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How would the government's proposals to prevent tenants from being evicted alter the existing legal position?19th March 2020 Commercial Litigation
Whilst we await the passing of the emergency legislation the government has, on 18 March 2020, promised, concerning giving private sector residential tenants “protection from eviction”, it is worth reminding ourselves of the present position briefly, which will need to be altered by such legislation. This note does not cover public sector tenancies nor any remaining private sector tenancies created before 15 January 1989 and assumes that a tenant does not leave their property voluntarily at the end of the term and, of course, advice tailored to a party’s specific circumstances must always be sought as each case is different from any other one:
1. Common law tenancies – any tenancy not falling within the assured tenancy regime under the Housing Act 1988 (“the Act”), such as where the annual rent exceeds £100,000 or the tenant is not occupying the property as their only or main home, including if they are a company which is incapable of occupying as such. Here, where the tenancy is fixed then once the fixed term has ended a claim for possession is made based on the end of the fixed term. Where the tenancy is periodic, a notice to quit will need to be served and then, once the tenancy has ended, a possession claim brought on the basis of that notice.
2. Assured or assured shorthold tenancies –
(a) Either the landlord would need to rely on the “no fault” ground of section 21 of the Act, which the government has separately promised to repeal but this has not occurred yet. Where a valid section 21 notice has been served and the requisite two months’ notice period has passed a claim for possession is made based on the expiry of the contractual term of that tenancy;
(b) Or the landlord would need to rely on section 8 of the Act and serve a section 8 notice setting out the relevant grounds under the Act on which the claim for possession would be made, which would need to be of 14 days’ or two months’ notice depending on the ground in question. The “fault” grounds, such as substantial non-payment of rent, entitle a landlord to give only 14 days’ notice of the intention to seek a possession order and is designed to give the tenant the opportunity to remedy the breach of the tenancy of which he has been given notice. Where the breach is capable of remedy but is not remedied or the landlord seeks possession on “no fault” grounds then he will rely on the section 8 notice when making the claim for possession. Whilst the court has discretion to waive service of such a notice in certain circumstances retrospectively, this is rarely an advisable risk to take save in the case of urgency.
3. Where the landlord brings a claim for possession at common law or under section 21 and the court considers that the claim for possession has been made out then it has to make a possession order; there is no discretion. Where the claim is based on a section 8 notice then the court has to make a possession order where any of the mandatory grounds are made out; otherwise it has a discretion whether to make an order at all and so can decline to do so. Its discretion is wide and includes factors such as whether the tenant has remedied any breach referred to in the section 8 notice between service of it and the court hearing.
4. When granting possession, the court has discretion as to precisely when it orders the tenant to leave. The usual time period is 14 days from the date of the order but it can make an order for possession forthwith, which is most frequent in the case of squatters (not covered by this note). However, under existing law the court can suspend the time by when possession must be given for up to six weeks in total but only on the basis that the tenant would otherwise suffer “exceptional hardship” under section 89 Housing Act 1980 and the tenant has requested that the court does so, which is such a high threshold to get over that it has been rarely used successfully in the past. Furthermore, there is no discretion to extend the time period beyond this six week period.
5. If the tenant has not left by the time that possession must be given up then the landlord will need to enforce the order by county court bailiff or high court enforcement officers attending. Once the relevant warrant for or writ of possession has been issued a tenant may nevertheless still apply to seek a stay of the same for a period of time to enable it, for example, to move to alternative accommodation and the court has a wide discretion here too as to deferring enforcement depending on the tenant’s circumstances.
6. Thus at present the court has discretion only as to:
(a) Ordering possession at all under certain grounds under section 8 of the Act;
(b) Ordering the time by when possession must be given for up to six weeks; and
(c) On application by a tenant, suspending the enforcement for a period of time beyond that in (b) above.
7. Thus any emergency legislation would need to address whether to give the court discretion in:
(a) Making a common law tenancy possession order;
(b) Making an order for possession based on section 21 or the mandatory grounds of the Act;
(c) Giving the court power under an amended section 89 provision, for possession to be extended for beyond six weeks and to decide for how long that should be; and
(d) Giving the court power to suspend any enforcement.
From a tenant’s perspective, he may need to be able to prove that his ability to pay rent is affected by the COVID-19 virus outbreak, such as he works in a sector adversely affected by it, unless the government provides for blanket ban for possession orders against all tenants regardless. This would be unfair to landlords where tenants have stopped paying rent for other reasons before the outbreak began and where notices were served and/or possession claims were begun before the outbreak began. It is unclear whether the government will try to legislate for rent payment holidays or deferment of the same and it remains unclear how this would actually work in practice. Landlords will frequently have their own expenses to pay, the biggest expense being mortgage instalments and, unless their own mortgagee will agree to provide a payment holiday or the government requires them to do so, it is easy to see landlords going out of business and seeking to sell their properties on a distress basis in the medium term, regardless of the tenant’s position, which will likely end up helping no one.