The Coronavirus Act 2020 came into force on 26th March 2020, substantially affecting the ability of Landlords and mortgage lenders to recover possession of properties in England and Wales. This paper seeks to provide a summary of the current position of repossession actions for landlords and also, mortgage lenders.
Repossession actions for landlords
Following the enforcement of the Coronavirus Act 2020, it has become extremely difficult for Landlords to recover possession of rented property, due to the tighter restrictions placed by the Courts in relation to the management of possession claims.
A key change which has been brought into force is the notice period that must be given to tenants when serving notices seeking possession, for both Section 8 and Section 21 Notices under the Housing Act 1988. The government extended the provisions of the Coronavirus Act 2020, meaning that from 29 August 2020 until 31 March 2021, landlords would not be able to start possession proceedings in most circumstances unless they had given their tenants six months’ notice. Notably, a shorter notice period is permitted where the grounds of eviction relate to anti-social behaviour or domestic violence. In England, a shorter notice period is also permitted for fraud or where at least six months’ rent is unpaid at the date on which the notice seeking possession is served.
When serving a notice seeking possession, you have to wait until the deadline, which is set out in the notice, has passed before commencing a claim. This change means that landlords shall now have to wait 6 months in most circumstances before commencing possession proceedings. For claims based solely on rent arrears, relying on grounds 8, 10 or 11 in Section 8 notices, the possession claims online service can be used. For all other grounds, the standard possession claim form shall be necessary to complete. For an accelerated possession order, a Section 21 notice can be used, only if rent arrears are not claimed. A Section 21 notice will be quicker as a hearing is not required. For possession claims issued before 3 August 2020, landlords will need to reactivate the claim by filing a reactivation notice with the court and serving it on the defendant. The deadline to file this notice is 16:00pm on 29 January 2021.
Once the court has issued the possession claim, a copy of the claim form will be sent to the tenant who will have 14 days to acknowledge receipt by completing a response form. A review appointment will then take place; this is a new step which has been introduced to the standard possession procedure. Judges will now review the case before deciding whether to list the case for a substantial hearing. The claimant shall then receive a notice from the court instructing them to submit an electronic or hard copy bundle of documents relevant to the case 14 days before the review date and to confirm that the bundle has been served on the defendant.
If the case is not settled by the review hearing and the Judge considers all steps have bene followed, then the case will be listed for a possession hearing 28 days after the review date. At this later hearing, the Judge will decide whether to make a possession order or supply other case management directions for the parties to take.
Once a possession order has been made by the court and in the event that the tenants do not leave the property in accordance with the Order, an application cane be made for a warrant of possession for bailiffs to evict the tenant. Due to a third national lockdown, bailiffs are not permitted to carry out evictions, only in exceptional circumstances. The current restriction on evictions which was due to be lifted on 11 January 2021 has now been extended for a further six weeks until 21 February 2021.
Repossession actions for mortgage lenders
The United Kingdom’s Financial Conduct Authority (FCA) is proposing to extend its current general ban on lenders enforcing repossessions in the mortgage market.
At present, FCA guidance bars lenders from enforcing mortgage repossessions before 31 January 2021, other than in exceptional circumstances. This was introduced to combat the financial difficulties that some borrowers faced, as a result of the pandemic.
In a new consultation, the regulator has proposed to extend the general ban on mortgage repossessions up to 1 April 2021. However, the FCA is proposing to loosen current restrictions in relation to other consumer credit arrangements from 31 January 2021.
At present, firms are generally banned from terminating a regulated consumer credit agreement or from repossessing goods or vehicles, except in exceptional circumstances. The FCA has proposed to end that ban from 31 January, setting out new draft guidance instead that would require firms only to terminate or enforce repossession ‘as a last resort’ and in accordance with all relevant government public health guidelines.