Can landlords re-possess properties if tenants can’t afford to pay the rent because of the coronavirus outbreak?
After 25 March 2020, and until 30 September 2020, a landlord can only start possession proceedings against a tenant if they have served 3 months’ notice upon the tenant – irrespective of any grounds relied upon.
On 27 March 2020, the Court introduced new rules to put all possession proceedings (except against trespassers) on hold until 25 June 2020 – it means that the Court cannot make an order for possession or any other order that would cause someone to be evicted during that time.
These rules do not just apply to tenants who have fallen into rent arrears.
On 5 June 2020, the Government announced that this stay would be extended further until 23 August 2020.
This means that you can issue new possession proceedings (provided you have complied with the new temporary rules in relation to notice periods, if the notice was served since 25 March 2020) and you can continue with existing possession proceedings.
However, any progress you may be able to make in dealing with those proceedings is likely to be very limited – the Court will allow you to comply with directions orders that have already been made but non-compliance will not be punished (at least for the time being).
These rules, and the latest announcements, are in keeping with the Government’s expectation that landlords show compassion towards affected tenants and that all parties will work together to establish a suitable repayment plan to allow tenants to repay the arrears at an affordable rate.
Related FAQs
Small suppliers (defined by reference to certain financial indicators) are temporarily exempt from these new restrictions until 30th March 2021 in order to account for the difficulties to small suppliers during the Covid-19 pandemic.
There are also certain industries that are exempt from these restrictions (for example financial services). The Secretary of State may also create further exemptions framed by reference to kinds of company, supplier, contract, goods or services or in any other way.
It is worth pointing out that, despite all the guidance, survey results and other advice about managing Covid-19 H&S risk in the workplace, the law has not been changed. None of the guidance is codified by regulation/legislation, which means that you are managing this risk in the context of existing H&S law.
In very simple terms, HASWA74 requires employers to take “all reasonably practicable steps” to ensure the health and safety of its employees (and anyone else affected by your business).
“Reasonably practicable” means to balance risk reduction against the time, money and effort required. If measures are grossly disproportionate, you wouldn’t be expected to take them, but there is a strong presumption in favour of taking any steps which will protect workers.
As part of managing the health and safety of your people, you must control the risks in your workplaces. To do this, look for what might cause harm to people while they work and decide whether you are taking reasonable steps to prevent that harm. This related duty under MHSWR is to ensure you undertake a “suitable and sufficient assessment of risks.”
The Act is intended to facilitate the rescue of businesses that are in financial difficulty by preventing suppliers from invoking certain termination clauses under a supply contract, and therefore maintaining supply of goods and services to the business whilst plans to save the business can be considered.
Supply contracts often contain a clause enabling them to terminate the contract, or take other steps such as requiring payment in advance, in the event that the customer enters an insolvency procedure.
This new Act removes any such contractual right by dis-applying any clause that allows the supplier to terminate the contract, or take any other step, due to the customer entering an insolvency process.
Suppliers are also prevented from demanding payment for pre-insolvency debts owed by the customer as a condition of continued supply.
Additionally, where the supplier had a contractual right to terminate the contract due to an event occurring before the customer went into the insolvency process (whether or not linked to payment issues), the supplier loses this right for the duration of the insolvency process.
If a contract contains a force majeure clause this may become operative due to the coronavirus pandemic and related emergency legislation. Such clauses exist to ensure that if some unforeseen event prevents a party from being able to perform their obligations under a contract, either on time or at all, they will be excused from their obligations and not be held liable for non-performance.
The clause must actually be written into the contract to have effect – a force majeure clause cannot be implied into a contract. Whether it can be relied on by a party will depend on the wording of the clause itself as it may only be applicable in certain limited circumstances.
You should seek legal advice at an early stage if you think that force majeure is relevant, because a number of potentially complex issues must be addressed, many of which will turn upon the exact wording of the force majeure clause in the contract in question:
- Has a force majeure event actually arisen?
- What notification process do you have to follow to rely on the provision?
- What mitigation steps do you have to take?
- What is the effect of the force majeure event – is the contract suspended, or can it be terminated (which might not be what you want)?
No. The Home Office has confirmed that sponsors do not need to report sponsored workers as working from home, where this is directly related to the coronavirus outbreak.
However any UK employers who sponsor overseas workers, should also ensure that they remain compliant with their other sponsor licence duties, which includes reporting any change to an employee’s salary and duties.