Light at the end of the tunnel for landlords and tenants?

As for everyone, the last five months have been a rollercoaster of uncertainty for landlords and tenants. The government first took assertive steps to place a hold on any new and ongoing commercial forfeiture and residential possession proceedings. There followed speculative “guidance” on how landlords and tenants were to maintain relations – particularly as regards the issue of unpaid rent.

Even though the bar on re/commencing residential possession matters has been extended (at the 11^th hour) from 23 August to 20 September, it does appear as if the months of uncertainty for both commercial and residential landlords and tenants are drawing to an end.

Ben Jones, Senior Associate in Blanchards Bailey’s Litigation and Disputes team, shares his views on what lies ahead:

“In the first instance it is fair to say there will be delays so landlords who are hoping for a swift repossession of their property will be disappointed. The Court Service (“HMCTS”) are already indicating a desire to keep cases out of litigation on the basis that Courts will be working through a five-month backlog of unissued cases. So, whilst it may be tempting is immediately issue new possession proceedings on 21 September, it may pay dividends in the meantime to have one more try at settling the matter to avoid litigation.

Of course, some residential tenants will have been advised not to surrender their tenancies unless they are served with a possession order. As this can only come from a Court at the end of a possession claim, settlement may be impossible as tenants will not agree to make themselves homeless. On that basis, I’m afraid landlords must soldier on both with outstanding and new claims.

If proceedings must be commenced (or recommenced) the process will now be slightly different from what we have all seen prior to lockdown. Practice Direction 55C of the Civil Procedure Rules (CPR) states what is required for both new proceedings and proceedings which have been stayed during the lockdown.

Claimants are obliged to file a written "reactivation notice" to continue a possession claim that has been stayed during the lockdown. This is mandatory in most cases. The notice must “set out what knowledge that party has as to the effect of the Coronavirus pandemic on the Defendant and their dependants". Such a notice is not required if a possession order has already been granted or the claim was issued on or after 3 August 2020.

For claims issued on or after 3 August 2020, Claimants must serve on the Defendants not less than 14 days before a possession hearing a notice "setting out what knowledge that party has as to the effect of the Coronavirus pandemic on the Defendant and their dependants". The Claimants must also take two copies of the notice to the possession hearing.

The actual impact of and weight attached to the notice mandated by the new practice direction remains to be seen. My expectation is that the Courts will want to ensure that the landlord has at least had regard to any effect of the pandemic and is not acting vindictively but rather dispassionately and in compliance with the CPR generally. Frankly, that is expected by the CPR in any case and is, in my opinion, the best way in which litigation should be conducted. Whilst emotions can run high, litigation should always be played with “a straight bat”.

Many landlords have commented to me that they have had (and may continue to have) the sharp end of the stick over the last few months. Whilst it is true that many tenants have struggled to pay rent, landlords have been hampered by the various procedural bars enacted. Many have not received rent, nor can they regain possession to let to new (paying) tenants. I have advised several landlords that they can still fall back on a money claim to recover unpaid rent. However, one cannot get blood out of a stone; If a tenant does not have the means to pay, the commencement of a money claim may be putting good money after bad.

My advice therefore is generally that landlords should mitigate their losses by seeking possession first, and then considering a money claim after – if their appetite and funds allow.

Whether landlords are commencing or recommencing possession proceedings, I’d also strongly recommend taking advice on the new changes to the CPR to avoid falling foul of them in the lead up to a hearing.

Finally, landlords must be patient. Despite predictions, businesses appear to be busy and the court system is no different. It will take time for proceedings to get moving once more. If your claim for possession is based on mandatory grounds or is issued under a section 21 notice, take heart in the fact that it is likely a matter of “when” not “if” you get possession. In the meantime, be fair and commercially minded with your tenants – conduct in litigation is just as important as your legal position”

Whilst time will tell what going through the new possession process will actually be like, now is the time for both landlords and tenants to be getting their houses in order (no pun intended).

Contact Ben or one of the Litigation and Disputes team on 01258 459361 for advice on how Blanchards Bailey can assist you.