How does COVID-19 impact on private Landlords?

March 19, 2020

For many people, their buy-to-let property provides an important source of income which they rely upon to service their borrowing, top-up their pension income, or just use as ancillary income.

The vast majority of people within the buy-to-let sector are not large scale portfolio Commercial Landlords. To that end, several clients have asked about how the likely impact of COVID-19 is going to affect them.

The latest government guidance is available here: https://www.gov.uk/government/news/complete-ban-on-evictions-and-additional-protection-for-renters

We’ve highlighted some frequently asked questions below and provided further guidance:

 My Tenants are casual workers and may not be able to pay the rent

The Government has announced that emergency legislation is to be applied. This means that in the event that your Tenants cannot pay the rent, due to the impacts of COVID-19, you will be unable to commence possession proceedings on that basis. Currently, the guidance suggests that this will prevent you from bringing a possession claim for rent arrears accrued as part of the crisis now or in the future. However, the legislation is yet to be finalised so is likely to change prior to being approved.

The Government has announced some support to the buy-to-let Landlord in regards to this. They have announced that the payment holiday for mortgage payments will be extended to include an up to three month mortgage holiday for buy-to-let mortgages as well as residential ones. So if you have a buy-to-let mortgage then you may be able to get some support in relation to it.

However, the Government have not announced any support for those that own their properties. We are hopeful that the Government will consider this in their ongoing support measure but at present, there is no current support in place to cover the rental income lost as a result of COVID-19

I have issued a S.21 notice which has expired, am I still able to recover possession?

The Government have also announced that they intend to suspend all possession proceedings for a period of three months to ensure that no one is evicted during this crisis.

It is unclear from the current guidance as to whether this applies to:

New possession claims;

1. Existing claims where possession has not been ordered;
2. Existing claims waiting for bailiff enforcement.

It is however likely that it will apply in all of the above circumstances from the limited information available at this time.

However, we suggest that if Landlords have issued a S.21 or S.8 notice and it has become effective, that they issue proceedings as protective measure as soon as they are able. This is because as once a claim has been issued the limitation period for relying on notices freezes, regardless of the Court moving forward with those proceedings.

I’m a Commercial landlord, my Tenant is a hospitality business and they are struggling to pay the rent. What support is there for me?

At present, there is no support or guidance from the Government in regards to the Commercial Landlord. Again, a mortgage payment holiday may be possible if you discuss the crisis with your Commercial lender, but there is no carte blanche guidance on the same from the Government at present.

The Government has however made available various grants and loans to businesses in the hospitality sector, so it may be worth you discussing the same with your Tenant to see what, if any, support is available to them to assist you in servicing your commercial liabilities.

The hospitality and retail sectors are likely to be significantly impacted by the current crisis and accordingly Commercial Landlords will need to work proactively with their Tenants to ensure they are making the most of any support available.

My Commercial tenant hasn’t paid the rent, can I still get possession back?

Currently, there is no guidance or legislation from the Government preventing Commercial repossessions taking place.

Whether you can recover possession will depend primarily on the drafting of your lease and the associated forfeiture and rent payment clauses.

However, there is a substantial argument that the current crisis could be deemed a Force Majeure event, on the basis of its impact on tenants. So we would be very cautious of Commercial Landlords taking any action at this time without a Court order for possession.

However, Commercial Landlords should also consider whether, in the current climate, it would be better to agree to a rent payment plan of some kind and keeping the tenant as Commercial Tenants may be cautious of taking on new leases in this economic environment.

What do Tayntons advise at this stage?

We understand that at the moment the Government guidance on these matters is changing frequently and they have a massive impact on Landlord and Tenants alike. To that end, we are working to ensure we remain up to date with the latest Government guidance and are able to advise on any Landlord and Tenant, or Commercial dispute resolution matters at this time.

If you have any questions in relation to a Landlord & Tenant matter, any item in this article or a Commercial dispute resolution please contact us directly on 01452 222340.