The Coronavirus Crisis and the Impact on Landlords and Tenants
With the coronavirus crisis escalating each day, many tenants - both individuals and businesses - will face the prospect of being unable to keep up with rental payments. Indeed, with the announcement on Monday evening that UK is to enter a period of ‘lockdown’ lasting at least three weeks, many tenants may find themselves without an income, or see it significantly reduced. On the flipside, understandably, landlords will be concerned that their rental income may come to an abrupt halt.
As announced by the Ministry of Housing, Communities and Local Government, the Coronavirus Bill 2019-21 significantly changes the relationship between landlords and tenants throughout the duration of the crisis and, potentially beyond. The legislation provides additional protections for residential and business tenants. The Bill will have the following impact:
- In relation to residential tenancies, no new possession proceedings are to take place within the next three months; this applies to both private and social housing tenants; there is the option for the Secretary of State to increase this to a period of up to six months. In order to provide some relief for landlords, where tenants are unable to pay rent due to financial difficulties caused by the crisis, landlords will have the benefit of a three-month mortgage holiday over the property. This comes into force the day after the Bill is passed; as of the time of writing (26th March), this has not yet happened. At the end of this three-month period (assuming it is not extended), landlords and tenants will be expected to work together on an affordable repayment plan, which should take into account the tenant’s individual circumstances.
In relation to business tenancies, there is no longer the right of re-entry or forfeiture for non-payment of rent after the Act comes into force until 30th June 2020. For any ongoing litigation, a tenant cannot be evicted until 30th June 2020. The impact on business tenants could be interpreted as a period of ‘rental deferral’. Again, as with residential tenancies, at the end of the crisis, landlords and tenants should work together in order to agree a workable repayment plan. Business tenants should also consider the financial support package currently being offered by the government.
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