Be prepared with possession claims

Courts re-open on 24th, landlords must act to re-ignite existing possessions claims. Housing Minister brings landlords good news in Commons debate. Warning to landlords to be aware of possible rise in cannabis farms in rental property.;
Eviction notice

Landlords who are waiting for the end of the evictions ban, need to be aware that action is required to reignite their cases, as the result of a new law, which comes into practice on 23rd August 2020.

Please be aware that this article is for information purposes only. Please seek professional, legal advice if you are affected. Commercial Trust staff are not qualified to give advice, or able to give further information on this matter.

What is the new law?

The new law is “Civil Procedure (Amendment No. 4) (Coronavirus) Rules 2020”.

It brings into practice the following: “Practice Direction 55c – Coronavirus: Temporary provision in relation to possession proceedings” (PD55C).

For how long will PD55C be in place?

The timeframe for the PD55C is from 23rd August to 28th March 2021.

How does the PD55C affect landlords pursing pre-existing possession claims?

Landlords who have a pending possession case that was halted as a result of the Covid-19 lockdown must:

  1. Provide a ‘reactivation notice’ to the court and defendant. If you do not provide one, the case will not progress. A reactivation notice must be specific as to whether the case is to be listed, relisted, heard or referred and;
  2. In cases of non-payment of rent, you must outline any knowledge you have of the impact of Covid-19 on the defendant and their dependants.

Unless the case is an appeal, you must also provide ‘an updated rent account for the previous two years’ with the reactivation notice.

The PD55C also requires the courts to give “at least 21 days’ notice to the parties of any hearing listed or relisted in response to a reactivation notice”.

Are there any exceptions?

Only cases brought on or after 3rd August 2020, or where a final order for possession has been made are not subject to the need for a ‘reactivation notice’.

8-week timeframe suspended

The PD55C also suspends the ‘standard’ 8-week turnaround time between a claim form being issued and a hearing being held.

This is inevitably because there is a significant backlog of court cases waiting to be heard, which have built up over the lockdown period.

Government guidance on possession claims

The government has also updated the following non-statutory documents:

  1. Coronavirus (COVID-19) Guidance for Landlords and Tenants
  2. Coronavirus Act 2020 and renting

Within these documents, landlords are reminded that they must have given tenants 3 months’ notice of their intention to seek possession of their property.

Landlords are also encouraged not to bring cases to court unless there is a very good reason for them.

The following extract from 1. above refers to how courts will assess possession cases, in light of the impact of Covid-19:

2.6 “Will the courts consider the impact of the coronavirus outbreak on tenants and landlords when they resume considering possession cases?

  • We are working to provide appropriate support to those who have been particularly affected by coronavirus when court proceedings start again. We want to ensure that when seeking possession of a property, landlords are providing more relevant information to the courts relating to their tenant’s situation in light of the pandemic.
  • Wherever possible we continue to encourage landlords and tenants to work together to resolve disputes without the need for court action, including agreeing repayment plans where a tenant is unable to fully meet their rent.
  • Where possible and appropriate, if disputes over rent or other matters persist, landlords and tenants are encouraged to consider mediation. Mediation allows an independent third-party to assist those involved to reach a mutually acceptable agreement to resolve their dispute, without the matter needing to go to court.”

Important Section 21 Commons debate

In a House of Commons debate on 22nd July, Housing Minister Christopher Pincher issued important messages that bring good news for landlords, around Section 21.

The debate arose from a question posed by Thangam Debbonaire, shadow secretary of state for the Labour party.

With her question, Ms Debbonaire revisited a subject that she and Dr Rupa Huq raised back in June; namely, whether Mr Pincher would be bringing forward the abolition of Section 21.

At that time, the housing minister was very much of the view that allowing costs to pile up through unpaid rent was the wrong approach, saying:

“The prospectus of the hon. Lady, which is simply to kick the can down the road and to pile up costs for people who may not be able to afford them, is not the right one. I think she should go away and think again.”

It seems the housing minister is holding strongly to his position on the matter. He referred on a number of occasions during the debate to information on the impact of Covid-19 on the PRS, provided by the National Residential Landlords Association, which demonstrates that fears of an eviction tsunami are simply unfounded:

“I have had discussions with many stakeholders, including representatives of landlords, including the National Residential Landlords Association, which tells me that, according to its research, 90% of renters say that they have been able to meet their rent liabilities.

Of the 10% remaining, who either have difficulty or fear difficulty, 75% have said that they have had a good response from their landlord in negotiating flexible repayments or other payment holidays.

I think that the landlord community understands the challenge that the economy faces and that tenants face, and is working proactively to support them.”

Generation Rent said to agree on unfounded ‘eviction tsunami’

Significantly, Pincher also referenced conversations he had had with Baroness Kennedy of Generation Rent, the operating name of the National Private Tenants Organisation, who is a leading voice for tenants in the UK.

Mr Pincher said that when speaking to Baroness Kennedy, QC, on 21st July (the day before the debate) she had shared his view:

“I am sure she will not mind me saying so, but when I spoke to Baroness Kennedy yesterday, she also said that she did not believe that a tsunami of evictions was at all likely.”

He also went on to criticise those spreading such messages, implying they were scaremongering:

“We need to be very careful with the language we use, and to not spread fear among potentially vulnerable people—tenants as well as landlords—where fear should not exist.”

It feels a little incongruous that Baroness Kennedy should support this view, given that at the time of writing, the homepage of the Generation Rent website carries the following message:

“Coronavirus has hit the incomes of millions of renters who are now worried about how to pay the rent. When the eviction ban is lifted, renters in arrears will face debt and homelessness.

“We’re making sure that renters’ voices are heard loud and clear by the government.

“Join our movement to protect renters during and beyond COVID-19.”

Nonetheless, if Generation Rent’s fears are indeed easing, this too is good news for landlords, as they are often amongst the strongest critics of UK landlords.

When will Section 21 be abolished?

On bringing forward the Renter’s Reform Act (which will abolish Section 21 ‘no-fault evictions’), Mr Pincher has reiterated that he will wait until “we have stable terrain on which to do so”, which some have speculated will be 2021, at the earliest.

Are the Conservatives changing their view of UK landlords?

Back in the run up to the 2019 general election, UK landlords were undeniably a political scapegoat. Whilst the Conservative party had for a long time been in greater support of landlords, even they appeared to highlight the bad and not the good in the sector.

However, the following comments made by Christopher Pincher, may be a sign of more positive support for landlords:

“A vibrant rental market is important to our economy and to renters. We must not act in any way, either individually or cumulatively, to drive landlords out of the marketplace.

That can only mean that there will be fewer properties available to rent, which is no good for tenants, and it may also mean, of course, that the properties vacated by good landlords are taken up by less scrupulous landlords, who will not give the same good experience to their tenants.”

A transcript of the full debate is available online here.

Cannabis caution

History tells us that crime rates rise, during an economic downturn. With that in mind, landlords are being warned to watch out for cannabis farms in their properties.

Please be aware that this article is for information purposes only. Please seek professional, legal advice if you are affected. Commercial Trust staff are not qualified to give advice, or able to give further information on this matter.

What is the current position on crime in the UK?

The latest “Crime in England and Wales” report from the Office of National Statistics only carries data to the end of March 2020. As a result, it does not demonstrate any impact of the coronavirus pandemic on crime rates.

Crime levels, over the last few years up to March 2020 had been relatively stable. Furthermore, it was estimated that crime rates had reduced by 9%.

However, back in January 2014 when the UK went into recession, the Financial Times reported on the rise in crime, related to the downturn in the economy.

A rise in cannabis farms since lockdown

The BBC reported in June this year, that Nottinghamshire Police had experienced a “spike in intelligence reports” as the result of people "spending more time in their communities".

In May 2020, the number of seized cannabis plants held a street value of £3m, which represented a 280% year on year increase.

It was noted by the police that crime in general had reduced, which had meant that there was more resource to investigate tip offs. Whether this will continue to be the case is yet to be seen.

Furthermore, it could be speculated that the rise in the crime is simply down to greater investigation of it. Nonetheless, it is still evident that this poses a problem and is one landlords should be proactive to deal with.

What to do if this affects you

Specialists in property litigation, Hägen Wolf, were quoted in a recent news report, offering the following advice to UK landlords.

1. Terminate the tenancy – with a standard Assured Shorthold Tenancy (AST) a Section 8 ‘Notice to Quit’ can be served based on ground 12 or ground 14:

Ground 12 – Relates to the tenant breaching the tenancy agreement

Ground 14 – Relates to the tenant being found guilty of being a nuisance or ‘engaging in unlawful activity’

2. Apply for an injunction to require the tenant to stop their illegal use of the property.

Hägen Wolf acknowledges that with the current 3-month notice period on evictions, terminating a tenancy is undeniably challenging. However, they highlight that there are no restrictions on serving an injunction, as described above.

3. Gather evidence – Keep a detailed log of:

  • Night-time visitors
  • Strange noises or smells indicating illegal activity
  • Photographs and videos

If possible, secure the help of willing neighbours.

4. Tell the police and the council – keep a record of having done so.

Long residential leases

If as a landlord the property you own is leasehold, Hägen Wolf explains that there is commonly a clause against ‘illegal or immoral conduct’.

Assuming that is the case, the landlord would apply to the residential property division of the First-tier Tribunal (Property Chamber), which is administered by HM Courts and Tribunals Service.

They will determine whether there has been a breach of the illegal or immoral conduct clause.

If such a determination is made, the landlord is then able to serve the individual flat owner with a Section 146 of the Law of Property Act 1925 notice and start court proceedings.

Why is acting against suspected crime so important?

Hägen Wolf highlight that it is vital for a landlord to act, if they become aware of illegal activity, so as to clearly demonstrate that they do not condone it, nor are party to it.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.