The Ministry of Housing, Communities and Local Government have announced emergency measures to protect both landlords and tenants during the outbreak of Covid 19. The measures will cover those in both private and social housing. This is to prevent tenant evictions for those individuals experiencing financial difficulties during this crisis.
The intention is to:
- suspend new evictions from social or private rented accommodation during the national emergency;
- prohibit new possession proceedings through applications to the court during the crisis; and
- protect landlords by providing a 3 month mortgage payment holiday, which is also available for individuals who live in their own properties.
It is expected that the suspension of a landlord’s eviction powers will be for a three month period, as they will be able to mitigate any losses by applying for a mortgage payment holiday.
At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan taking a tenant’s individual circumstances into account. In order for this to take place, the government will widen the “pre-action protocol” on possession proceedings to include private renters. In order to bring a successful claim in court, both parties will have to show that they have complied with the pre-action protocol, which encourages use of Alternative Dispute Resolution, such as negotiation and mediation. The intention behind this protocol is to only use the court to settle a claim as the last resort.
It is expected that guidance will be provided by the government intended to ask landlords to show compassion and permit tenants to remain in their homes wherever possible. If you own leasehold property, we would suggest that the management company is notified of any potential issues in the payment of ground rent and service charge to negotiate a period of grace before any enforcement proceedings may be taken.
This is an unprecedented set of measures in the private rental sector. However, during this difficult time it has been welcomed by both landlords and tenants. It will be interesting to see whether appetite for these measures remain once the outbreak is under control to mitigate against homelessness.
Importantly, legislation has not yet been drafted and surprisingly these measures were not included in the draft Coronavirus bill announced today. Although the government website does state that the legislation will be taken forward as an urgent priority, it is not yet binding law. Once the measures are drafted, there will be further clarification as to how this will operate in practice.
If you have any queries regarding your property portfolio and are concerned that Coronavirus may affect your property or property portfolio, please do get in touch with the Residential Property Team. Stone King is operating business as usual during this outbreak and can arrange for a virtual meeting if you require any advice.