Commercial and residential landlords pursuing possession claims through the courts will have been relieved on 20 September 2020 when the stay on all claims was lifted, but will it be plain sailing from here?
The stay of proceedings initially applied to all claims for possession of property but some exceptions, for example claims against trespassers, were later removed. As of 20 September 2020, possession proceedings can now continue through the courts.
Although possession work has now begun, it is going to take the courts a while to clear the backlog of cases. The courts will be dealing with a six-month backlog, and on top of that, we can expect a surge in new claims because of the impact of the virus on some tenants’ ability to pay the rent.
Dealing with the backlog
The court service has set up some "Nightingale Courts" to deal with general case backlogs, but not all of these courts will be dealing with civil claims and it is expected they will focus primarily on family and criminal work.
The court is introducing a new system referred to as "Covid–19 Case Marking" to allow the courts to prioritise cases which should be dealt with quickly.
The courts will mark out cases where the claimant or the defendant has experienced hardship because of the pandemic to help with prioritising those cases for listing. The courts will give priority to (amongst other criteria) cases of domestic violence, anti-social behaviour, squatters, allegations of fraud and what the court terms cases of "extreme rent arrears". Extreme rent arrears are cases where the arrears exceed 12 months’ rent or nine months’ rent where that rent contributes more than 25% of the landlord’s income. There is no suggestion that commercial landlords will get any special treatment unless their cases fall into one of the priority categories.
Claims that were issued before 3 August 2020 will not be progressed by the court until the claimant files notice to "reactivate" the case. Reactivation notices can be filed up until 29 January 2021.
Landlords can also expect a new stage in some cases called the "review date" to allow the parties to take stock before a substantive hearing. The purpose of the review date is to discuss options for settlement and for the court to have the opportunity to decide whether to list further directions or a substantive hearing.
Should a landlord obtain a possession order, its options for actually enforcing that order may be limited. Bailiffs will be restricted from operating in areas of local lockdown, and guidance says that no evictions should take place in the weeks leading up until Christmas.
Notice periods for termination of residential tenancies – changes to section 21
Residential tenants will now be entitled to much longer notice periods before landlords can apply to the court for possession of their properties. Landlords with portfolios of residential and mixed use properties will be accustomed to notice periods of just two months to terminate assured shorthold tenancies on a "no-fault" basis. However, from 29 August 2020, residential landlords must give tenants six months’ notice to terminate on a "no-fault" basis.
Notice periods have also been extended in cases of rent arrears. If less than six months’ rent is outstanding a landlord must now give at least six months’ notice to terminate a tenancy on grounds of rent arrears. If arrears exceed six months’ rent a landlord can give a shorter notice period of four weeks before issuing proceedings, but landlords may be reluctant to wait that long before serving notice. Either way, landlords could be waiting a long time whilst arrears accrue before they can take action to recover their properties.
The new rules on notice periods are in place until 31 March 2021 but some commentators anticipate the changes to section 21 will not be quick to revert to two-month notice periods. The government was already under pressure to reform "no-fault" residential evictions before the pandemic hit. The growth in the number of private renters has led some to advocate for permanent reform to section 21 to protect renters from short notice periods.
And what about while you wait?
Although the new rules mean landlords will inevitably face delays in obtaining possession orders, it will still be possible to obtain a possession order where the landlord can show that mandatory grounds for possession apply and valid notices have been served and the correct information has been provided to the tenant at the outset of the tenancy. Landlords will also still have the right to claim rent for the period of the delay up until the tenant gives up possession of the property.