Residential possession, commercial forfeiture and the coronavirus
Here Matt Champ, property litigation expert and partner at Boys & Maughan Solicitors, considers the impact of the Coronavirus Act 2020 on residential and commercial landlords.
The Coronavirus Act, which came into force on 25 March, has been anticipated by lawyers in the wake of the coronavirus outbreak which has seen most peoples’ way of living obliterated overnight. It is the government’s response to the many issues that the virus has presented.
Perhaps the greatest shock has been the economic impact of the government’s social distancing policy and the very clear message of, effectively, unless it is essential, staying indoors. Naturally, as a result, people cannot work and have been worried about how they would pay their rent whether for their domestic homes or business premises. This, in turn, led the government to promise protection and now, at last, the protection can be seen and analysed.
Under the Act, (particularly under section 81 and Schedule 29 for those who are interested) the notice periods required to be provided to residential tenants has been extended to three months, this is true for both section 8 notices and also section 21 notices. This is significant protection for tenants who, for rent arrears under section 8, were only previously entitled to 14 days’ notice.
There is also power under the Act to extend the three month period to six months if needed. The real puzzling aspect is that ‘any power under Schedule 29 may be exercised more than once’ which would, it seem, allow for an apparently never-ending power to extend the notice period to three months or six months repeatedly.
Of course, landlords facing hardship as a result of tenants not paying rent will have to rely on the government’s promised scheme to secure redress during the extended notice periods. Time will tell if that is enough in a system that can be abused by tenants knowing how to play the system.
The Act is interestingly silent on the position of proceedings that are based upon notices that have already been served prior to the Act coming into force.
As far as commercial landlords go, they have not fared much better. Possession of commercial premises under a relevant business tenancy cannot be regained because of non-payment of rent within the relevant period which is up until 30 June 2020 or such further period as may be prescribed if needed. Helpfully though, anything that a landlord does up until the 30 June 2020 will not mean that he cannot still forfeit the lease for non-payment of rent once the June period has been passed. Relevant business tenancies are, generally, those that are protected by Part II Landlord and Tenant Act 1954.
The provisions relating to possession will no doubt be welcome to tenants in difficulty as a result of business or income loss due to the virus. It will take time to see whether landlords who lose out as a result will be adequately compensated or whether they will suffer at the government’s understandably hasty response.
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