Covid-19 continues to have a significant impact on lettings legislation. ARLA Propertymark's Robert Bolwell, Senior Partner at Dutton Gregory, joined Goodlord for a webinar to discuss the most recent changes, answer letting agents questions, and talk about what's on the horizon.
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This has been an extraordinary journey over the course of the last - what is it now, 10, 11 months? They keep changing the courts and the eviction process and how it's impacting landlords and of course regions right across the country. If we go back to the original legislation that hit the statute books towards the end of March with the first lockdown, basically what they did overnight, is removed the ability to serve a two week notice for Section 8 and they removed the ability to serve a two month notice for Section 21 when you needed your property back. All those notices went to a three month standard notice right away across the board.
It applied to every tenancy where you have an individual renting your property. Now, that was the first wham, as it were, for the industry. Now, that situation continued right the way through to August. It was a bit different in Wales. In Wales, they went from a three month to a six month notice norm earlier in the summer but in England, it went to a six month notice norm, as it were, on the 29th of August.
That situation will continue right the way through to the 31st of March when all the emergency legislation both in England and Wales will be looked at again but your executive government who you give all powers. Now, under the new norm,, yes, that Section 21 notice has to be a minimum of six months duration. They have to change a few other bits and pieces along the way because if you remember, one of the things that was brought into the English legislation by the Deregulation Act 2015 was this requirement to issue proceedings on a Section 21 notice within six months of that notice being served. Well, of course that makes no sense at all if your notice can't expire for six months so they changed that. Now you have to issue on the base of a Section 21 note in England within 10 months of sending it out and it's basically a six month notice.
With regard to default situations, I'm talking about the Section 8 notice, it's slightly different. If six months is the norm, so you have, say, two or three months rent arrears, yes, It is a six month Section 8 notice but there are a whole load of exceptions. I think that perhaps the most important section for landlords are two or threefold. Number one, if you suddenly find yourself in a situation with six months rent arrears, you can now serve a Section 8 notice which will expire after only four weeks. So six months rent arrears with a Section 8 notice is not a six month one, it's a four week one.
If you have got antisocial behaviour, yes, you can serve a much shorter notice. If you have nuisance, and remember, nuisance is a discretionary ground but if you've got nuisance, you can actually serve a notice today and go to court tomorrow if the nuisance is bad enough. So there are all sorts of exceptions. Now trying to get your head around this, one of the things the English government has done every time they've changed the rules on notice, they've published a new form. They've published a new Section 21 or the form [6-A 00:07:54] on the 29th of August and they've published a new Section 8 notice again on the 29th of August last year. And the great thing about the new Section 8 notice is it says out there on the second page all of the time limits and they link them to particular grounds upon which you or your landlord might be relying to get your property back.
At the moment I have to say we don't know. We keep referring to the new norm, it could be that even after the 31st of March the new notice provisions continue and otherwise it might still be six months for Section 21 or six months for a Section 8 note in most circumstances. We simply don't know.
In fairness to governments on both sides of the River Severn, this pandemic is twisting and turning every single week so we don't know what's going to be with us in April, May, or even further into the year. What I would say though is in Wales they have already introduced legislation to make the new Section 21 equivalent, it's called a Section 173 notice, they've already introduced legislation to make a six month notice in Wales the norm. Now that legislation hasn't been passed as yet but it does indicate that perhaps when we get to the 31st of March, at least in Wales, your Section 21 will continue to be a six month document. In England, we know from what the government has said in the past that they want to look very closely at the whole Section 21 gambit.
We know that in the Queen's speech to Parliament in December 2019, the government was committed to eventually getting rid of the whole Section 21 process. Now, I don't want to guess what might happen in six weeks' time but bearing in mind and for all this prattle in the background, I think maybe we should be prepared to accept that after the 31st of March, at least the Section 21 notice, it might still be six months as opposed to going back to the old two month rule. For the moment, we just don't know what to expect but obviously you'll be updated from time to time by your providers [inaudible 00:10:33]. It is a changing scene, changing Wales in March and England, March of last year, changing again for Wales in the summer, changing again for England in August, and changing again possibly on the 31st of March this year, but what to expect? That's all I was going to say about serving notices. Let's say anything you think I've missed.
Yeah, I'm afraid it does. It's tough on landlords. In many ways, landlords have suffered more in this pandemic than perhaps the tenants have. We've seen the situation with renter risk climbing, we've seen the situation with courts being closed down, the backlog of court cases, so this is yet another instance I'm afraid of politicians deciding that for the public good, I'm going to use the term inviting to the public good, six month notice if you want your property back. Here's effectively the new norm and probably will be after the 31st of March, I'm guessing.
We've had quite a few changes in the court process, so if you're used to issuing a possession action in your local county court on Monday morning, turning up in front of the judge perhaps, I don't know, six weeks later, and getting your court order there and then, those days have gone. Last August had significant changes when choosing a process. Those changes really were reflecting the sheer problem that the pandemic was leading to for all, landlords and tenants, and also reflected the need for social distancing. It reflected a need to make sure that tenants got a fair hearing, so I just want to remind you of some of those changes and they all came in effectively on the third of August 2020.
One of the new things you might have noticed if you've started a court proceeding since then is your lawyer will say to you, "Well, we need a rent arrears statement." That's what we normally put in with the court. But, "We need an arrears statement going back for literally two years if that's how long the tenant has been on the property." Now, the court ordered this because they want judges to have a really clear picture as to how the tenant was behaving, vis-à-vis his rental payments, both before, during, and hopefully eventually after the pandemic. So if you're going to court at all for a possession order, don't be surprised if the solicitor acting for your landlord says, "No, I need a rent statement for the last two years." That was one of the big changes.
What else do you need to do?
What has also been directed is that you need to file a statement when you issue your proceedings to indicate what effect the pandemic has had on your tenancy as far as you own it. So if need be, your lawyers will be asking you for that information about not just the rent arrears but have you any information about your tenants being furloughed which might explain the renter risk. Do you know if your tenants have been self isolating? Do you know if they've actually suffered from the virus, from Covid-19? All that information will go into a separate statement which again accompanies all the papers in to the court.
Again, the idea is to give the judge who is going to decide the case as full a picture as possible, how the pandemic has affected your tenants. Now, this doesn't mean you've got to go digging for information, but if you've got that information on your file, if you've been sent an email or two over the last few months from the tenant explaining what effect the pandemic is having, that information has got to be included. But now apart from getting more information from the landlord, the court now is trying to not essentially slow the process down but give itself a bit of breathing space.
For those of you who have been to court in the past, normal times, will know that typically the judge might deal with half a dozen, maybe a dozen cases in an hour. You turn up to court, you appear in front of the judge, your case might last five minutes and it's all over fairly quickly unless the tenant wants to oppose what you're taking. The problem with that process as I describe it was social distancing. If you have, say, 10 cases an hour in your normal court, and let's assume you've got an advocate for the landlord, you might go as the letting agent, you might have the tenant there, that's three people per case. Multiply that by 10, you could have 30 people milling around the court waiting area in any one hour period and that's simply not acceptable. Courts can't cope with it.
So what courts are now doing is listing cases more like half an hour a court. If you were doing 10 cases an hour in normal times, you are now doing two cases an hour and of course that leads to a certain problem. The problem is timing, it's backlog, it's delayed, it's all those things you associate with slowing down the whole system.
The court's doing two things to mitigate this. Number one, they're opening more court rooms in buildings which haven't seen a court in maybe 10 years. If you were in Winchester, for example, you've now got a court in what we call the Guildhall, it's a council building. So all of a sudden you've got more venues which are dealing with our sorts of cases than ever before to help clear the backlog. A big thing the courts are trying to do is deal with cases on the telephone. Video links are few and far between. Video links tend to be for the more senior judges. Our sort of case, county court district judge level, a lot of them are being done by telephone and that is working by and large, and that's one way the courts are trying to speed up the whole throughput.
One other thing that may have come across your desk if you've got a problem with a tenant is what courts are calling "review hearings" to try and save some cases going all the way to a telephone hearing or even a face to face hearing. Now, the concept behind this, if we're going to say, "Well, I can see there's an issue here. I've read the Covid statement, the effect it's had on the tenants. I've seen the rent arrears history. I think there is a possibility here that this tenant at a different time might be able to clear the arrears by instalments."
I think if you're in a situation where you've got two or three months' rent arrears, okay, fine. You can probably come to a compromise because no landlord wants to throw out a tenant and risk having a void if he can help it, but of course, by the time a file gets to a solicitor's desk, it gets to a judge's desk, by and large we're not talking two or three months' rent arrears like we might have been talking about two years ago. Now we've got rent arrears that are literally 12, 13, 14 months.
You've got a few issues here. Number one, there were no bailiffs operating in the UK until the 21st of September. They then started working again and within a couple of weeks, both the Welsh and English government said, "No, no, we're going to have a temporary ban on evictions over the Christmas period." Well, I can understand that - we have had an informal hold on evictions in Britain in the past. It goes back literally decades. But this time the ban over Christmas was extended until about the 11th of January and then new legislation came in from both sides of the River Severn to extend the ban even further.
Generally speaking, there are no evictions until the 21st of February and, of course, on the 20th of February, a Saturday, I suspect Westminster will review the situation and it might move yet again. In Wales, as things stand at the moment, there are no evictions until the 31st of March, the date when all of the legislation is going to be reviewed. In Wales though, what they're doing is they are reviewing the situation every 21 days, so between now and the 31st of March, in Wales there will be another review. I've got to be honest, William. I can not see Wales changing positions. I think in Wales with a few exceptions that have come at the moment, there will be no evictions in Wales until after the 31st of March. Who knows what's going to happen come April. We just don't know.
The exceptions in England are, number one, you have six months' rent or more. And number two, you have a possession order which is based on antisocial behaviour, nuisance, that sort of stuff. But the problem is you have to have either of those two elements written into your original section order. So it's no good saying, "When I was in court three months ago, I had three months' rent arrears. Now I've got six months' rent arrears. I'd like to do an eviction." It doesn't work like that. In England, you have to have had six months' rent arrears at the time you got the order. Now, if it's not clear on the face of your order that when it was made you had that six months' rent arrears, you're going to have to go back to the court, ask them to amend the order, then actually make it clear that the momentary figure in the document is actually six months or more. Once you've got that, in theory, your bailiff in England should go ahead with the eviction. again, if you've got anti-social behaviour, that should be written into the order and again, if you've got that, once more, the bailiff in England should schedule that eviction.
In Wales it's slightly different. In Wales, the only exception is antisocial behaviour. If you've got that written into your order, yes, in Wales, a bailiff should execute the warrant for you. Wales do not have an exception for rent arrears. So in Wales, you can have rent arrears of 36 months. No, you will not get eviction until after the 31st of March as things stand at the moment.
The numbers don't add up, do they? You've got to be prepared that your tenant is going to be there for 10 months and, if we don't go down the court process, gone are the days when you could get a court order that accelerates the application in six or seven weeks - now it's going to be more like three months. So if you think about it, a six month tenancy, at least according to the term, it's over a year and there's nothing we can do.
Two things. A notice is valid on the day it's issued and remains valid, so if you issued six months' notice in February, that won't run out. If we go back to the two month mark, there is no reason why a landlord cannot write to a tenant and say, "Look, we are withdrawing the previous notice and here is your new one." We haven't seen that yet with Section 21s for obvious reasons. We've seen it a lot with Section 8 notices where you're served a six month Section 8 notice when you've got, say, four months' rent arrears. You then hit the six month mark, you serve a second Section 8 notice of four weeks because it's going to be a lot quicker to incur the cost of a second notice because you're going to court much sooner than if you wait for the first notice to expire. But there's no reason why you shouldn't do that.
Yep, absolutely. No problems at all. Rules don't say you have to keep the court updated. You simply have to file it when you issue the proceedings but I agree, if you know something has happened, in fairness to the court, in fairness to the tenant, you should update the court.
No, it won't. If you say, "We've tried mediation. It failed," you will still have to go through the review hearing process. It's always worth pointing out to the court what you have done to try and resolve matters. The judges sitting in England do have the ability to prioritise cases. I haven't come across a case where that's happened except to try and get the case back on track. Have a go, but I don't think it'll save you much time at all in the long run.
If the tenant is still there, the answer is yes. You can talk to them but you can't harass. You can't change the locks. You can't send the local ruby team around. You've got to use due process. That would mean either, again, call a bailiff. We know there are problems with bailiffs. We've got backlogs. You can always go back to the county court and say, "Look, I would like to transfer this case to the high court for enforcement. If you're going to do that, the best time to do it is when you're in front of the judge of your actual possession hearing.
It's interesting. These measures that were brought in last August were supposed to be temporary and one of the things I haven't mentioned yet is what's called a "reactivation notice." You'll probably remember that when we had the first lockdown at the end of March 2020, one of the things that came to a grinding halt was the court process. It wasn't all courts, most criminal courts kept going. Any case that was in the court process during that window, March through to September, was effectively put on a hold. To get that case kick started again, you had to file what was called a reactivation notice. It sounds very dramatic but it's a bit of paper, a reactivation notice. That notice was designed to tell the courts what had happened during the lockdown. The deadline for filing your reactivation notice was the 29th of January this year and interestingly, the legislation about this notice was going to run until the 31st of March.
Now, a couple of weeks ago, courts ended the deadline and you can now serve a reactivation notice all the way through to the end of April. Now that, to my mind, would indicate that the courts aren't seeing any quick end to the otherwise temporary measures that were introduced last August. If we are now assuming that Covid notices are going to be filed on all proceedings up to those issued in July of this year, I think it just tells us nothing is going to change. These temporary measures will continue. We'll probably continue to have review hearings for at least until the end of this year or until the government says the pandemic is over, and I'm afraid at the moment there is absolutely no sign of that. No sign at all.
No, I think that's the wrong way of looking at it. The way bailiffs operate is with a diary, so the idea is when you get on a court order coming through, you get a warrant on your desk for the bailiff, you put the first warrant you get in the earlier spot in your diary. So what I would say landlords out there is if you've got a possession order today, even though we know in most cases a bailiff will not be able to do anything with that warrant tomorrow, it's probably worth filing your warrant request now rather than waiting until after the 21st of February, because after the 21st of February, other people will have filed their warrants during an interim period. Don't wait until bailiffs are operating. Issue the warrant now because bailiffs simply should take them in the order in which they were issued in the first place.
We have lots of things on the horizon. First of April, if you're in England the Electrical Safety Certificates become mandatory for all properties. In Wales, they don't have any statutory requirement for this. It's a recommendation but it's not mandatory. Further ahead, of course, we've got at least two private member bills and also a government-wide paper on increasing energy efficiency levels in domestic properties over the course of the next three or four years. I think that's a bit optimistic but it's on the horizon.
I think that the push the government has been making quietly in the background for longer tenancies will be with us. In Wales, they've got legislation on the horizon, we can make tenancies effectively a minimum of 12 months and I think that's going to happen. I think we'll have more people wanting to rent. I think that squeeze on the landlords will continue so margins for landlords will probably be reduced and I think sooner or later the government here will say, "No, six months is not the norm. It should be 12 months or even longer unless the tenant wants out with due causes." So that's the way I see it going.
What's your outlook for the future of the lettings industry?
I think the future is really good for our industry. Yes, there may be problems with energy efficiency. Yes, we've got all sorts of regulations on the horizon but I think, generally speaking, if you want to take a long term view, our industry is here and it's going to be really well over the next 10 years.
This transcript has been edited for clarity and length. You can watch the whole webinar on-demand.
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