With such unprecedented uncertainty surrounding the COVID-19 pandemic, we hope that Myerson’s COVID-19 Real Estate blogs can help alleviate concerns surrounding many current issues.
Notwithstanding the government implementing changes daily, Myerson is committed to providing individuals and businesses with the advice it needs now, and for the foreseeable future.
A landlord’s perspective
The government passed the Coronavirus Act 2020 on 25 March 2020 to, amongst other things, protect residential tenants from evictions in the private and social sector, and the increase in the amount of time required to be given under notices requiring possession (from 2 months to 3) but what about landlord’s protection?
Boris Johnson has referred to several practical steps to protect “other actors in the economy” by avoiding "passing on the problem."
Q: With the prevalent three-month ban preventing landlords from evicting tenants who cannot pay rent where does that leave landlords?
A: Ordinarily, a landlord has the right to retake possession of their property and prematurely end a lease for the non-payment of rent (subject to various legislation).
With the government enacting many measures and legislative backing to follow, the temporary ban on ending tenancies for the very reason of non-payment of rent as a result of the COVID-19 outbreak will no longer be an option for landlords.
However, in light of this measure, the government are encouraging mortgage lenders to offer a three-month mortgage payment holiday for landlords who have Buy to Let mortgages with tenants currently suffering financial difficulties due to COVID-19.
Those eligible to benefit from the “payment holiday” (which is currently unclear) may be extended to not only those who are currently experiencing rent arrears but those landlords who are up to date with their mortgage payments. Without further substantial detail from the government, currently, it is unclear exactly how the above emergency measures are to take immediate effect. However, it would prudent to collate as much evidence from tenants in financial difficulty and contact your mortgage lender to seek clarity on their application process and guidance they offer.
Q: What if I do not have a Buy to Let mortgage?
A: Unfortunately, without further updates from the government, only measures concerning “mortgage payment holidays” have been considered. Importantly, the government have not frozen tenants’ obligations to pay rent therefore, a tenant should be continuing to do so unless severely affected by COVID-19.
Accordingly, it would be appropriate to refer to your landlord insurance policy (or similar) to seek clarity on the position in this uncertain time.
Failing appropriate insurance cover, it is essential that landlords start engaging with tenants regarding rent payments, organise a long-term plan and gather evidence of financial difficulty.
Q: What happens after the three months is over?
A: Although described as a “holiday”, landlords need to be aware that this may lead to an increase in monthly mortgage payments once the national emergency is “over”. Although the future is unknown, landlords and lenders must assess the unique circumstances of each case and agree a realistic, affordable payment plan.
A tenant’s perspective
For tenant’s, this unchartered territory is likely to be creating serious concerns over the future of the time in your rented property.
Q: What steps can be taken if I miss my rent?
A: Tenants should consider this situation very carefully. Without a rent suspension provision (which are very rare), failure to pay rent is essentially a breach of contract.
It is understandable that with job losses and threatened job security in the future it may be that tenants can simply not afford to pay their monthly rent. If this applies, contact with the landlord should be made immediately to see if any alternative arrangements can be reached during this unprecedented time.
As noted above, the government has increased the notice period required to terminate leases and has placed a stay on terminating tenancy agreements for a period of 3 months for the reason of unpaid rent and COVID-19. However, if rent continues to be unpaid and no arrangements have been made with your landlord, the landlord may seek to recover any unpaid costs through the Courts we then ban is lifted.
Q: Can I end my tenancy early because of COVID – 19?
A: There is no immediate right to end the tenancy early in the circumstances unless there are specific provisions within the contract.
You can only end a fixed-term tenancy early if there is a break clause within the contract, or if you can negotiate an early end to the agreement with your landlord. It may be that your landlord is more willing to negotiate with you in this difficult time.
Q: As a tenant in a shared building, who is responsible for any increased cleaning costs and will this affect the service charge?
As per the service charge provisions in your contract, it is likely (though you will need to check the service charge provisions carefully) that you, the tenant, will be responsible. At present, there are no specific legal obligations on landlords to carry out extra cleaning to prevent the spread of COVID-19. Without any current legislative framework regarding this, each landlord will have a different approach to the outbreak and what they can do to prevent the spread.
Close attention should be paid to the service charge provisions in your contract when considering how cleaning of any common areas should be combatted both now and in the future. A large number of service charge clauses will contain a provision permitting a landlord to recover 'reasonable costs', or the costs of works carried out as part of good estate management, which would likely seem relevant given the highly contagious nature of the virus.
What next?
At this moment in time during this national emergency, it has been advised that both landlord and tenant act practically, collaboratively and compassionately towards each other.
At the time of writing this blog, the measures in place act as guidance and preliminary recommendations for those who find themselves asking the above questions.
Here to Help
If you have any more questions or would like further information on how we can help, you can contact our Commercial Property Team on 0161 941 4000 or email The Commercial Property Team.
You can also follow legislation updates by checking www.gov.co.uk.