Leading Residential Property Lawyers Notice Rise in Repossession Requests During Covid-19
Landlords wanting to obtain possession of their residential property should consider serving notice or issuing proceedings sooner rather than later, advise property dispute lawyers at Irwin Mitchell, particularly given the court’s backlog of cases.
“In current circumstances, we believe that it will likely take at least 12 months from the service of a notice, for a landlord to recover possession of a property where county court bailiffs are required.” says Sam Lane, a solicitor in Irwin Mitchell’s Real Estate Disputes Division. “It is therefore imperative that landlords do not waste time or delay taking steps to end ASTs, where they wish to recover possession.”
Irwin Mitchell has in recent weeks noted a rise in inquiries from landlords seeking to recover possession of a property still in the infancy of an assured shorthold tenancy agreement (AST), many of which had been entered into since March 2020, when the Coronavirus pandemic gripped the nation.
The majority of these situations occurred because the landlord was eager to let the property because it was, or was due to be, vacant. As a result, the landlord’s investigation into a prospective tenant was often reduced, a fact which is coming home to haunt some landlords now.
As Lane says, “We recently had a case where a tenant was able to pay rent upfront for six months, along with a five week deposit. However, the tenant’s antisocial behaviour in month one led to three longstanding tenants threatening to leave.”
He cites another case in which a tenant was able to make payment of the first month’s rent and a five-week deposit, however, has been unable to make payment since.
He continued, “Whilst it is understandable that landlords want to ensure their properties are occupied and let, it is important that they do not cause themselves problems by cutting corners or “panic-letting”. Whilst it is likely that the rental market will become more competitive over the coming months, a short-term solution to an empty property now, could lead to a bigger problem further down the line.”
So, What Can a Landlord Do Now, during Covid-19 Tenancy Restrictions?
A valid notice to terminate an AST must be properly served, and expire, before a landlord can seek possession via the Court. Since 26 March 2020, landlords have been required to give all renters three months’ notice if they intend to seek possession (i.e. serve notice that they want to end the tenancy). This extended notice period will apply until at least 30 September 2020, and it is expected this may be extended further.
Additionally, there is a current stay on evictions, which the Government has recently (June 5th) now extended until 23 August 2020. This will take the suspension on evictions to a total of 5 months. Therefore, no landlord will be able to evict a residential tenant before 23 August 2020.
However, as Irwin Mitchell point out this does not prevent landlords from issuing possession proceedings or serving the necessary notice to terminate (subject to increased notice periods).
As Sam Lane continued,” Existing claims for possession will sit in a queue of paperwork until at least 23 August 2020, and the court’s backlog is only going to grow. The Government has not yet provided any guidance on how they will deal with the backlog, but the courts typically deal with post on a ‘first come, first served’ basis, with the exception of urgent applications. Consequently, if a landlord issues a possession claim now, he will likely be significantly ahead of where he would otherwise be if he waited for the stay to be lifted a few months down the line, before starting the eviction procedures.”
Unless agreed otherwise, rent continues to fall due in accordance with the AST, and the tenant remains liable to pay it. Accordingly, if payment has not been received, landlords may take legal action to recover arrears. In addition, most ASTs include a term entitling the landlord to claim back their legal costs and expenses from the tenant as well as interest.
Irwin Mitchell advise that landlords should first attempt to open a dialogue with their tenant to see if an amicable solution can be reached, prior to resorting to legal remedies. However, if a solution cannot be reached, landlords should consider serving the requisite notice and/or sending the tenant a compliant letter before action in respect of the arrears. This letter would give the tenant a final chance to make payment, or agree a payment plan, before court proceedings are issued.
If the arrears exceed £5,000, another option may be to serve the tenant with a statutory demand. However, as Lane warns, “This is often seen as a pre-cursor to commencing bankruptcy proceedings and is a far more aggressive tactic. It should be carefully considered before being pursued.”
He concludes, “The important point for landlords to remember is despite market conditions, they need to make the same inquiries into prospective tenants as they would have previously made; in fact, it is probably important to do so than ever, given the restrictions on eviction. Ultimately, if things do go downhill, it’s much more sensible to take action now and be front of queue rather than waiting for the stay of eviction to be lifted at the end of August, at the earliest.”