COVID-19: Implications for the Residential Housing Sector

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COVID-19: Implications for the Residential Housing Sector

Published 14 May 2020

Introduction

Section 81 of the Coronavirus Act 2020 (“the Act”) has been enacted to protect residential tenants in this difficult and uncertain time. These changes apply equally to private tenants and social tenants.

The Act has put in place a safety net for residential tenants who find themselves unable to comply with the obligations imposed on them by their tenancy. This does not just include rent, and the restrictions apply to attempted evictions based on other grounds.

However, there is a notable absence of legislation to suspend the obligations imposed upon residential landlords either contractually or by statute.

The first part of this article focuses on the changes made by the Act to protect tenants, and the second part explores the issues faced by landlords with respect to their obligations together with possible ways of dealing with the difficulties of complying during this pandemic.

Part 1 - Time-limited ban on regaining possession of residential premises

Notice periods

Ordinarily before a residential Landlord can start a Possession Claim at Court, they first have to give a formal Notice to the tenant that they intend to apply for possession. As a result of the Act, with effect from 27 March 2020, the notice period has increased. Notice now has to be given three months before any Court process can begin. This applies to most tenants in both private and social rented sectors. The above changes to notice periods will apply to all of the following tenancies:

  • Rent Act 1977: protected and statutory tenancies
  • Secure tenancies
  • Flexible tenancies
  • Assured tenancies
  • Assured shorthold tenancies
  • Introductory tenancies
  • Demoted tenancies
  • Licenses covered by the Protection from Eviction Act 1977

Possession proceedings

Additionally, in order to protect those tenants upon whom notice has already been served , a three month stay of proceedings effective from 27 March 2020 now applies to all Part 55 possession proceedings, including all residential tenancy possession proceedings, whether brought by private or social landlords. It applies to both existing and new possession claims.

The ability of a landlord to enforce a possession order by writ has also been suspended, meaning that if a possession order was obtained before the provisions came into force it cannot currently be enforced.

Rent

It should be noted that the above provisions do not alter a tenants obligation to pay rent, but rather delay enforcement of the obligation through the threat of and the eviction process. The tenant will have to pay at some stage and a landlord is still able to pursue a Court claim to get a CCJ. However, the Courts and Government are urging cooperation between landlords and usually the landlord’s best option (should a tenant request it) is to agree to accept the rent at a later date, perhaps over instalments.

If as a Landlord you rely on the rent to pay your Buy to Let mortgage; the Government has provided you with some additional help in that you are protected by a 3 month mortgage payment holiday. As with rent the obligation is not written off, merely suspended and interest will continue to accrue.

Squatters/Trespassers

It is possible to bring a possession claim against trespassers notwithstanding the other restrictions. Practice Direction 51Z (which is the provision responsible for implementing the temporary prohibition on issuing possession proceedings and imposing a stay on existing claims) has now been amended so as to bring trespasser claims outside of the ambit of the stay. How easy it will be in practice to do so, remains to be seen.

Part 2 - Landlord’s statutory and contractual obligations

Repairs

Upon receiving notice of disrepair for which they are liable, a landlord will need to remedy urgent repair work immediately, and for non-urgent repair work, it is generally expected (under normal circumstances) that a landlord will undertake the repair within a “reasonable” time, which is usually 4 – 6 weeks.

What can a landlord do if it is having difficulties complying due to COVID-19?

All efforts should be made to undertake the repair work as quickly as possible in order to avoid the potential for a costly disrepair claim, to which social housing providers are particularly susceptible as many of their tenants have security of tenure. The pandemic should not be seen as an excuse to let the repairs regime slip.

It is doubtful that a Court will be sympathetic if the problem is not one of availability but rather cost and is unlikely to excuse a landlord from its obligations simply because it would cost more to comply.

If, during the current pandemic, a landlord is genuinely unable to find a suitably qualified contractor to undertake the work then there are steps which can be taken to mitigate the position.

As a first step, a landlord should get in touch with the tenant. The landlord should explain its difficulties and ask the tenant to agree to a deferment for undertaking the repair. Any deferment should be formally documented. Most tenants are likely to agree to defer non- urgent repairs.

If the tenant does not agree to a deferment of non-urgent repairs, a landlord may succeed in the argument that the pandemic has an impact on the meaning of “reasonable period” for undertaking the repairs in their particular case.

A landlord who is experiencing difficulties in finding a contractor should approach contractors within travelling distance of the property in question and keep a detailed record of all tenders/enquiries sent to the contractors and their responses.

Finally it should be noted that if, after reporting disrepair, a tenant decides that they do not wish to have a contractor present on the property for fear of contracting coronavirus (or any other reason) a landlord will be able to raise this as a defence or partial defence to a disrepair claim should the tenant later issue one.

Gas safety

The Gas Safety (Installation and Use) Regulations 1998 require landlords to ensure that all gas appliances in their properties are regularly checked and maintained, to ensure their safe and efficient working. The ability of a landlord to comply with these regulations may be affected during the outbreak. All efforts should be made to comply but it may simply not be possible.

There are two problems which arise out of this issue: (1) enforcement action by the competent authority for failure to undertake a gas safety check and (2) in relation to ASTs, whether this could have a bearing on the landlord's ability to recover possession at a later date using section 21.

The HSE has not indicated any general relaxation of its enforcement policy due to COVID-19 and therefore if landlords are struggling to comply then they are going to have to demonstrate that they took all reasonably practicable steps to try and comply and carefully document this, though there is no guarantees the HSE will accept this.

With respect to the second issue, we are still waiting for judgment to be handed down in the appeal in the case of Trecarrell House Ltd v Rouncefield which will be relevant in relation to gas certificates irrespective of COVID-19. It is possible that the outcome of the appeal could confirm that, so long as the landlord has provided the tenant with a valid gas certificate (and possibly an in-date EPC) prior to the service of any section 21 notice, the notice will be valid. However the Court of Appeal may uphold the first instance decision. In this scenario, one would hope that the courts would in due course be sympathetic to landlords who were unable to obtain the required certificate due to COVID-19, or that the Government will pass retrospective legislation to deal with that issue, but this remains to be seen.

If a Landlord or its contractor is unable to gain entry to carry out gas safety checks or repairs, it is paramount that accurate records are kept of pre-visit communication, timings of attempted visits etc. These records may be necessary if the Landlord is called upon by any court (or in the case of social housing providers, a regulator) to show reasonable steps were taken to comply with the law.

New “MEES” Regulations (Private residential sector only)

As from 1 April 2020, landlords cannot let, or continue to let, domestic, private rented properties (which includes Assured Tenancies and Rent Act Tenancies) where there is a valid EPC with a rating of F or G. These properties are categorised as “sub-standard” under the Minimum Energy Efficiency Regulations (MEES).

The Regulations are now here and in force, and domestic landlords should therefore, if they have not already done so, be reviewing property portfolios to ensure compliance - either undertaking works to increase a property's EPC rating or registering an exemption.

Many landlords will have been aware of this looming deadline and will have had contractors lined up to undertake the work only to find that due to the pandemic, the work cannot go ahead. The consequences of non-compliance for landlords are serious and unwanted: they could face enforcement action by their local authority, financial sanctions and negative publicity.

What can a landlord do?

There are various exemptions from the MEES regime, but these are limited and are only temporary. Sometimes, the exemption will allow the landlord a period of time to make the improvements to bring the property up to the required standard, or time to register another valid exemption. Any exemption must be registered on the Private Rented Sector Exemptions Register, together with supporting evidence.

Landlords should seek legal advice as to whether they can rely on any exemptions.

Whether enforcement will be forthcoming though, at least in the short term, is questionable. We are living in unprecedented times where local authorities are likely to have more pressing concerns than MEES enforcement.

An interesting point to note is that, following the introduction of the MEES regime, there has been no amendment to the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (SI 2015 1646), compliance with the MEES Regulations is not apparently a prerequisite for service of a section 21 notice on a tenant.

As with repair works and gas safety, detailed records should be kept, should the Court or local authority need to consider the facts at a later date.

Authors

Rosa-Maria Kane

Rosa-Maria Kane

London - Walbrook

+44(0)20 7894 6909

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