Rent Arrears, Possession Orders, and Coronavirus

March 2020

Partner of Courtyard Solicitors and specialist in Landlord and Tenant Law; Jonathan Lynn, gives his view on how the current health scare could impact tenancy agreements:

"It seems likely that many people will suffer drops in their income due to Coronavirus and that many will fall into rent arrears, so what is the legal position in this situation, and will tenants homes be at risk of losing their homes if they are badly affected by this situation?

The situation for tenants will vary depending on who the landlord is and the type of tenancy held.

Assured Shorthold Tenants

Most private sector tenancies are Assured Shorthold Tenancies (ASTs).   These tend to be short fixed term tenancies and virtually all private sector tenancies are ASTs.  In these tenancies there is a fixed term and if the tenant remains in the premises after the term expires (assuming no new fixed period has been agreed) then the tenancy becomes a rolling tenancy which renews automatically each rental period.

If your fixed term tenancy has expired and you are on a rolling  tenancy then the landlord can evict you using the Section 21 no fault procedure.  He will need to serve a notice in the right form (a Section 21 notice) wait 2 months and then he can commence proceedings against you which - unless you have a technical defence eg deposit not properly protected, error with the gas safety certificate etc.-  he will obtain as of right.

If you are within the fixed term period of the tenancy and fall into arrears then the landlord can seek possession on the basis of the rent arrears.

There are 2 grounds for possession orders based on rent arrears .

Firstly if there are any rent arrears at all the landlord can serve a 2 week notice seeking possession   and if those arrears are still in existence at the possession hearing he may obtain a possession order if the court thinks it is reasonable to grant one.   Arrears due to Coronavirus may help a tenant or his solicitor to argue that it is not reasonable to make an order. Any order could be suspended on terms 

The other ground for possession on rent arrears is for serious rent arrears. This ground has no reasonableness defence. In order to obtain a possession order the landlord must serve a notice seeking possession giving 2 weeks notice.

At the time of the notice and at the time of the hearing the landlord must prove that  at least:: eight-weeks rent is owed if paying weekly or fortnightly, two-months rent is owed if paying monthly, three-months rent is owed if paying quarterly, or that three-months rent is owed if paying annually.

If the tenant has reduced the arrears below the specified amount by the time of the court hearing, possession under this ground will not be granted. 

However, most landlords would issue proceedings under the mandatory ground and the discretionary ground jointly so if arrears exist (but at a lower level) then the landlord might get an order if he can persuade the court that it is reasonable to make an order.

Assured Tenancies.

Some Local Authority & Housing Association tenants have these.  They are in the same position as tenants with ASTs who are within the fixed period of their tenancy.

Secure Tenants.

This is the sort of tenancy that proper long term council tenants tend to have.     In these cases possession orders on the basis of rent arrears are always discretionary, i.e. subject to a reasonableness test. Obviously the greater the arrears the harder it is to argue reasonableness but arrears caused by Coronavirus may well be used in a defence that it is not reasonable to make the order.

Generally

If the Coronavirus outbreak becomes much worse than it is now, I would think it would not be easy for a landlord to re-let a property.  This must strengthen the hand of the tenant in any negotiation over rent arrears."

If you have been affected and need our help, please email Jonathan Lynn with your query.

 

 

 

 

 

Photo by Fusion Medical Animation on Unsplash