Andrew Skelly considers the current restrictions on a landlord’s ability to recover possession, and the emergency measures set out in the Coronavirus Act 2020 that will continue to apply after the automatic stay on possession proceedings comes to an end on 23 August 2020.
With the new CPR Practice Direction (PD) 55C coming into force on 23 August 2020, there might be a temptation to think that the recent emergency protections for tenants, and the hurdles for landlords, will come to an end. But hold your horses; that would be a mistake. It seems that while most property practitioners will have been aware that there is a raft of provisions that have come into effect during this COVID-19 emergency, which have had a significant impact on a landlord’s ability to recover possession of property, many have not fully appreciated that the provisions come from a number of different sources, some statutory and some procedural.
While the new PD 55C means that there will no longer be an automatic stay imposed on a Part 55 possession claim, the provisions elsewhere which oblige a residential landlord to serve an extended notice seeking possession, and which prevent a commercial landlord from seeking to forfeit a business tenancy for non-payment of rent, continue. This might be a sensible time for a review of these other provisions, and to be sure that their continuing effect is appreciated.
CPR Practice Direction 51Z
PD 51Z was brought into force on 27 March 2020, and provided that most proceedings for possession brought under CPR Part 55 (and most proceedings for enforcement of a possession order) were stayed for a period of 90 days from the date the PD came into force, therefore until 25 June 2020.
PD 51Z ceased to have effect on 25 June 2020, when the new (temporary) CPR 55.29 came into effect. CPR 55.29 largely repeats the provisions of PD 51Z and extends the stay from 25 June 2020 until 23 August 2020. It applies to Part 55 proceedings that were stayed immediately before 25 June 2020, or are brought between 25 June 2020 and 22 August 2020.
Importantly, it does not appear to have been appreciated by all property practitioners (or, indeed, all court staff) that nothing in PD 51Z or CPR 55.29 precludes the issue of a claim; a claim may be issued even though it will be stayed. Practice Direction 55C The new (temporary) PD 55C will come into force when the stay on possession proceedings imposed by CPR 55.29 ends, namely 23 August 2020, and is set to be in force until 28 March 2021.
Among other things, PD 55C distinguishes between claims brought before, and those brought after, 3 August. In relation to the former, nothing further will happen in such a case, which will effectively remain stayed, unless one of the parties files a “reactivation notice”. This requirement extends to a claim in which case management directions had been made before 23 August 2020, or a trial date had been set before 27 March 2020 (and any trial dates listed will be vacated unless a party files a reactivation notice not less than 42 days before the trial date). If no reactivation notice is filed by 29 January 2021, the claim will be automatically stayed and an application to court will be required to lift the stay.
Coronavirus Act 2020
Completely separate from the CPR Rules and PDs, the Coronavirus Act 2020 (CVA 2020) passed as an emergency measure in response to COVID-19, received Royal Assent on 25 March 2020 and came into force on 26 March. It has had a huge impact on landlords (and indeed tenants) of residential and commercial premises, as it substantially affects a landlord’s ability to recover possession.
Under the CVA 2020, notice periods in relation to possession proceedings for certain residential tenancies have been extended (Schedule 29, CVA 2020).
Put very simply, the effect of Schedule 29 is that a landlord must give a longer period of notice before they can commence proceedings for possession. For example, in respect of an assured tenancy (under the Housing Act 1988), whereas previously a landlord could serve a section 8 notice on the grounds of rent arrears (relying on grounds 8, 10 and/or 11) giving only two weeks’ notice before they could issue a claim for possession, the effect of the CVA 2020 is that such notice period must be three months. Similarly, the notice period for a notice served under section 21 in respect of an assured shorthold tenancy has been increased from two to three months. In respect of a secure tenancy under the Housing Act 1985, section 83 (general notice requirements) is to be read, in relation to notices, as if the notice period is three months. There are similar provisions in Schedule 29 in relation to Rent Act 1977 protected and statutory tenancies, Housing Act 1985 flexible tenancies, and Housing Act 1996 introductory tenancies and demoted tenancies. The notice period is generally extended to three months.
Crucially, these provisions apply where a notice is served during the “relevant period”, which began on 26 March 2020, the day the CVA 2020 came into force, and which is presently set to end on 30 September 2020. I say “presently” because, by paragraph 1(2) of Schedule 29 of the CVA 2020, this period may be extended. Therefore, although the automatic stay on Part 55 possession proceedings (and enforcement) is set to end on 23 August, the requirements for a landlord to give a three month notice before they can commence proceedings for possession will continue.
It is also worth observing that by paragraph 13 of Schedule 29, the notice period of three months may be extended to a period of up to six months, and this may be done more than once. This has already happened in respect of premises in Wales: the Coronavirus Act 2020 (Assured Tenancies and Assured Shorthold Tenancies, Extension of Notice Periods) (Amendment) (Wales) Regulations 2020 (SI 2020/778) came into effect on 24 July 2020 extending the notice period for a section 8 or a section 21 notice, from three months to six months. Accordingly, at least until 30 September, where a tenant is in arrears of rent, the landlord can no longer give just two weeks’ notice, but must now give six months’ notice, before they can even commence proceedings for possession. That is sufficient period for huge arrears to mount, which could have disastrous consequences for the landlord who relies on the rental income. If a landlord was considering serving a notice in September, therefore, it might well be worth waiting until October!
Section 82(1) to (12) of the CVA 2020 contains protections for business tenants, restricting the landlord’s ability to forfeit during the relevant period. For these purposes the relevant period began on 26 March 2020 and was originally set to end on 30 June 2020. Subsequent regulations have extended this period, however, to 30 September 2020. As with residential tenancies, this period may be extended more than once.
During this relevant period, a landlord may not enforce a right of re-entry or forfeiture for non-payment of rent, by action or otherwise. It matters not that the tenant’s failure to pay the rent due was not as a result of COVID-19. Therefore, if the business tenant fails to pay its rent, for whatever reason, the landlord cannot enforce their right of re-entry or forfeiture until 1 October at the earliest. Again, although the automatic stay on Part 55 possession proceedings (and enforcement) is set to end on 23 August, this restriction will continue. Consequently, practitioners should be quite clear that while there will no longer be a stay on Part 55 possession proceedings or enforcement after 23 August, the provisions which require a residential landlord to give extended notice periods, and which prevent a commercial landlord from forfeiting for non-payment of rent, will continue until at least 30 September 2020.
This article was first published in Thomson Reuter’s Practical Law Property Litigation Column.