Introducing our new podcast, ‘Let’s Talk Lettings’, aimed at helping landlords like you manoeuvre the ever-changing lettings landscape...
In our first episode we discuss possession during the pandemic, what it is and what it means for landlords - with expert insight from Andrew Culverwell, head of lettings compliance at Countrywide and with over 35 years' experience in the industry.
Listen to the full episode here or read the full transcript of the episode below.
Is it fair to say that landlords have faced unprecedented challenges as a result of the pandemic?
For a number of landlords, that’s certainly been the case. Both in terms of challenges as a result of tenants having difficulty in paying rent, and of course with their own financial circumstances.
How have these challenges manifested themselves?
More often than not landlords will rely on rental income to pay their mortgage. It’s also not uncommon for retired landlords to be reliant on the income from a rental investment to top up their pension. Therefore when a tenant is unable to pay their rent, there is an obvious knock-on effect. Where a landlord’s personal income has been affected as a result of the pandemic, bridging the financial gap created by tenant arrears can be near impossible to manage in some cases. A perfect storm sadly.
Have mortgage holidays been unhelpful?
In many cases, they have provided an invaluable lifeline. Although it needs to be remembered that firstly the payment holiday is capped at 6 months and secondly that the money still needs to be repaid at some point. Where possession is delayed beyond the 6 month holiday period, an increasing number of landlords are experiencing genuine hardship. Remember also that landlords are still required to fund routine maintenance and repairs. As an example, the implementation of the new electrical regulations last summer was not delayed as a result of the pandemic. In many cases, this resulted in landlords having to fund costly upgrade works at a time when their personal finances were under pressure.
Away from the benefits system, is help available for tenants who are having trouble paying their rent and facing eviction?
Yes, in October the notice approved The Debt Respite Scheme which comes into force in May 2021. Its purpose is to provide a temporary period of respite from creditors (including landlords) of up to 60 days during which the individual can investigate what options might be open to them, including seeking professional debt advice. However, it neither writes off the debt nor provides a payment holiday but pauses enforcement action, as well as the addition of interest payments to the debt. In practice, therefore, and assuming that the current ban on evictions comes to an end before May, tenants may seek protection under the scheme in delaying the service of notice for possession.
Are landlords required to offer help to tenants when they are having trouble paying their rent?
Yes, the notice has confirmed that landlords and tenants should work together and exhaust all possible options – such as flexible payment plans which take into account a tenant’s individual circumstances. The courts will ask for evidence of this in the newly introduced review hearing which now takes place prior to the main possession hearing. Landlords will be required to demonstrate an understanding around whether the pandemic has had any bearing on their tenant’s arrears, and if so what, if anything, they were reasonably able to do to assist their tenant. As to what a court views as being reasonable is of course open to interpretation.
Are evictions in England still banned?
Yes, the ban on bailiff-enforced evictions has been extended until 31st May.
Are there any exceptions to the eviction ban in England?
Yes, there is a small number of exceptions where bailiffs can now take possession. These include illegal occupation, anti-social behaviour and where extreme rent arrears of more than 6 months have accrued. In this regard, arrears accrued post-23rd March 2020 are discounted meaning that in practice only arrears accrued before the pandemic hit are taken into consideration.
Are evictions treated differently in Wales?
Yes, a ban on evictions looks set to remain in place until 31st March although this is reviewed every 3 weeks.
Arrears aside, what notice does a landlord need to give if they require possession?
As of 29th August 2020, for all Housing Act Tenancies, the usual 2 month notice period was extended to 6 months. In England, this has now been extended until 31st May.
What notice does a landlord need to give if their tenant is in arrears?
Where notice for possession is being served under Section 8 of The Housing Act, for arrears of less than 6 months landlords are required to serve 6 months notice of their intention to seek possession. However, this reduces to 4 weeks' notice when the level of arrears exceeds 6 months.
Are the courts open and hearing possession claims?
Yes, the courts are open but the listing of possession hearings is subject to considerable delay. As I mentioned earlier, there is now the requirement for a “review hearing” in advance of the main hearing. This is aimed at reducing the number of full hearings but inevitably places additional stress on an already challenged court system. At this stage, it’s impossible to say on average how long it will take for a possession hearing to be listed, but we know they are being prioritised and not dealt with on a first come first served basis… which may be of some comfort.
Where can landlords go for further advice?
Now more than ever, if their tenant is falling into arrears, landlords should really seek specialist advice either from a solicitor or their insurer where they have rent and/or legal protection cover.
For more information contact your local branch today.