In a move which may surprise many people, rumours are that “listing possession hearings” will resume on Monday, 29th June. While not confirmed as yet by the government, it looks as though the eviction protection offered to tenants in light of the coronavirus pandemic will not be extended. Can we therefore assume that mortgage/rental holidays will also come to a close?
Huge backlog of cases
Even prior to the emergency government legislation there were many ongoing eviction actions in the pipeline. When you bear in mind the potential issues as a consequence of the economic impact of the pandemic, the pressure on UK courts will be huge. There’s also the problem that many larger property companies will have furloughed their staff and may not be ready to recommence possession claims. In reality this will give private landlords just over a month to discuss rent arrears with their tenants and try to put some kind of payment plan into place. If no agreement can be reached, surely legal action is the only option?
It will be some time before UK courts are up and running as “normal” therefore the backlog and future eviction proceedings will be held via video link. While many businesses have been working from home and are familiar with video links and virtual settings, this may not be the same for tenants on the end of eviction notices. It will therefore prove extremely challenging to get all parties together at the same time whether via video link, telephone or any other medium. Apparently judges have already been warned to ensure that “vulnerable tenants are not prejudiced by the new process”. What exactly does this mean?
The idea seems to be that judges will require only sight of paperwork to proceed with an eviction case, working in 30 minute slots. Rumours suggest that anywhere up to 10 cases per day could be heard although time will tell whether this is feasible.
Despite the fact that many private landlords will be pushed to the financial edge as a consequence of rent arrears, much of the political focus will likely remain on tenants. It will also be interesting to see how the courts react in the aftermath of the pandemic and how eviction notices will impact individuals and families. The fact that the property market has effectively been “unfrozen” has been welcomed across the board but it will be some time before we get back to anywhere near normal markets.
The financial aftermath
While the fight against the pandemic goes on, the financial tsunami it is leaving behind will take a long time to clear up. The UK has already tipped into recession, job losses are expected, many tenants will struggle to raise their rent going forward and private landlords will still need to pay their mortgage arrears. If tenants quite literally can’t afford to pay their rent arrears, but perhaps they can afford to pay the majority of their rent going forward, this leaves landlords with a very difficult decision. It is better the devil you know, retaining a tenant able to pay the majority of their rent going forward (with the idea of reverting back to standard payments in due course) or do you bring somebody else in?
While there are obvious legal parts that private landlords can take, if a tenant was evicted for non-payment of rent how likely would they be able to claw back the arrears? Will some landlords be forced to take a financial hit in the short term to at least maintain the majority of their cash flow going forward?
While the resumption of eviction proceedings will bring back a degree of normality to the private rental sector, it will also stir up a hornets nest of potential issues. There will be a political backlash, no doubt about that, with private landlords painted as the devil incarnate despite their own financial sufferings. Will the courts be more appreciative of tenant struggles in the short term? Will mortgage lenders squeeze private landlords to begin paying back their rent arrears?
Never has the UK private rental market seen such upheaval and uncertainty.