How do I recover rent arrears from residential tenants post-Covid?

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The Coronavirus Act 2020 has had significant implications for landlords and tenants of residential premises, by prohibiting landlords from recovering possession. Section 81 and schedule 29 of the Act deal with the protection from eviction for residential tenancies in England and Wales. This  article covers how landlords can recover residential rent arrears from residential tenants post-Covid following the lifting of the moratorium on possession and eviction proceedings. 

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Serving Notice

Landlords can give two types of notices to their tenants before evicting them. The first one is a section 21 notice, which terminates the tenancy and is the quickest and cheapest way to gain possession of a property. The second one is a section 8 notice, which also terminates the tenancy due to a breach of tenancy agreement, for example if rent is unpaid. However, a section 8 notice is a longer and more costly process of gaining possession which includes a court hearing. 

If the landlord serves a section 21 notice, rent arrears will not be recovered as part of the possession claim. But the landlord has the option to bring a separate claim in the County Court to recover the outstanding sum. There is, however, a court fee payable which may vary depending on the value of the claim. 

If the landlord serves a section 8 notice, he will be able to recover possession of the property as well as rent arrears. Before the pandemic, in order to serve a section 8 notice the tenant had to be at least two months in arrears.

Changes Post-Covid 

New regulations were introduced in December 2020 until 31 May 2021 to mitigate the impact of the coronavirus pandemic on residential tenants. These regulations increased the minimum notice period and prohibited landlords from evicting their tenants due to rent arrears in most circumstances. They were introduced to protect tenants from economic turmoil and public health dangers that the pandemic caused. 

New amendments to the Coronavirus Act 2020 have extended the new regulations from 31 May 2021 until 30 September 2021. These new regulations made a series of amendments to the Coronavirus Act 2020. These amendments concerned the notice period for evictions; ‘serious arrears’ thresholds; and ‘egregious’ grounds for specialised tenancies. The amendments were made to ensure that the measures introduced by the Coronavirus Act remain proportionate to the risks posed to public health during the coronavirus pandemic.

From 1 June 2021, the new regulations will reduce the required notice period for section 8 notices from six months to four months, unless an exception applies in which case the notice period may be shorter. They will also maintain the existing exceptions where the grounds of eviction relate to anti-social behaviour, domestic violence or acquiring the tenancy as a result of a false statement. 

An example of the new regulations show that a claim for recovery of possession based on rent arrears could have been started after just two weeks from the date of service of a section 8 notice before 26 March 2020, yet from 1 June 2021, unless at least four months’ rent is unpaid, the earliest date after which court proceedings could be brought cannot be earlier than the expiry of four months from the date of service of the notice. 

The new regulations have also reduced the notice period for section 21 notices from six to four months and the period in which possession proceedings must be commenced from 10 to 8 months from the date on which the notice was given.   

Claims for Rent Arrears 

Landlords who want to recover rent arrears pre-possession mayl need to bring a claim in the County Court, and written notice to the tenant. The notice confirms that the landlord intends to apply to the court for a possession order if the notice is not complied with. The section 8 notice must be served in the prescribed form, known as Form 3. If the tenant fails to vacate the property by the date specified, the landlord may apply to court for an order for possession. This must be done within 12 months of the date of service of the Section 8 Notice otherwise the section 8 notice becomes invalid. If the landlord’s possession claim is based on substantial arrears of rent and the landlord is successful, the court must make an outright possession order. This means the tenant must leave the property by the date given in the order. The date is usually 14 days after the date the court makes the order.

From 11 December 2020 until 11 January 2021, residential evictions could not be carried out anywhere in England and Wales. These Regulations prevented attendance at a dwelling house for the purpose of executing a writ or warrant of possession, or delivering a notice of eviction, subject to certain exemptions. These restrictions were subsequently extended and amended from 11 January 2021 until 31 May 2021. The exemptions included but were not limited to wholly or partly on the grounds of some or substantial arrears of rent, or persistent delay in paying rent. Under the November Regulations, landlords could only seek to enforce evictions in cases with rent arrears of nine months or more at the date of the possession order, which had accrued before 23 March 2020. 

The January Regulations reduced the minimum amount of rent that had to be outstanding to six months’ rent. Accordingly, under the January Regulations, February Regulations and March Regulations, the arrears could have accrued at any time. The government widened the rent arrears exemption in order to balance the impact of the extension on landlords, while continuing to protect tenants from eviction.

The courts also imposed a suspension on most proceedings seeking to enforce an order for possession of a residential property, from 27 March 2020 until 25 June 2020 (Practice Direction 51Z). The suspension was further extended from 25 June 2020 until 23 August 2020 (Civil Procedure Rule 55.29) and subsequently extended again to 20 September 2020. The courts have introduced the new steps required to reactivate suspended claims, as well as procedural changes applying both to existing claims and the issue of new possession claims (PD 55C) from 20 September 2020, when the automatic suspension ended, until 30 July 2021.

Different requirements apply under the new Practice direction (PD 55 C as amended) depending on when the possession claim was first issued.

In relation to a suspended possession claim brought before 3 August 2020:

•   The claim will not be listed, relisted, heard or referred to a judge until one of the parties serves a “reactivation notice”, stating that they wish the case to be listed.

•   The court must give at least 21 days’ notice of any hearing listed or relisted in response to a reactivation notice.

•   If no reactivation notice was served by 30 April 2021, the claim will be automatically suspended.

•   No reactivation notice will be required where a final possession order has been made.

For possession claims (new or suspended) brought on or after 3 August 2020, the claimant using the accelerated procedure must file with the claim form, and claimants in all cases must serve before and produce at the hearing, a notice setting out the knowledge that they have as to the effect of COVID-19 on the defendant and their dependants. Social landlords will need to confirm that they have complied with the Pre-Action Protocol for Possession Claims by Social Landlords.

Where does Legal Utopia fit? 

Legal Utopia provide businesses with support on a range of common legal issues and disputes via its Legal Checker service on a fixed subscription basis on the Legal Utopia app, providing further legal guidance and resources to navigate the process of possession or rent arrears proceedings in residential and commercial premises. 

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