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As professional landlords complain that residential rent arrears are growing, the Government extends the ban on residential evictions until 21 February 2021

Although the Mayor of London has no formal powers over the private rented sector, Sadiq Khan recently urged the UK Government to give private sector renters the same protection as commercial tenants who were granted an extension of the eviction ban until the end of March, writes Lee Stafford a Partner in our Litigation and Disputes team.

An opposing position reported here has been taken by property investor and professional landlord Ranjan Bhattacharya, who launched a Parliamentary petition in early October 2020 calling on the UK Government to enable landlords to start evictions once a tenant falls more than two weeks behind in their rental payments. The online petition has so far received 12,394 signatures. However, 100,000 signatures are needed for the petition to be formally debated by Parliament.

In this three-way argument the UK Government has been forced to act by announcing an extension to its ban on enforcing residential property evictions during the coronavirus pandemic until “at least” 21 February 2021. This emergency measure, which has been extended before, had been due to expire on 11 January 2021.

Therefore, and as things currently stand, courts can still process possession cases and eviction notices can still be issued (although with considerably extended notice periods in some instances), but bailiffs will not be able to enforce an eviction notice until 22 February 2021 at the earliest. As before, exceptions in extreme cases involving anti-social behaviour and domestic violence remain available.

The Independent quoted Alistair Cromwell, acting Chief Executive of the charity Citizens Advice, “The government has made the right decision to extend this protection. Renters who are struggling with arrears shouldn’t face the prospect of losing the roof over their head when everyone is being asked to stay at home.”

Citizens Advice currently estimate that around half a million private residential tenants are in rent arrears, with the average amount owed being stated to be £730.

As one might expect, Mr Bhattacharya wants to see more done to help buy-to-let landlords, like himself.

The Mayor’s comments were reported here by CityAM shortly prior to the most recent extension: “With the evictions ban ending next week, Ministers need to take urgent action to prevent people being evicted from their homes, putting in place a proper financial support package for those who have fallen into arrears through no fault of their own.”

The Mayor’s “Report a rogue landlord or agent” tool has seen a spike in complaints, with more than 1,400 between March and December 2020. I wrote about it here, in November 2020. One in five complainants is now reporting an unfair eviction.

Sadiq Khan said: “The government must finally act on their promise to scrap ‘no fault’ evictions and give Mayors like me the powers to freeze rents until we have recovered from the huge economic impact of the pandemic.”  It is unclear however how such a power could in reality be enforced, applied holistically or without damaging fundamental principles of freedom of contract, or without causing some financial hardship in some direction.  Although as a commuter with a monthly travel card, I am dubious to the true application of another of the Mayor’s suggested ‘freezes’.

Property Industry Eye quoted this recent research by the National Residential Landlords Association (NRLA) that found an increase in rent arrears has built up since the start of the pandemic.

Ben Reeve-Lewis, strategic case manager at Lambeth-based charity Safer Renting, said: “Working across seven London boroughs, Safer Renting has seen a massive increase in illegal eviction since the start of lockdown.

“In the third quarter of 2020, Safer Renting’s work on illegal eviction had become so pressing, we had to take on more caseworkers to cope.”

The NRLA calculates that professional residential buy-to-let landlords could be facing up to two years without rent due to the UK Government’s decision to introduce and continue to extend the currently on-going eviction ban. With many tenants now being months and months in arrears on their rent, and being unlikely to make back payments as a result of pandemic lockdowns, eviction remains the only viable way forward for many landlords operating in the private residential sector.

On 10 December 2020 a spokesperson for the Ministry of Housing, Communities and Local Government outlined the UK Government’s position in response to Mr Bhattacharya’s petition: “Given the ongoing pressures of the pandemic, the Government believes this approach strikes a fair balance of ensuring landlords can progress the most urgent cases whilst ensuring ongoing protections to tenants.

“The Government has been clear that tenants remain liable for paying their rent. An early conversation between landlord and tenant can help to agree a plan if tenants are struggling to pay their rent.

“To help tenants pay their rent, the Government has put in place an unprecedented financial support package. This includes support for business to pay staff salaries through the Job Retention Scheme, with employees receiving 80% of their current salary for hours not worked until March 2021. We have also introduced substantial welfare support to help those who are facing financial disruption. This includes, in 2020/21, an extra £1 billion to increase Local Housing Allowance rates so that they cover the lowest 30% of market rents. As announced at the spending round for 2020/21 there is already £180 million for local authorities to distribute in Discretionary Housing Payments to support renters with housing costs.

“We are grateful to landlords for their forbearance during this difficult time and are conscious of the financial pressure on landlords. Where landlords find themselves in coronavirus-related hardship, mortgage lenders have agreed to offer payment holidays of up to six months, including for buy-to-let mortgages. This was further extended, with applications open to 31 March 2021 and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

“Where possible and appropriate, including cases of rent arrears, we encourage landlords and tenants to consider alternative dispute resolution such as mediation to reach a mutually acceptable agreement to resolve their dispute, without the matter needing to go to court.

“When parliamentary time allows, the Government is committed to introducing reforms to deliver a fairer and more effective rental market. This will be achieved by legislating to remove Section 21 of the Housing Act 1988, to provide tenants with more security – but also strengthening the grounds for eviction to ensure that landlords have confidence that they can gain possession when it is fair to do so. This includes working closely with the Ministry of Justice to explore how we can simplify court processes and make them work more efficiently.”

Whilst there is a lot of debate going on as to what will happen from 22 February 2021, none of these sources appear to have considered the Debt Respite Scheme which will be coming into force on 4 May 2021; tenants subject to a Scheme moratorium will obtain protections under Regulation 7(7)(j) against notices being served on them under Grounds 8, 10 or 11 (relating to non-payment of rent / persistent late payment of rent).

Unfortunately the public are trapped between a UK Government juggling too many competing interests on an overly stretched budget, and incumbent opposition Mayors advocating concepts rather than strategies which could be implemented with collaborative schemes.

Since the pandemic tragically struck this country there has been a lot of noise following any proposal floated, statement made, or legislation passed, and apparently equally critical that it has either been too harsh to tenants and landlords.

There is no simple solution to this problem. If tenants cannot pay their rent then landlords may fall into debt and arrears, and risk losing any equity they have if the property is repossessed.  If tenants are evicted with no ability to find alternative accommodation, this will frustrate the UK Government’s attempt for isolation / social distancing and put a strain on local authorities where the infrastructure is simply not in place to deal with it.

There will have to come a time when matters return to a ‘2019 normal’, and while it would not be unexpected to see the 21 February 2021 non-eviction date extended yet again, with the coming into force of the Debt Respite Scheme Regulations it is difficult to think that that time is not fully in contemplation of soon being realised.

 

If you need Litigation or Dispute Resolution advice (Commercial or Personal), please contact Lee or another member of our expert team on litigation@bishopandsewell.co.uk or call 020 7631 4141.

At Bishop & Sewell, we have more than 40 years’ experience in property with a particular focus on Landlord & Tenant matters.  If you are thinking of buying a flat in London or already own a flat and wish to extend the lease or purchase the freehold, please call us on 020 7631 4141 and ask for either Mark Chick or Laurent Vaughan.

The above is accurate as at 25 January 2021. The information above may be subject to change during these ever-changing times.

The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.


Category: News | Date: 25th Jan 2021


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