linked to the coronavirus situation.
For example, a commercial tenant may have had to close their business, while a residential tenant may have been furloughed or may be unable to work.
Landlords may choose to give tenants a rent holiday, a reduction or a suspension, but tenants still need to bear in mind that their obligations will have to be fulfilled at some point and that landlords’ rights to enforce these obligations will return to normal after the pandemic situation is over.
If tenants are facing problems paying rent, they should discuss this situation with their landlord at the earliest possible opportunity to try and reach an amicable agreement. It’s always better to do this rather than risk being pursued for what they owe when landlords can take such action down the line.
Sara Malik, Solicitor, Hay & Kilner Law Firm
T: 0191 232 8345
E: sara.malik@hay-kilner.co.uk
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