The National Residential Landlords Association report an increasing number of landlords calling to say their tenants are under the impression they no longer have to pay rent as a result of the pandemic. The obligation to pay private rent is unchanged by the Coronavirus Act 2020. However, as unemployment rapidly grows tenants will find it more difficult to pay the rent and arrears will inevitably accumulate.
Today the Times reports on the significant increase in applications for the new Covid-19 unemployment payment and the government's encouragement to tenants to take up the income support available. But is unlikely that the measures will fully cover rent for those tenants who have lost their jobs.
A landlord can usually recover possession quickly where the tenant is over 2 months' in arrears using a Section 8 Notice. The notice period is only 2 weeks and a court hearing is likely to be listed within 3 to 4 weeks after the possession claim is filed. Under this type of procedure, a landlord can expect to recover possession in approximately 8 weeks. But as a result of the changes brought in by the Coronavirus Act 2020, the notice period is extended to 3 months and currently the landlord cannot file a possession claim. And when the restrictions are relaxed and the courts begin to accept possession claims there is likely to be a long delay in hearings as the number of claims filed are likely to be very high. This expected delay is predicted in the government guidance for landlords and tenants, which is very helpful and can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876500/Consolidated_Landlord_and_Tenant_Guidance_COVID_and_the_PRS_v4.2.pdf
Tenants often stop paying rent once they receive a notice seeking possession. This would normally result in a loss of around 2 months' rent for the landlord and, in practice, it is unlikely this loss can be recovered from the tenant especially if they are unemployed. But in the current coronavirus lockdown period, it is seems likely that landlords are going to suffer losses of six months or more.
Buy-to-let landlords with mortgages are entitled to a repayment holiday which may ease the financial burden in the short term but will not alter the net loss in the long term.
Landlords should seek legal advice on the benefits of agreeing a repayment plan with a tenant or serving a notice and filing a possession claim. At Hedges Law we have experienced solicitors in our Dispute Resolution team ready to provide advice on your particular circumstances.
As of 27 March, the department had received 283,000 applications for the new Covid-19 unemployment payment following widespread business closures put in place to slow the spread of the virus. This is likely to include thousands of renters, as Central Statistics Office (CSO) figures show more than one quarter of households in the state are rented. Times 6 April 2020