Substantial rent arrears exemption is a ‘welcome change for landlords’

The government’s decision to reduce the threshold for “substantial rent arrears” to six months last week provides much needed relief for landlords, according to a property lawyer at Irwin Mitchell.

The Public Health (Coronavirus) (Protection from Eviction) (England) Regulations 2021 came into force last week extending the eviction ban for residential properties – the regulations apply to England only – and provide that no evictions can take place until 21 February 2021.

The government has confirmed that the end date of the ban will be regularly reviewed. Court proceedings for possession are unaffected by the ban, and landlords can still progress to obtaining a possession order.

As with the previous eviction ban regulations, there are exemptions to the ban in certain serious circumstances, including cases involving trespassers, antisocial behaviour and “substantial rent arrears”. Crucially, the threshold for “substantial rent arrears” has been reduced to six months.

The explanatory memorandum of the Regulations gives further guidance as to how the exemptions will work in practice. It states that when making an order for possession, the court will record whether the order falls within one of the exemptions. In cases where a possession order was made before the new regulations were introduced, the landlord will need to make an application to court for a determination as to whether an exemption applies. Hopefully, this will be a straightforward procedure, but given the backlog in the court system, there will inevitably be delays.

George Cohen, real estate solicitor at Irwin Mitchell, said: “In theory, this is a very welcome change for landlords. In the previous regulations, the substantial rent arrears exemption only applied where there were nine months’ arrears on or before 23 March 2020, which is extremely limited [if there were nine months’ arrears before 23 March 2020, they would now be at 18 months’]. Many landlords are suffering severe hardship by rent arrears levels significantly below that figure, and six months’ appears to be a more balanced threshold.

“Whether or not bailiffs will actually carry out evictions during lockdown is another matter. We have heard instances of bailiff officers implementing their own policies not to carry out evictions in a period of lockdown. There is also the question of how a bailiff deals with a situation where they attend a property for an eviction, and the tenant claims to be self-isolating. Presumably, the eviction could not be carried out. However, it is hoped that bailiffs will proceed with evictions in accordance with the Regulations if they can do so safely.”

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3 Comments

  1. RosBeck73

    But has the guidance changed whereby courts are ordered to not prioritise cases (i.e. put them to the bottom of the pile) until there are 12 months’ rent arrears? (which conflicts with the 6 months mentioned above)

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    1. PossessionFriendUK39

      Indeed Ros,  whole situation is a Mess of the Governments  making.

      Delay,  delay and  ‘ kick the can down the road. ‘     Bit like the Debt Moratoriums –  solves nothing.

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  2. paulgbar666

    I predict that many hundreds of thousands of LL will be selling up as soon as they can once they have evicted their feckless rent defaulting tenants. The illusion of BTL being viable as a business proposition has been shattered by the Govt eviction ban and their intention to make eviction even more difficult.   For leveraged LL Govt actions and policies has made BTL unviable for most LL. It will take decades for LL to recover losses if they stay in the game. You can bet your bottom dollar that when not if the next pandemic arrives Govt will ban evictions again. Such an inappropriate response makes being a LL very risky. Mass rent arrears will never be paid. To be viable a LL needs RGI and a guarantor for tenants. Very few tenants are able to achieve this which means the LL is heavily exposed to massive losses caused by bonkers Govt policies. It is logical that Govt would again ponce off LL by imposing an eviction ban as it saves Govt billions in TA costs if the LL was able to evict.   LL have to be aware of Govt poncing off them and manage their business models accordingly.      

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