Jonathan Seitler QC and Miriam Seitler debate moot points in property law – this time, whether the new Covid-19 legislation offers adequate protections for landlords and tenants.
Question: Is the Coronavirus Act 2020 enough?
Yes, says Jonathan Seitler QC, barrister, Wilberforce Chambers
High praise to those who have conceived and drafted this in such a short timeframe. It strikes a sensible, well-judged, nuanced balance between landlord and tenant rights in this awful crisis.
1. As regards commercial landlords and tenants, the Coronavirus Act 2020 (the Act), which came into force on 25 March 2020, includes a lengthy section 82 introducing changes to the remedies of a landlord during the relevant period of three months (25 March 2020 to 30 June 2020).
During this time, a landlord is prevented from enforcing its right to forfeit a relevant business tenancy for non-payment of rent. This includes forfeiting by bringing proceedings and by peaceable re-entry: both are prohibited.
The scope of this is wide-ranging: a relevant business tenancy will include a tenancy protected by the Landlord and Tenant Act 1954 (the 1954 Act) and also a tenancy that would have benefited from that protection but has been contracted out in accordance with that Act.
It also includes “a tenancy to which that Part of that Act would apply if any relevant occupier were the tenant”. This covers the situation where a tenant is not in occupation itself (and therefore the 1954 Act is not triggered) but a sub-tenant or licensee is in occupation lawfully and for business purposes. In that scenario, section 82 means the tenancy cannot be forfeited for non-payment of rent.
And rent means more than just headline rent: it extends to any sum due under the lease, so any sum payable – regardless of whether reserved as rent.
2. The changes extend to the private residential sector too – see Schedule 29 to the Act. The notice period for possession claims under the Housing Act 1988, for both fault (section 8) and non-fault (section 21) grounds, has been extended to three months. A three-month period also now applies under the Housing Act 1985 to secure tenancies.
Similarly, where a landlord needs to serve a notice to quit to end the protected phase of a Rent Act 1977 tenancy, the requisite notice period is now three months (previously four weeks under the Protection from Eviction Act 1977).
A claim against a Rent Act tenant also now needs to be preceded by a notice of intention to seek possession; previously no notice was required at all.
All of these new provisions apply to any notice served within the relevant period (for these purposes 25 March 2020 until 30 September 2020, subject to the possibility of an extension.)
Similar provision is made for flexible, demoted and introductory tenancies.
New prescribed forms have been created to reflect the extended notice periods. And that is not all: the legislation includes provision for those notice periods to be extended even further, up to six months. A landlord could face the possibility of a six-month notice period to evict a tenant who has not been paying rent for months, well before this crisis began, when previously two weeks’ notice would have sufficed.
3. The significance of the Act cannot be fully appreciated without being read in the context of the new practice direction, PD51Z, introduced on 27 March 2020 and effective until 30 October 2020.
The practice direction bolsters the legislative provisions found in the Act and its significance should not be under-played.
Its effect is that all proceedings for possession brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession are stayed for a period of 90 days from 27 March 2020.
So no possession claim can proceed and no possession order can be enforced until 25 June 2020 at the earliest. All possession claims are automatically stayed. Tenants can rest assured that they will not be evicted before 25 June 2020.
4. On the commercial side of things, there is an element of retrospectivity to the Act, which is fundamental to the effective protection of tenants. Regarding existing possession claims based on forfeiture for non-payment of rent (in the context of a relevant business tenancy), a court can no longer make a possession order requiring the tenant to give up possession before 30 June 2020. This is regardless of when proceedings were commenced.
The Act also goes a step further by affecting possession orders already made: a possession order that was based on forfeiture for non-payment of rent (in the context of a relevant business tenancy) which had provided for a date for possession that was before 30 June 2020 will, in the County Court, automatically be extended such that the date for possession becomes 30 June 2020. In the High Court the extension is not automatic but, on a tenant’s application to vary the possession date, the court cannot order a date before 30 June 2020.
5. The Act should also be commended for its flexibility. Not only can the notice period for residential possession claims be extended to six months, but the “relevant period” as defined in both Schedule 29 and section 82 can be extended.
No, says Miriam Seitler, barrister, Landmark Chambers
The Act itself has numerous omissions and falls far short of the government’s promises regarding protection for tenants.
1. Contrary to what the government announced – “no renter in either social or private accommodation will be forced out of their home during this difficult time” – the Act does not prevent evictions of residential tenants during the period of the crisis.
The Act only extends the notice periods in respect of notices served within the relevant period: it does not restrict evictions and it has no impact on notices served prior to the Act coming into force.
The Act itself does nothing to prevent a landlord commencing, continuing or completing a possession claim against a residential tenant. It is only the new practice direction (PD51Z) – thanks to the Master of the Rolls and the Lord Chancellor – that really does anything like what the government had promised.
Without the practice direction, the Act does very little to address the real risks for residential tenants.
2. The Act has numerous holes: certain groups of tenants will not benefit at all. Section 82 (relating to relevant business tenancies) will not cover licensees of commercial premises, agricultural tenancies, tenants at will or tenancies not exceeding six months. Anything that would fall outside Part II of the 1954 Act will not benefit from the protection of the new Act.
Similarly, for residential tenants, no provision is made for those occupying under the Rent (Agriculture) Act 1976, assured agricultural tenancies, nor family intervention tenancies. Perhaps the largest group omitted from protection by the Act is residential long lessees.
Those occupying under a contractual tenancy or licence (with no significant security of tenure under the Housing Acts) are perhaps the most vulnerable; no changes have been made to the statutory period for a notice to quit under section 5 of the Protection from Eviction Act 1977 (save for in respect of Rent Act tenants.) So that period remains four weeks.
For example, a company letting of residential premises – a common way to grant a short-term residential tenancy but without the security of tenure of an assured shorthold tenancy – is not covered and the landlord will be able to give four weeks notice only. Finally, no protection has been afforded to those living in temporary homeless accommodation, those in property guardian-type arrangements, lodgers or people in employment-related accommodation.
3. The measures introduced by the Act are not well targeted so as to protect tenants from the risks they actually face and help them overcome difficulties arising specifically from the crisis.
First, the restrictions on forfeiture against business leases is not limited to rent that fell due during the relevant period. The restriction on forfeiture extends to forfeiture for non-payment of any rent; this goes considerably (and unjustifiably) further than protecting tenants from difficulties in paying rent that arise from this crisis specifically. For example, a tenant who failed to pay the December quarter rent (for reasons entirely unconnected to this crisis) is protected from forfeiture.
Second, the restrictions on forfeiture protect the tenant from a risk that they never really faced; in these circumstances, it is highly unlikely that a landlord would be interested in pursuing the remedy of forfeiture anyway. Particularly in the retail sector, a landlord is going to want to hold on to the tenants rather than evict them.
Third, the practice direction (that seems to be doing all the work here anyway) is far too wide in scope. It includes “all proceedings for possession brought under CPR Part 55”. This is surely too extensive. Why should a claim in trespass against squatters who entered and remained on land without any permission of the owner be stalled because of this crisis?
Finally, the extension of all residential possession notices to three months is clumsy because it overlooks the varying urgency in different cases under section 8. The Housing Act thoughtfully distinguishes between, for example, a rent arrears case (two weeks’ notice required) and a nuisance/criminal conviction case (proceedings can be issued immediately). The Act ignores these differences and applies a blanket notice period of three months.
4. The Act fails to address the real difficulty likely to be faced by residential and commercial tenants alike: the inability to pay rent during the crisis. The Act does nothing to address the fact that rent continues to fall due under a lease; it only removes one remedy in the landlord’s armoury. Throughout the relevant period, the landlord retains his remaining remedies against the tenant for the rent: statutory demands, CRAR, instating the relevant insolvency process, taking rent from a deposit, adding interest to the debt.
5. What’s more, once the crisis is over and the relevant period (whether extended or not) has expired, the landlord’s opportunity to forfeit for the previously unpaid rent is resurrected. The Act enables this by providing that a landlord cannot waive the right to forfeit for non-payment of rent during the relevant period except by express waiver in writing – something a landlord would never do.
This was a marvellous opportunity to rewrite the law of landlord and tenant to make it fit for the current crisis. It hasn’t been done anywhere near as extensively as it could have been and, curiously, the procedural changes appear to be doing all the work here.
