Wed 02 Sep 2020
EVICTION BAN: WHERE EXACTLY DO LANDLORDS STAND?
With the Government’s last minute extension of the eviction ban on August 21st, we cancelled our blog on the subject that week because, even with the announcement, it felt like there was so much uncertainty around how events would eventually pan out. Even now, it's possible the ban will be extended further and render this article out-of-date fairly soon, but we thought we could at least provide some reasoned commentary on the current state of play and offer some advice where possible.
Whether you are a landlord with a tenancy that has been affected by Covid-19, or if you’re simply concerned about the future of one or more of your tenancies, it’s worth saying that evictions should be the very last resort when it comes to taking action against tenants.
Even if they don’t feel like it at the time, most problems, – financial, social, neglectful – can be resolved through communication. It may feel like the problem shouldn’t be yours in the first place – and there may be some justification in that – but part of being a landlord is recognising that a time may come when the lives of your tenants will need your action or assistance.
In the midst of all this it would be heartening to see the Government increasing its level of support to landlords: perhaps the tenant loan system adopted by Wales, or Scotland’s interest-free loan scheme for private landlords, could be extended to the rest of the UK, or some other framework created to facilitate rent payments being either paid or insured. But until then, let’s take a look at where things stand right now.
THE CURRENT REALITY
A poll of 1,058 private renters was carried out in June by YouGov, on behalf of Shelter, and suggests that around 5% of the UK’s 8.7million private renters are in arrears. The estimated total of 442,403 includes 226,785 who say they were up to date with payments at the end of March.
On August 12th, the National Residential Landlords Association published the results of their own survey that found that 87% of tenants were up to date with their rent, with another 8% saying they were making reduced payments or had made some other arrangement with their landlord. That survey also showed just over 3% of tenants as building arrears and being unable or unwilling to repay them.
So while the vast majority of tenancies have been unaffected, there are a significant number of tenants who are behind with payments (and that the number has increased over the last five months). For landlords whose livelihoods depend on the rent they receive being paid in full and on time, the extension of the eviction ban and notice period requirements are understandably a cause for concern, particularly with no sign as yet of any extended landlord support.
While the month extension to the eviction ban tells us for certain that no notice for any eviction will be processed before at least September 21st, it remains to be seen whether that date will be shifted once more. What we do know is that evictions for anti-social behaviour will be prioritised over rent arrears which means that if you have tenants who are behind with their rent, your case may take some time to be heard. It’s therefore sensible to look at other solutions around your own financial situation and you’ll find some suggestions later in this article.
We have zero idea how many landlords are waiting in the wings to issue eviction notices for anti-social behaviour as there are no figures available for non-submitted court cases. The reports and fears of an enormous backlog could well be overly exaggerated given the results of the surveys by Shelter and NRLA, or they could reflect the oncoming reality.
The one silver lining for landlords is that tenants who are exhibiting anti-social behaviour are being pushed straight to the front of the eviction queue, so if you have a tenancy that fits that problem it’s worth gathering your paperwork and submitting your application now for when the courts reopen.
EXTENDED NOTICE PERIODS
Even more headline-grabbing than the extension to the eviction ban was the announcement by the Housing Minister that the period for giving notice to tenants was being extended to six months.
Clearly the Government wants to avoid a wave of evictions in the autumn and to remove the worry of tenants that they may be facing a homeless winter. We suspect there is more news to come around this in the coming months, but the current preference for last minute announcements means we don't expect to know anything very much in advance.
It's worth mentioning here that evictions for non-payment of rent are often a fairly lengthy process in the most normal of times. It can take several months for your case to work its way through the court system and, even then, if the paperwork has been served incorrectly a claim can be immediately thrown out. And if a tenant pays something towards their arrears before the hearing, your claim can be nullified. So eviction proceedings are by no means a panacea.
Perhaps there is a sense in Government that by extending the notice period, landlords and tenants will find a way between themselves to come to agreements around reductions, deferments and catch-ups to negate the need for notices to quit being served.
There is so much uncertainty around absolutely everything at the moment and nobody can say with any conviction exactly what the position will be regarding the UK economy, unemployment, Covid-19, or anything else relating to this extraordinary set of circumstances.
OPTIONS FOR LANDLORDS
If you have a tenancy where your tenants are unable to pay all or some of the rent, there are some actions you can take to ease the pressure on yourself.
Perhaps the first question to ask is whether the situation your tenants find themselves in is actually having an adverse affect on your own finances. With so much dramatic commentary, it can be easy to be distracted from what is actually so.
If you don’t have a mortgage on your rental property and your outgoings are minimal and manageable, you may well find that leniency towards your tenants around rental payments removes the stress, annoyance and expectation from you and them.
Beyond that, it’s vital to have a mature conversation with your tenants to get absolutely clear on their position. If they are furloughed, do they have any indication from their employer about when they will be returning to work? If they are self-employed, is their situation improving as more of the economy re-opens? And are your tenants entitled to apply for any benefits?
You could also ask if your tenants have one or more relatives who could step in (much like a guarantor) to pay some or all of the rent. Sharing the outgoings across a larger number of people could make life more manageable than your tenants trying to handle it alone.
If you do have a mortgage on your rental property, speak to your lender to see if they are willing to be flexible around extending your mortgage holiday, or if they’ll accept reduced payments while your tenants are in arrears. You could also explore whether refinancing is worth your while with interest rates at historic lows: you may find you can reduce your payments and/or release some equity as a cushion without needing to enter into an arrangement with your lender.
There is also nothing stopping you agreeing to your tenants moving out early and at short notice if they wish to avoid their arrears increasing any more. Just because the notice period has been extended doesn’t mean your tenants are forced to stay, and them moving out quickly will free you up to find new tenants in a more stable position. Even if they don’t mention this solution to you, you can still offer it to them.
PLANNING FOR PROBLEMS
Most tenancies are in perfect shape with either no rent arrears or with an acceptable arrangement in place, but you may wish to make a plan in case the situation with your existing tenants changes for the worse, or to begin any new tenancies with as much certainty as possible.
If you have a vacant property and are looking to minimise your risk with new tenants, your best course of action is to conduct thorough referencing to ensure you are completely happy with the status of whoever is looking to rent your property. This should be standard procedure for everyone at all times, but there are plenty of cases of private landlords accepting tenants on a handshake. Now more than ever is the time for extra diligence.
You could also insist on a guarantor for any new tenancies to give yourself extra comfort in the event of your tenants experiencing financial distress in the future.
Another option to consider is taking out rent guarantee insurance where you pay a monthly premium and then receive your rent in full in the event your tenant stops paying. These policies are not inexpensive but may give you sufficient peace of mind and a level of certainty to make the outlay worthwhile.
So there you have it. Evictions do not have to be an inevitable outcome and sustaining tenancies wherever possible is in everybody’s interest and ultimately the least amount of work (even if it means some negotiation around what is a workable solution for everyone involved). Nobody expects tenants to bear the full brunt of Covid-19, but landlords shouldn’t be expected to either.
If you’d like to talk about any aspect of being a landlord or the effects of the eviction ban on your tenancies, you can call us on
Crewe - 01270 252 251
Sandbach – 01270 763 200 option 2
Newcastle – 01782 625 734 option 2
Alsager - 01270 883 130 option 2
or email us on
Crewe – email@example.com
Sandbach – firstname.lastname@example.org
Newcastle – email@example.com
Alsager – firstname.lastname@example.org
We’d love to help you make informed decisions.