Restrictions on landlord action to end this summer

In response to COVID-19, the government issued temporary legislation preventing possession action and imposing a stay on existing proceedings, all in a bid to prevent homelessness during the pandemic.

The government has now confirmed that the current stay will not be extended further, and claims can proceed from Monday 24 August 2020.

However, not quite business as usual. A new Practice Direction – “Coronavirus – temporary provision” -  has also been announced to govern the management of possession action, setting out provision for how claims, including appeals, are to proceed when the stay comes to an end in a few week’s time.

What are the timescales?

This new Practice Direction 55C comes into force on 23 August 2020 and will remain in force until 28 March 2021. So the changes are temporary.

But for a 7 month period parties will not only need to take active steps to recommence existing proceedings, but will also need to consider the impact coronavirus may have had on the claim at hand. Key details of Practice Direction 55C are set out below.

Landlords should also be aware that the lifting of the stay and the resumption of claims does not change the current requirement to give tenants at least 3-months’ notice when serving a section 21 or section 8 notice. The temporary changes to notice periods introduced by the Coronavirus Act 2020 will continue to have effect until 30 September 2020.

Existing/stayed claims

The bulk of the legislation is aimed at claims which have already been issued but which have been subject to the mandatory stay. This is all possession claims issued on or before 22 August 2020.

Reactivation notice

Once the stay expires on 23 August, parties who wish to proceed with their claims must file and serve a written ‘Reactivation Notice’. The court will not automatically list, hear, or refer, any matter unless a Reactivation Notice has been served.  There are only 2 exceptions to this:

1. A Reactivation Notice is not needed where a claim is issued after 3 August 2020.
2. A Reactivation Notice is not needed where a final possession order has already been made.

The Reactivation Notice must confirm that the party filing and serving it wants the matter to be listed/heard etc.

It must also (unless the proceedings relate to an appeal) set out what knowledge the party has as to the consequences Covid-19 has had on the defendant and their dependants. This is to enable the court to consider vulnerability, disability, social security position and those who are “shielding”.

Where the possession claim is based on rent arrears, the Reactivation Notice must be accompanied by an up to date rent statement detailing the account for the previous two years.

If case management directions had already been given prior to 23 August 2020, the Reactivation Notice must be accompanied by a copy of the last directions order, as well as new dates for compliance with the directions.

The party must file and serve, either a draft order with additional/alternative directions, or a statement that new directions are not needed. The party must also make a statement confirming if the case is suitable for hearing by video/audio link. Where the opposing party disagrees with any of the above, it must file and serve a response within 1 day of the Reactivation Notice being served.

Trial dates and hearings

If a trial date had already been set before 27 March 2020, that trial date will now be vacated and stayed unless a Reactivation Notice is filed and served within 42 days of the trial date.

Where a Reactivation Notice has been filed and served, the court must give at least 21 days’ notice to the parties, of any hearing.

Stay

Where a party fails to serve a Reactivation Notice or comply with the provisions of PD55C, before 29 January 2021, the claim will automatically be stayed.

All claims (existing and new)

Practice Direction 55C sets out how claims will be managed up to 28 March 2021. This will apply to existing claims which have been stayed for the past four months, as well as new claims issued after 22 August 2020.

Whilst Practice Direction 55C is in force, the standard period of 8 weeks between the issue of a possession claim and the first possession hearing will not apply, and in fixing the hearing date on or after the issue of the claim, the court will spread cases out to avoid the “bunching” of hearings.

These changes enable the court to account for court capacity and allow social distancing. This means that parties who are proceeding with possession action should prepare themselves for a potentially lengthy wait for the hearing.

Where a new claim is commenced (i.e. a claim brought on or after 3 August 2020), the claimant will need to file a notice with the claim form, setting out the effect of COVID-19 on the defendant and their dependants.

What to do once you have a hearing date

• Social landlords only - must bring two copies of a notice confirming that the claimant has complied with the Pre-Action Protocol for Possession Claims by Social Landlord.
• All claimants - must bring to the hearing, two copies of a notice setting out what knowledge they have as to the effect of COVID-19 on the defendant and their dependants.
• All claimants - must also serve the defendant with the applicable notices (set out above), at least 14 days before the hearing.

Summary

The clear message that comes from the changes being introduced is that the court requires landlords to demonstrate that they have engaged with their tenants in an effort to find a solution before making a claim.

Delays to the court process mean that, even more than before, landlords who wish to recover possession will need to be patient, unless they are able to negotiate a mutually satisfactory agreement with their tenants outside of the court process.

Other than the delay to the court process however, the changes are unlikely to have much of an effect on the outcome of section 21 or mandatory ground 8 rent arrears claims.

This is because, provided the ground is satisfied, or in section 21 claims, the landlord has complied with all the procedural requirements, the judge has no choice but to grant a possession order.

The date of possession can still only be stayed by 6 weeks if the tenant can show exceptional hardship. Whilst coronavirus factors may be very relevant to a tenant’s request for postponing possession, ultimately the judge has no power to delay possession for longer than 6 weeks.

So now is the time for landlords to start reviewing those properties with rent arrears or other breaches necessitating possession action, to decide how best to proceed and be ready to take steps as soon as possible after 23 August 2020.

If you need any specific help or advice on your position then please contact Jennifer Pearson or Rachel Templeman in our Real Estate Dispute Resolution team.