Unsurprisingly given we are in a third lockdown, some of the temporary changes made to the possession procedure for residential tenancies have been extended.
Once again landlords will need to get to grips with new processes which could ultimately affect their ability to recover possession whilst also grappling with the implications of new debt regulations which are due to be introduced in May 2021.
From 29 August 2020, a landlord has been required to give six months’ notice in their Section 21 notice and most Section 8 notices, unless an exemption applies. We draw your attention to the following exemptions –
- Section 8 – Grounds 8, 10 and 11: 4 weeks’ notice can be given where a tenant is arrears of rent in excess of six months.
- Section 8 – Ground 14: where there is evidence of anti-social behaviour, nuisance, illegal or immoral behaviour on the part of the tenant, a landlord can issue proceedings immediately after service of the notice.
- Section 8 – Ground 7: 3 months’ notice is required following the death of a tenant.
The modified notice periods currently remain in force until 31 March 2021, but it seems likely that they will be extended.
When the court resumed dealing with possession proceedings in September 2020, practice direction 55C introduced a modified possession procedure which was aimed at managing the backlog of cases.
This introduced new concepts such as Reactivation Notices and Review Hearings into the possession procedure.
The time period of the application of Practice Direction 55C has been amended so that it will now apply until 30 July 2021.
Landlords therefore need to take care that the modified process is being followed to ensure their possession case is not delayed or struck out by the courts.
Although it is possible to proceed to a Possession Hearing and obtain a Possession Order, a ban on court bailiffs enforcing the Possession Orders remains in place.
The ban, due to end on 21 February 2021 has now been extended until 31 March 2021. There are exemptions to the ban, for matters such as substantial rent arrears and anti-social behaviour. However, the reality for most landlords is that they are not going to be able to enforce Possession Orders yet.
The Debt Respite Scheme
The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium (England and Wales) Regulations 2020 are due to come into force on 4 May 2021.
Although the regulations are wider in their remit than simply tenants, they will apply to landlords trying to recover possession of residential property from individuals based on rent arrears.
The regulations will create two types of ‘breathing spaces’ creating a time period in which creditors cannot take enforcement action:
- A standard breathing space; and
- A mental health crisis breathing space.
A standard breathing space is available for anyone with a problem debt. This allows protection against creditor action for up to 60 days.
A mental health crisis breathing space is available to someone receiving mental health crisis treatment. This will last as long as the individual’s mental health crisis treatment plus 30 days.
The intention behind the regulations is to enable an individual to seek debt advice and must not be used to simply delay paying the rent where there is no prospect of it ever being paid.
The breathing space can only be started by an FCA authorised debt advisor or a local authority. There are different requirements for how they can be commenced.
However once a breathing space is commenced, the debtor’s details will be put on a breathing space register and the creditor (in the case of rent arrears, the landlord) will receive a notification.
The impact on landlords is that during the breathing space, they cannot serve a section 8 notice relying upon rent arrears which are due up to the start of the breathing space. They must also notify the court of the breathing space if any proceedings have already commenced.
Further, there are strict rules as to what contact can be made with the tenants during this period. Landlords will need for example, a way of ensuring automatic rent notifications are not sent out during this period nor automatic interest added to an account.
Landlords will still be able to proceed with section 8 notices based on other grounds and serve section 21 notices but unsurprisingly, given the lengthy notice periods which currently apply, many landlords had started to move towards service of section 8 notices based on rent arrears where there were substantial arrears.
Although the tenants are still required to pay their debts during the breathing space, many landlords will understandably be concerned that there is now an additional hurdle being introduced which could further delay recovery of possession.
For the foreseeable future, recovering possession of residential proceedings will remain more difficult than it was in the pre-coronavirus world.
Landlords will have to continue to think carefully about whether to try to reach agreement with their tenants regarding rent repayment plans and continue to follow the modified process carefully.