When the Coronavirus lockdown began in March, the government introduced a ban on evicting tenants for an initial period of three months. The ban was intended to protect tenants who had suffered income loss as a result of the pandemic. This initiative mirrored the payment holiday offered to mortgage payers for the same period, although critics felt that it was less fair since tenants were not given the opportunity of a rental payment holiday.
Tenant eviction ban extended
As the pandemic continued to bite, the ban on evictions was extended to August 23rd. It has now been extended by a further four weeks to September 20th.
That date in September is now the point at which landlords can take their case for eviction to court. However, as of 29th August 2020 landlords are now required to give a six month notice period to tenants, meaning landlords cannot regain possession until 31st March 2021 - unless they fall into one of the circumstances listed below.
The new legislation sets out alternative notice periods for a number of different scenarios:
- Where notice is served as a result of rent arrears or misleading information, six months notice is required. However if the arrears exceed six months rental payments, the notice period reduces to four weeks.
- In cases of domestic abuse or riot, two weeks' notice will be sufficient.
- Where landlords are seeking possession as a result of antisocial behaviour, four weeks' notice will be sufficient.
- Where tenants are required to vacate property as a result of failed follow up Right to Rent checks, 12 weeks notice will be required.
Prioritising claims for landlords suffering loss of income, anti-social behaviour or domestic abuse
When courts do begin hearing eviction cases, they are set to prioritise the claims of landlords who have suffered extreme loss of rental income or those who wish to evict tenants on the basis of ant-social or criminal behaviour or alleged domestic abuse.
Property Industry Eye also reported this week that courts would only prioritise cases where tenants were in a year or more’s worth of arrears.
An eviction time bomb?
Charities such as Shelter have welcomed the extension and the six-month notice period which now protects tenants over winter. However, they believe that there is a ticking time bomb that could lead to thousands of tenants with rent arrears and limited income facing future homelessness. The charity estimates that more than 230,000 private renters have been in rent arrears since the beginning of lockdown and that around 175,000 had received warnings of eviction from their landlords.
Landlords’ position weakened
While the government’s actions provide a degree of protection for tenants, commentators believe that it is landlords who bear the brunt of the legislation. They have suffered loss of income since lockdown began and they have essentially been powerless to take action against difficult tenants.
The ban has effectively weakened landlords’ abilities to take swift legal action for eviction under Section 8 or Section 21 notices of possession or eviction. Before the government’s changes, landlords could apply to court under those notices and, if successful, could evict tenants within a short timeframe.
With a Section 21 notice, landlords did not have to give a reason for evicting tenants (though as we know, the government plans to prioritise banning the no-fault evictions post pandemic). If they were successful, tenants had to leave within two months. That timeframe applied to eviction notices served before March 26th.
In June, the government required landlords to provide evidence about tenants’ financial circumstances, particularly if it had been affected by the pandemic. The notice period was also extended, initially to three months and is now further extended to six months with effect from 29th August.
A Section 8 notice originally carried an even shorter notice period of two weeks, provided the landlord had a valid legal case for eviction. The notice period will also be six months as of 29th August, unless the reason for eviction is included in the list of circumstances set out earlier in the article.
Read More: Covid-19 Changes To Lettings Legislation
Greater cooperation between landlords and tenants
Despite the changing legal situation and shift in the balance of power, feedback from landlords indicates that some have been able to negotiate temporary arrangements with tenants who have been willing and able to make reduced rental payments.
The Housing Department also reported that landlords had been supportive of tenants, with some eight percent offering to reduce rents through the crisis period.
This level of cooperation between landlord and tenant has eased the pressure to a small extent with figures from the National Residential Landlords Association (NRLA) indicating that the vast majority of tenants have been able to make some form of rental payment.
In fact, NRLA research found that 87 percent of landlords received full payment while only 3 percent of landlords reported losses related to arrears from tenants who were unwilling to resolve their payment problems.
Although the government has so far been unwilling to consider any scheme to compensate them for loss of rental income caused by the Coronavirus, it has included buy-to-let landlords in the wider mortgage payment holiday scheme, providing some relief for hard-hit landlords.
New opportunities in the rental sector
Although legal and government constraints look set to remain in place until March 2021, other factors are introducing a more positive note into the rental market. One important driver is the wider availability of buy-to-let mortgages, which had seen a significant drop during March and April this year.
More products are now back on the market and there has also been a drop in interest rates, giving landlords much greater choice and access to funds.
To cut interest costs, landlords are being advised to get an up to date valuation on their rental property. Lenders will then need to recalculate the LTV. A lower LTV typically means you’ll get a better interest rate and have access to a larger selection of lenders.
Significant savings to be made
The Chancellor’s announcement of a Stamp Duty holiday has also given landlords an opportunity to make significant savings if they decide to increase their property portfolio.
The initiative, designed to stimulate the property market means that buyers in England and Northern Ireland pay no stamp duty on the first £500,000 of their purchases until March 31.
Landlords will have to pay a 3 percent surcharge on any investment property they buy, but the Stamp Duty break effectively reduces that portion of the cost by about half. As a result, several agencies, including Zoopla and Yopa have reported increases in enquiries for investment properties of around 15 percent.
A further factor is rising demand for rental properties, particularly in Greater London and Essex way as people take the decision to move away from major conurbations. The desire to reduce the risk of infection in crowded urban areas and the increasing opportunity and expectation to work from home are helping to fuel this change.
That gives landlords an opportunity to invest in areas they might not have considered previously, with an opportunity to boost rental income over the medium and longer term.
While uncertainty continues throughout the economy, the more specific timeframes for evictions and the changing opportunities in the rental market give landlords a degree of optimism.
Read More: Capital Gains Tax On Second Home Changes
1 Bedroom, 1 Bathroom, Ingrebourne Avenue, Romford, RM3
£196 per week (£852 pcm) Tenancy info
View property details.
1 Bedroom, 1 Bathroom
Park Hill, Clapham, SW4
£270 per week (£1,173 pcm)
View property details.
2 Bedrooms, 1 Bathroom
Hainault Road, Leytonstone, E11
£288 per week (£1,253 pcm)
View property details.
Support for landlords and tenants
Dealing with the legal aspects of eviction is just one of the challenges facing landlords. If you’d like to speak with someone from our team about rental insurance or other ways we can try to help, get in touch today. Similarly, we understand that through these difficult times many tenants will be looking to reduce rental costs and seek more affordable accommodation. Click the link to view our properties to rent in London, or give us a call on 0207 099 4000 if you’d like us to help you with your search. If you’re thinking of selling, get an !!!!!instant online valuation.