Property Litigation FAQs
During this time of uncertainty, Barcan+Kirby’s Property Litigation solicitors continue to advise landlords, letting agents and tenants in all areas of property law.
Many of the questions our litigation team are being asked are from tenants who are struggling to pay their rent due to a change in their employment circumstances and from landlords whose tenants cannot pay their monthly amount and, in turn, are left without an income. Some of our frequently asked questions are below, and which our expert team have answered as best they can in this ever-changing climate.
What does The Coronavirus Act 2020 mean for residential landlords and tenants?
The coronavirus (Covid-19) outbreak has had significant implications for residential landlords and tenants. In response, the Government introduced a series of housing support measures, including extending the basic notice period for seeking possession of residential tenancies in England.
On 8th September 2021, the Government made further announcements easing some of the rules previously introduced for notice periods. Accordingly, from 1st October 2021 notice periods will generally return to pre-pandemic notice rules.
Can landlords go ahead with possession proceedings?
The suspension on procession proceedings expired on 20th September 2020. Therefore, possession proceedings are now continuing.
Renters’ Reform Bill
The Government has pledged to bring the Renters Reform Bill to Parliament in the Queen’s Speech. The Bill includes proposals for the abolition of Section 21 ‘no fault’ evictions to give tenants greater security.
The Government announced that a white paper will soon be published, setting out proposals to create a fairer private rented sector that works for both landlords and tenants.
What does The Coronavirus Act 2020 mean for commercial landlords and tenants?
As a result of the disruption to businesses, The Coronavirus Act 2020 introduced generous protection to tenants of commercial property, including a moratorium in respect of a landlord’s right to terminate a business tenancy due to rent arrears.
On 16th June 2021, the Government announced a further extension to the moratorium introduced by The Coronavirus Act 2020. Accordingly, the measures in place originally until 30th June 2021, which were then extended to 30th September 2020, then to 31st December 2020, then 31st March 2021, and then to 30th June 2021, have been extended further until 25th March 2022.
- Commercial landlords (of a relevant business tenancy) cannot enforce their right of re-entry or forfeiture due to non-payment of rent during the relevant period until 25th March 2022.
- Within current litigation relating to forfeiture for rent arrears, the tenant cannot be evicted during the relevant period.
Despite the above, forfeiture by peaceable re-entry is still available to commercial landlords where tenants are in breach and such breaches are unrelated to non-payment of rent or other sums due under their lease.
This seems to be a rent deferment for business tenants, however, the rent is still contractually payable. It is not a rent-free period. Landlords and tenants are encouraged to communicate.
Separately, the restriction on the use of Commercial Rent Arrears Recovery (CRAR) also continues until 25th March 2022. Therefore, a minimum net of 554 days rent arrears are required to use CRAR.
The Commercial Rent (Coronavirus) Bill
The Commercial Rent (Coronavirus) Bill, which had its first reading on 9th November 2021, covers protected rent arrears incurred by commercial tenants during the pandemic.
The Bill stops landlords from using any method (including making a debt claim in civil proceedings, using CRAR, using a tenant’s deposit, and enforcing a right of forfeiture), to recover protected rent arrears, other than arbitration.
This is in addition to the existing restrictions set out in the Commercial Rent Arrears Recovery (CRAR) procedure.
What are ‘protected’ rent arrears?
The rent arrears protected by the Commercial Rent Bill include rent, service charges, repairs and maintenance, management costs, insurance and interest on unpaid rent.
The criteria for this protection includes:
- Business tenancies
- Where the business and/or commercial premises were required to close under Coronavirus regulations, either fully or partially
- Rent arrears related to the ‘relevant period’, which begins as of 2pm on 21st March 2020 and ends at or before 11:55pm on 18th July 2021 (in England) or 6am on 7th August 2021 (in Wales).
On 16th June 2021, the Government also announced their intention to introduce legislation to ring-fence the rent arrears which have accrued within specific periods during the pandemic and as a result of a businesses having to close. It is believed that landlords and tenants will have to agree a plan in respect of the ring-fenced arrears, such as a long-term repayment plan and/or the waiving of some of the arrears.
In the event an agreement cannot be reached, an arbitration process will follow; the outcome providing a binding agreement between the parties. We await further information.