In this first of two articles, residential tenancy specialist, Mike Hansom, outlines the problems currently facing landlords in respect of rent arrears. In his second article, he considers solutions.
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As widely predicted, under the special powers granted by the emergency coronavirus legislation, the government has extended the suspension of evictions for residential tenants until 23 August 2020, taking the moratorium to five months.
Thereafter, with the prospect of a tsunami of possession proceedings, the government has stated that it wants court action to be the last resort, with landlords to “exhaust all possible options” before turning to litigation. In most cases, the issue between the parties will be arrears of rent and by implication, landlords are encouraged to attempt to agree flexible payment plans. However, there is no compulsion on them to do so and in reality, most will face a simple choice between the significant uncertainty of an agreement with an impecunious tenant, or cutting their losses and re-letting the property. For many landlords, that decision may be influenced heavily by the current buoyant state of the residential lettings market.
Expect long delays
But for landlords, the option of pursuing possession proceedings remains almost two months away, by which time some tenants may be four or five months in arrears with their rent, or even more. And, of course, 23 August simply marks the current planned date when the courts will begin processing claims again, not when they will regain possession. Even before lockdown, a landlord seeking possession was at the mercy of two factors, both entirely beyond their control:
- the ever-varying size of the court’s backlog; and
- their tenant’s co-operation.
With many thousands of pre-lockdown proceedings currently ‘paused’ by the court and a likely unprecedented number of new possession claims awaiting the green light, September will see huge additional pressure placed upon the Court Service, with lengthy delays inevitable. In the meantime, with only a slim prospect for many tenants of finding new accommodation, there is little or no incentive for them to simply vacate.
In his second article, Mike Hansom considers how, particularly in the current climate, landlords should approach arrears of rent.