Eviction ban extended again

The eviction ban has again been extended and is now set to last until May 31st for residential evictions.
During this time, evictions can only take place during the most serious circumstances and landlords are required to give six months’ notice to tenants. The extension aims to protect renters during turbulent times, although has faced criticism from landlords and housing campaigners for potentially just delaying a crisis.

What are the exceptions to the ban?

The stay on eviction proceedings aims to protect renters from homelessness during the pandemic; however there are still some situations where evictions are deemed to be acceptable.
An eviction notice can be served where rent arrears exceed the value of six months’ rent. Overdue rent payments accrued during the pandemic is included in this and where at least six months’ of rent is unpaid, a minimum four week notice period is required as opposed to the six month notice period for rent arrears of less than six months’ rent value.

Evictions can also take place is tenants are displaying antisocial behaviour or committing domestic violence in the property.

The courts continue to encourage parties to work together and where possible, make arrangements outside of the court such as payment plans or mediation.

Speak to an expert

The ban on commercial evictions has also been extended until June 30th. It is strongly advised that you seek specialist advice before taking any steps. Get in touch with our team today if you’d like any further information.

The stay on possession proceedings has been extended with an important change

Ministers have announced they are going to extend the ban on possession proceedings until at least 21st February, 2021. Legislation is in place to ensure eviction notices are not served except in serious circumstances to include substantial levels of rent arrears.

Important update: this ban was extended on February 14th until March 31st 2021.

It has been almost a year since the Coronavirus Act was passed, putting measures in place to limit the number of evictions taking place except in the most serious of circumstances. Although the eviction ban has once again been extended, landlords have been thrown a lifeline regarding the recovery of unpaid rent on their properties where substantial rent arrears remain outstanding.

Previous legislation defined substantial rent arears as equivalent to nine months’ rent and any arrears accrued during the first lockdown on 23 March 2020 was excluded from the total.

The term “substantial rent arrears” has now been re-defined. An eviction notice can now be served where rent arrears exceed the value of six months’ rent. Under the new legislation, overdue rent payments accrued during the pandemic can now be included. Furthermore, the amount of rent arrears that must have accumulated prior to issuing possession proceedings has been reduced from nine months down to six months.

Where at least six months’ of rent is unpaid, a minimum four week notice period is required as opposed to the six month notice period for rent arrears of less than six months’ rent value.

If a claim for possession was made before 3rd August 2020 a landlord must also advise the tenant and the court that they still intend to seek possession of the property. A reactivation form will then be needed to proceed.

The courts continue to encourage parties to work together and where possible, make arrangements outside of the court such as payment plans or mediation. New court rules mean landlords are asked to consider such requests prior to any hearings.

At SLC Solicitors, we have robust vulnerability procedures in place to offer our clients alternative options when dealing with vulnerable leaseholders and those adversely affected by the pandemic. We can offer legal advice on these matters as well as assistance to recover arrearage outstanding. Get in touch with info@slcsolicitors.com for more information.

Reform a step closer for lease extensions

Today the Housing Secretary Robert Jenrick has announced the government is taking steps to implement the recommendations made by the Law Commission in 2019 for changes to the law relating to extending the leases of houses and flats.

Today’s indication is that leaseholders of both houses and flats will be able to:

• extend the term of the lease to 990 years as standard (a change from the current 90 years for flats and 50 years for houses) and
• reduce the ground rent to a peppercorn (essentially zero).

Leaseholders are likely to welcome the news that marriage value, an additional valuation calculation where the term remaining on the lease is very short which made the premium payable higher, is to be abolished and an online calculator will be introduced to make it easier for leaseholders to determine how much it will cost to extend their lease in advance of starting the process.

There are also proposals to restrict ground rents to zero on retirement homes to afford additional protection to the elderly against increases in ground rent which have been widely considered to be unfair.

Legislation containing the details will be proposed in the upcoming session of parliament and we will report further when that is available. The government has indicated further reforms will be announced in due course, particularly in relation to the Commonhold model.

The proposals for reform are an attempt to strike a difficult balance between reducing the price payable by leaseholders who want to buy their freehold or extend their lease, while ensuring that landlords (who cannot refuse an application while qualifies under the current legislation) are adequately compensated for losing their interest in the property.

Some of the other main changes proposed by the Law Commission in 2019 were:
• reducing premiums payable by leaseholders by introducing a simple formula for valuation (such as a ground rent multiplier or a percentage of capital value)
• a fixed costs regime so that leaseholders know the costs they are liable for at the outset
• all disputes to be determined by the Tribunal (currently some disputes are dealt with in the county court which increases complexity and costs)
• a right for leaseholders on an estate of houses and flats to join together to purchase the freehold
• powers to require contributions once the freehold has been purchased allowing estates to continue to be maintained.

For extending leases :
• no minimum period of ownership (for flats this is currently two years),
and for buying a freehold containing flats :
• a right to join an earlier application ( to stop leaseholders being locked out of ownership).

It remains to be seen how the government will deal respond to those.

The current law has been criticised for being complex with separate procedures applying to each of the different enfranchisement rights. The proposals recommend a single procedure for enfranchisement to simplify the process and improve transparency to ultimately provide a better deal for leaseholders and the government have today reaffirmed their commitment to ensuring that those who wish to do so can extend or buy the freehold without cumbersome bureaucracy and unfair expenses.

SLC Solicitors are experts in this area and can assist you with lease extension or enfranchisement claims. We can offer fixed fees and value for money guidance on the complex regimes in place. If you would like more information please contact Analise Broomhall.

Government extends ban on commercial evictions

The moratorium on the use of commercial rent arrears recovery and forfeiture of lease has been extended, for what is expected to be the final time, to the end of March 2021.

The ban was due to end at the end of 2020 but has been extended by an additional three months to support businesses that are struggling financially due to the coronavirus pandemic, particularly business such as bars and restaurants that have been forced to close for the majority of the year.  Tenants and landlords are strongly recommended to use this extension to work together on finding an agreement about any unpaid rent, however companies that are able to pay rent should be doing so.

Throughout this year, many landlords have made flexible arrangements with their tenants – such as rent holidays – but understandably, this announcement will cause for concern for landlords who have also suffered financially due to the unpaid rent during the pandemic.

Further guidance is expected to be published by the Government and the team at SLC will keep you updated on any further developments.

For any further information or to discuss the options available to landlords currently (both residential and commercial), please don’t hesitate to get in touch today: info@slcsolicitors.com

Coronavirus and evictions: the latest regulations

New regulations that came into force on November 17th 2020 prevent evictions from being enforced (including serving notices of eviction) until 11 January 2021.

There are some limited exceptions to this for the most serious circumstances.

These are:

The regulations also prohibit enforcement agents from taking control of goods inside residential
properties during the period when these regulations are in force. This measure does not prevent
enforcement agents from taking other steps to enforce debts, such as making contact by telephone,
visiting but not entering properties, taking control of goods located outside the home and
enforcement of business premises.

How will this affect your business?

Whilst you cannot enforce or serve any notice of eviction proceedings until 11 January (unless one of
the above exemptions apply), you can still begin the process of forfeiture proceedings, up to the
point of serving your notice.

The most notable exemption for our clients, is the exemption that evictions are permitted to
proceed, if the possession order was granted based on ‘substantial rent arrears’, this is where at
least 9 months worth of arrears were outstanding on the date on which the possession order was
made. Those arrears must have accrued prior to 23 March 2020.

One final point to note is that where proceedings have already been issued at Court, you should be
mindful of issuing any new invoices to tenants, as in doing so you could waive your right to forfeit
and we would always encourage you to take legal advice before doing so.

If you would like to discuss this in any greater detail or are looking for advice on how to take action,
please contact us.

Stay on possession proceedings ends

Back in March 2020, the UK government put emergency rules into place that suspended all possession claims and the enforcement of any possession orders already made.  On September 20th 2020 this came to an end for all residential tenancies.

So, what does that mean for residential landlords that are now looking to commence new possession claims or resurrect claims that had begun before the emergency legislation?

How landlords can move forward

 Any evictions claims brought before August 3rd which were automatically stayed can now be relisted by filing a reactivation notice with the relevant court.  You currently have until January 2021 to do this, although this deadline could be further extended.  For claims brought after August 3rd, a reactivation notice does not need to be filed.

In addition, all evictions where final possession orders are already in place can resume from 21 September onwards.

The government has also extended the notice period that landlords are required to give tenants to six months. This will remain in place until at least 31st March 2021. Whilst this will apply for the majority of cases, shorter notice periods can be given when the reason for eviction is rent arrears exceeding six months, anti-social behaviour, domestic abuse or false statement.

Unless the original directions can be complied with, case management directions received before 21st September will be rescheduled and an application for a proposed new hearing date may be required.

It should be noted that the courts have warned of a backlog of cases caught up in the suspension and are encouraging the parties to engage in settlement discussions. Additionally, the ban on commercial tenancies has been extended until the end of 2020.

Please get in touch if you have questions or queries in relation to how this could affect you and your business and we will be happy to offer guidance on how to manage the new rules: info@slcsolicitors.co.uk.

Cornavirus eviction ban to be extended by four weeks

The ban on tenant evictions that was set to end today has been extended by a further four weeks to September 20th. Understandably, this will be unwelcome news to many struggling landlords.

This ban has offered a level of protection for tenants over the past five months and ‘mortgage holidays’ were introduced to help support landlords. However, while in a lot of cases tenants and landlords have been able to work together during this time; there are still many landlords who have been left to foot the bill with a serious loss of earnings.

It should be noted that in addition to the ban, the government has confirmed tenants must be given six months’ notice for evictions unless the eviction relates to serious cases of anti-social behaviour or domestic abuse.

When the courts finally do open, there is also expected to be a huge backlog and increased waiting times. The most serious cases will be prioritised first – which will be the cases involving domestic abuse, anti-social behaviour and arrears of over a year.

Your options

Whether you’re considering flexible payment plans and temporary rent reductions for your tenants or you’re faced with anti-social behaviour and uncooperative tenants, it’s essential to seek legal advice to fully understand your position. While in some cases you may be severely limited in your options, your solicitor can help you explore all avenues and decide on the most appropriate plan of action.

At SLC solicitors, we can offer no-recovery no-fee for rent arrear collection, as well as fixed fees for section 8 and section 21 notices and court proceedings so you’re in the best possible position when the courts reopen. We understand how difficult this time may be, and can provide first class legal support while minimising any reputational risk.

Caution over clause claiming to vary fixed apportionments of service charge in a lease

It is fairly common for leases to permit the landlord or management company to vary the percentage contribution to a service charge payable by a leaseholder. This, on the face of it, allows the landlord some much needed flexibility in determining the apportionment payable if, for example, further development takes place or the original apportionments would no longer be reasonable. An example of this type of clause is, ‘5% or such other percentage as the Landlord shall determine from time to time acting reasonably’.

However, the Upper Tribunal has now determined in a recent case that this ability to fix an alternative percentage is not compatible with s 27A (6) of the Landlord and Tenant Act 1985. The FTT at first instance distinguished a lease which provided for the landlord’s discretion in fixing the percentage to be final and one which still permitted the FTT to have jurisdiction, but the Upper Tribunal have now determined that this approach was incorrect. Their approach is to strike those words out of the lease, leaving only the fixed percentage. Should the landlord wish to vary that fixed percentage, they can only do so with direct agreement from the leaseholder, or by application to the tribunal.

Practical consequences
It is essential you review your portfolio regularly to ensure the percentage being applied is the one detailed in the lease. In cases where you find it is different, you are at risk of the percentage being charged to be unreasonable and not payable by the leaseholder (and not recoverable from any of the other tenants).
Where a lease does not state a fixed percentage and states only that a reasonable percentage should be determined, then the landlord can do this. However, they could still face a challenge on the percentage charged which can be determined by the FTT on request. Where a fixed percentage is stated in the lease the FTT cannot determine the percentage to be paid, it is to be as stated in the lease unless varied – though they can still determine the reasonableness of the charges to which the percentage is applied.

If you would like any assistance with interpretation of leases then please contact Analise Broomhall, Head of Property at SLC Solicitors.

Landlords beware when granting consent – the danger of contingent obligations

On the 6th May 2020 the Supreme Court gave its judgment in the case of Duval v 11-13 Randolph Crescent Ltd UKSC 18 and the resulting implications for landlords or management companies of blocks of flats and their tenants are significant.

The Supreme Court was asked to consider whether a landlord of a residential block of flats is entitled to grant permission to a tenant in the block to carry out works that would otherwise breach an absolute prohibition in that tenant’s lease, in circumstances where leases of the other tenants in the block are granted on similar terms and require the landlord to enforce the breach of the alterations covenant.

THE DECISION

The Supreme Court held that in granting consent to a tenant to undertake alterations which would otherwise breach an absolute prohibition in the lease, the landlord would be in breach of their obligations to the other tenants in the block.

Importantly, this breach of the landlord’s obligations will also apply where the obligation to enforce covenants is a contingent obligation; namely where under the terms of the lease the landlord is not under any express obligation to take, or refrain from taking any action against a tenant. The contingency (or condition) being that the landlord is requited to take action to enforce the covenant at the request of a complaining tenant and upon the indemnity of the landlord’s costs of undertaking such action by the tenant requesting the enforcement.

The Supreme Court further confirmed that the limitation period for a breach of covenant is 12 years. In practice this means that tenants in a block may challenge past consents and permissions granted by a landlord to neighbouring tenants.

THE FACTS OF THE CASE

The building known as 11-13 Randolph Crescent, previously two mid-terrace houses had been converted into nine flats. The freehold was owned by 11-13 Randolph Crescent Limited, a company of which the tenants were shareholders.

The leases for the tenants were granted on similar terms and in clause 3.19 the landlord covenanted with each tenant that all other flat leases would contain covenants of a similar nature and that at the request of the tenant, and subject to the provision of security for costs, the landlord would enforce the covenants given by other flat owners in their leases.

One tenant at the building, Mrs Winfield, requested consent from the landlord to undertake works which would involve removing a considerable part of a load bearing wall. Mrs Winfield applied to the landlord for a licence consenting to the works, which was granted.

However the proposed works breached clause 2.7 of the lease which contained an absolute covenant prohibiting cutting into walls or ceilings. There was no dispute between the parties as to whether the works were in breach of this provision.

Another tenant, Dr Duval, objected to the granting of the licence on the grounds that in doing so, the landlord had breached its obligations to her under clause 3.19 of the lease and she required that the prohibitive covenant in clause 2.7 be enforced by the landlord against Mrs Winfield.

THE IMPLICATIONS FOR LANDLORDS OR MANAGEMENT COMPANIES

Although the Court of Appeal did briefly discuss potential remedies prior to the Supreme Court ruling, the Supreme Court decision will no doubt have practical consequences for landlords and tenants alike.

Whilst the power wielded by other tenants in the block has increased, the implications of wielding that power against the landlord and other tenants could have far reaching implications:

Whilst the Supreme Court ruling in Duval v 11-13 Randolph Crescent Limited concerned consent for a licence for alterations, the implications of the decision are more far reaching. Any absolute covenant in the lease is subject to the same implications. If a landlord grants permission to a tenant to breach a covenant, regardless of how minor the covenant actually is (such as a prohibition on keeping pets), the landlord will put itself in breach of all other leases.

Another issue to consider arises where there is a qualified covenant in the lease that requires the landlord’s prior consent. Following the logic in Duval, any attempt by the landlord to grant retrospective consent, which is the usual practical remedy, may well place the landlord in breach of a contingent obligation to enforce covenants at the request of tenants.

Finally, where there is a covenant in the lease requiring that all leases be granted on similar terms, the granting of a variation of those terms to individual tenants will also place the landlord in breach of their obligations under the lease. Therefore careful consideration to the terms of the lease and the variation proposed must be given before the landlord considers a variation which is not universally implemented across all leases of a development.

If you would like advice on contingent obligations and remedies to potential breaches of this provision then please contact Laura Gregory in our Property Department: lg@slcsolicitors.com or on 0333 0 300 200.

The Coronavirus Act and The Impact on Payment of Service Charges & Ground Rent

You will have seen the announcement that private and social renters will be protected from eviction for three months under legislation given the Royal Assent on 25th March 2020, The Coronavirus Act 2020, as well as the offer of mortgage repayment holidays for mortgage borrowers.

These measures mean that residential tenancies are protected from eviction as new claims for forfeiture for missed payments of rent cannot be brought until at least the 30th June. This date could still be extended further.

Currently the Act does not include forfeiture of a long lease but enforcement of any possession order is unlikely to be in the interests of justice and recent guidance has advised that the courts will be suspending all ongoing housing possession action until at least the 30th June 2020, and again this could be extended further.

The government guidance on the legislation is that those in a position to make their rental payments continue to do so, while providing a few months grace to those that are struggling. This is not a rental holiday and as mentioned above, technically does not extend to breaches of lease, for example,  failure to pay service charge and insurance.  Where the breach complained of is as a direct result of these challenging times (i.e. financial) the courts are likely to offer relief to the Leaseholder wherever possible.

You will no doubt be faced with leaseholders who are unable to pay their service charges or ground rents, asking to delay payments. Leaseholders may be experiencing severely reduced incomes and the government are therefore encouraging Landlords to have a sympathetic approach  and to collaborate with tenants on devising flexible payment options, in place of the traditional quarterly rent.  The government has offered protection to property owners in the form of a Mortgage Holiday and  put in place a furlough scheme so workers who might otherwise have lost their jobs will be entitled to 80 % of their income which should reduce the financial impact of the crisis for many. SLC have a bespoke vulnerable leaseholder process to identify those financially negatively affected.

If you are a Property Manager, Service charge budgets and accounts and planned works should be reviewed to ensure that any temporary shortfalls can be accommodated, and payment plans can be offered to give tenants breathing space.

The precise terms of any deferment or reduction in costs will need to be decided between you and your clients but of course both discounts and payment holidays will mean lower income and therefore a reduction in services. Due to the directive on home working this is likely to be a time when you will have higher than average occupancy levels, so you will need to carefully decide which services to reduce or cut and how to communicate this to the residents. Fire safety and the supply of heat, light and water are likely to be considered priorities.

As you will appreciate, the situation continues to change on a daily basis and we will provide further guidance as it becomes available from government.

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