Proposed emergency eviction freeze
The Housing Secretary, Robert Jenrick, has announced that the government would pass emergency legislation to protect tenants from eviction if they fall into ‘financial difficulties’ as a result of the ongoing crisis. Financial difficulties have not been defined, however, it is anticipated that ‘difficulty’ need only be potential and will be presumed valid if raised as an issue.
Details of this legislation are still limited but they are likely to affect the ability of landlords to evict residential tenants in the usual manner, relying either on section 8 notices or section 21 notices. Currently this only applies to new proceedings, but there are demands for a complete freeze on ongoing proceedings as well.
Possible rent freeze
The Acorn Union, described as a community and tenants’ union, has begun a petition calling for the Government:
- to enact a rent suspension for anyone unable to pay rent during the crisis;
- to freeze all current section 21 or section 8 evictions;
- to freeze all current evictions of housing Association and council tenants; and
- to extend the ban on eviction proceedings to cover lodgers.
The petition notes the potential mortgage holiday for landlords and demands that rents be suspended. It remains to be seen how the government will react to these demands. Currently, the Government’s position does not seem to affect ongoing evictions proceedings except by mortgage firms, but things are changing quickly.
Mortgage payment holiday
The Government has also announced an initial 3-month mortgage payment holiday for borrowers who are experiencing payment difficulties as a result of COVID-19. This includes landlords whose tenants have difficulty making payment of rent. The FCA guidance leaves open the possibility that payment holidays may be shorter than 3 months if so requested by the borrower.
Landlords should indicate to lenders at the earliest possible time if a payment holiday is desired or needed, and in as many forms of communication as are practical.
As things currently stand, interest will continue to accrue on the mortgage throughout the duration of the mortgage holiday and missed mortgage payments will eventually need to be paid in full.
We recommend that landlords be proactive in this situation. We suggest that you contact your tenants by phone or email to discuss whether they anticipate financial difficulties as a result of the coronavirus, specifically whether they are going to be in a position to pay their rent.
It should be made clear that those unaffected by the coronavirus should continue to pay rent as normal. It should also be made clear that any deferred rent during this period will still be payable at a later date. Tenants should be encouraged to pay their rent if they can so as to avoid future unmanageable repayments.
You should also contact your insurance provider to see whether you are covered for loss of rent in these circumstances.
In addition to any legal implications, the developing crisis is likely to have far-reaching practical effects. As more and more people are required to work from home, it is possible that court processes such as the appointment of bailiffs may be delayed. A reduction in capacity may lead to a backlog of work to be processed.
Landlords may also be minded considering the public relations impact of chasing rental payments and / or eviction proceedings. It may be possible to act within the rules as they are written but fall foul of the court of public opinion.
The situation is developing daily and in hard to predict ways. While little is certain, clearly business will not simply continue as usual. All parties will need to be flexible as circumstances dictate. We will be monitoring the situation closely and shall send regular updates.”