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MAY
2020

Coronavirus – tenants in financial difficulty

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The government has implemented new legislation to protect tenants experiencing financial difficulties as a result of the coronavirus outbreak.

You can download a copy of the government guidance on the new requirements here. We have outlined some of the key areas of consideration and how they may impact your business.

The government guidance is clear that landlords should show support to their tenants during this period, including forbearance for those experiencing financial difficulty. It stresses landlords take a “pragmatic, common-sense approach to resolving issues” and advises an early conversation between landlord and tenant. Both parties should agree a plan, and for both parties to agree a plan should the tenant be experiencing financial stress. The government is clear that tenants should continue to pay their rent and abide by the terms of their tenancy to the best of their ability. However, in cases where this is not possible, the advice is for landlords to come up with a plan with their tenants. Suggestions include reaching a temporary agreement not to seek possession action for a period of time and instead accept a lower level of rent or agree a plan to pay off arrears at a later date.

Landlords should be aware of where their tenants may be able to receive financial help and support. For example, local authorities can provide support for tenants to stay in their homes. The government has made £500 million available to fund households experiencing financial hardship and to enable landlords to offer more flexibility to tenants. To help landlords, mortgage lenders are offering a three-month mortgage payment holiday.

The provisions of the Coronavirus Act mean that, until 30 September 2020, most landlords will be required to increase the notice period needed to initiate possession proceedings to three-months. Landlords can however choose to give their tenants more than three months’ notice. Regardless of this legislation, where tenants have difficulty paying rent over this period, the government has ‘strongly advised’ that landlords do not issue a notice seeking possession, particularly given that the tenant may be sick or facing other hardship due to COVID-19. At the expiry of the three-month notice, a landlord cannot force a tenant to leave their home without a court order. When the three-month notice period expires, a landlord would still need to take court action if the tenant was unable to move.

The court service has suspended all ongoing housing possession action. As a result, neither cases currently in train or that went into the system shortly before the deadline can progress to the stage where the tenant could be evicted. This suspension of housing possession action will initially last for 90 days, but this can be extended if needed.

Landlords’ repair obligations have not changed. Tenants have a right to a decent, warm and safe place to live and it is in the best interests of both tenants and landlords to ensure that properties are kept in good repair and free from hazards. Where reasonable, safe and in line with other government guidance, tenants should allow local authorities, landlords and contractors access to the property in order to inspect or remedy urgent health and safety issues. Tenants are advised to inform their landlord early and engage constructively in the event that they encounter any issues with the condition of their property, and the effect of current restrictions should be considered. The government encourages tenants and landlords to take a pragmatic, common-sense approach to non-urgent issues which are affected by COVID-19 related restrictions.

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  • YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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