24/05/2020

What to do, what to do, what to do?

The Housing, Communities and Local Government Commons Select Committee has published an interim report on protecting rough sleepers and renters through the Coronavirus pandemic.

The key recommendations are:

i) on rough sleeping and homelessness, a serious opportunity to bring it to an end in large part. Needs:

  • Task force to costs and Govt to fund ‘housing-led solution’.
  • Fund councils to help with No Recourse to Public Funds rough sleepers, and guidance on discretion.
  • Boost supported housing provision

ii) On tenant renters

A pre-action protocol is not enough (including me telling them this):

21. We received evidence which argued the pre-action protocol would not be sufficient to prevent evictions under section 21 or for a ground 8 rent arrears claim. Giles Peaker, a housing solicitor, told us in those circumstances that “failure to comply with a PAP simply cannot prevent a possession order being made, or indeed result in a delay to a possession order being made to any significant degree”. In a similar vein, Citizens Advice told us:

In theory, Courts should take into account whether this protocol has been followed when considering what orders to make in social housing. However, this only applies to discretionary grounds in practice. Private landlords rarely use only discretionary grounds–they may use either ground 8, section 8 of the Housing Act 1988 (a mandatory ground), or section 21, or both.

22. We are wary of the Government reliance on conversations between landlords and tenants which have little legal force. Housing security for renters should not rest with individuals. The Government is already aware that tenants require greater security in the rental sector: it said as much in the Queen’s Speech background briefing notes on the planned Renters’ Reform Bill. Legislating to protect tenants from the minority of landlords lacking compassion does not invalidate the premise that most landlords behave in good faith; it protects those at the sharp edge of the crisis from facing homelessness.

23. At the moment, judges cannot exercise any such discretion for section 21 applications or mandatory ground 8 section 8 applications, as discussed.

Mandatory rent arrears (and section 21) grounds for possession need to be removed for the interim. (I’ll come back to the draft Bill below).

Unless the Government amends existing housing legislation, its plans to introduce a pre-action protocol to the private rented sector will be toothless and will fail to prevent a cliff edge of evictions once the moratorium on possession cases ends. We recommend the Government bring forward legislation to amend the 1985 and 1988 Housing Acts to allow judges to usediscretion where a tenant is in rent arrears due to the coronavirus crisis for the next 12 months at a minimum. Discretion could include consideration of whether a pre-action protocol has been complied with. These amendments should be delivered through a short Bill—such as we have proposed—which must be introduced to Parliament as soon as possible.

Permanent abolition of section 21 needs to accelerated:

The Government must accelerate its plans to introduce the Renters’ Reform Bill to Parliament and abolish ‘no fault evictions’ under section 21 of the Housing Act 1988 within the next 12 months. By amending the Act to allow judges to exercise discretion, the Government will have time to deliver a Bill which provides greater security for tenants.

And LHA/UC housing element needs to be set at a realistic level. Keep the 30th percentile level permanently, with reviews to see if situation merits increasing higher.

The Government must ensure that the Local Housing Allowance (LHA) rate is set at a level that reflects real market rents and ensures those in need are able to afford properties in their areas. We call on the Government to guarantee that the LHA rate will be maintained at the 30th percentile long-term. We also ask the Government to conduct work on what the impact on renters and the wider rental market would be of raising LHA rates further.

The draft Bill referred to is this (oddly only available as an image file).


Some comments on this – a time limited set of amendments to 31 December 2020.

This only affects Housing Act 1988 tenancies – assured and assured shorthold – not Housing Act 1985 or any other kind of tenancy (Rent Act, Agricultural, etc.). But it effectively makes both ground 8 and section 21 claims discretionary grounds for possession, removing the mandatory effect.

I’m not sure why ground 8 is just moved from part 1 of Schedule 2 HA 1988 to part 2, rather than being made of no effect for the relevant period. Grounds 10 and 11 cover ‘discretionary’ rent arrears claims, and an additional ‘ground 8 but hey, this one is discretionary’ adds nothing to that.

But why restrict the 2(3) ‘court must consider if arrears are a result of coronavirus’ to ground 8 alone? Why not also grounds 10 and 11? Further, why not add this to Housing Act 1985 rent arrears discretionary grounds? Or Rent Act discretionary grounds?

On the s.21 temporary amends, this works to introduce a discretion for the court as to whether to make a possession order, and also to suspend it. But how would the ‘court must consider the extent to which LL is seeking possession due to (coronavirus) arrears’ work?Who is to evidence this? And how would tenants evidence it in a case? Tenant says ‘it is rent arrears’, Landlord says ‘I want to sell’. What then? How is that adjudicated?

Why not just remove s.21 from having effect for the relevant period?

And also, what of other forms of tenancy where any extension for the time for possession is restricted by section 89 Housing Act 1980 to a maximum of six weeks?

But beyond the immediate details of housing law, what this draft Bill does not do is make any address to what happens about rent arrears in the meantime, because possession claims are not the only issue.

Money claims (and threats of bankruptcy, although I’ll grant these will be much rarer) are not in any way restrained by this draft Bill. Tenants could certainly face County Court judgments for money claims, ruining their credit records, their future ratings and leaving them open to attachment of earnings or third party debt orders. This needs some kind of measure, as we previously noted here.

It is worth noting that this is a cross party (Tory majority) committee of MPs, and this interim report has no dissent. It seems that everyone (except so far the Government) agrees that some form of measure is needed to address the possession claim cliff edge. There are now various proposals – which aren’t necessarily mutually incompatible, but do have a greater or lesser extent – but from the government, as yet, silence.

 

 

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

10 Comments

  1. Tim

    Interesting Giles, some (2AM) thoughts:

    On Ground 8, I had the same thought – my best guess is that because the provisions apply to “hearings” taking place in the relevant period rather than “claims begun during” the relevant period, it might be thought better not to suspend ground 8 altogether in case there is some landlord who has already begun a claim on ground 8 alone.

    On LHA/UC, this is great but there will clearly be parts of the country where claimants are going to be running into the benefit cap before the higher rates hit. The cap needs to be raised or lifted entirely to avoid blunting the effectiveness of the increase.

    On money claims, I am not sure why landlords should be restricted from ordinary civil remedies when everybody else including commercial lenders and utilities firms can still use them (and councils can still get liability orders). In any event, it seems odd to place restrictions on money claims whilst allowing possession claims where the home is at stake to carry on, albeit on discretionary grounds only – presumably most landlords would prefer to have an SPO dealing with the arrears than a CCJ anyway. I am not sure there are going to be very many cases where the debt is high enough that the landlord is considering forking over £1k+ to apply for bankruptcy which wouldn’t also result in an outright possession order even on discretionary grounds.

    Reply
  2. Mandy Thomson

    I welcome the proposal to protect vulnerable tenants from the small (and I emphasize small) minority of rogue landlords, but what about complementary measures to protect small private landlords from the small but significant minority of problem tenants?

    Even before the lockdown, it often took months for private landlords to evict a bad tenant, but since the enactment of the Coronavirus Act and the inception of PD51z, it’s even worse.

    Just one example of many: a HMO landlord contacted me through my website about the downright abusive behaviour of a new tenant he recently housed after taking pity on him.

    The new tenant has serious mental health issues and is a regular drug user. Not only does he not clean up after himself (which includes leaving a foul mess in the toilet) but he shouts, raves and tries to get into other tenants rooms during the night while high on drugs and drink.

    The other tenants, particularly the females, are living in fear. Needless to say, this “gentleman” is very likely to be spreading infection, especially as he goes out for several hours every day, in flagrant disregard of government guidance and the Coronavirus Act.

    However, despite several calls, the police are, as is often the case, reluctant to get involved. The police are also wilfully ignorant of the limitation of landlords’ legal powers. The landlord has also tried to get social services and the local authority involved, again without success.

    When this tenant isn’t high on drugs, he is very clued up on landlord and tenant law and is fully aware of his rights and limitations as a tenant – although of course he only cares to apply his knowledge to ensure he remains in his rental property as for as long as possible, while just paying as much rent as he needs to in order to maintain his tenancy, while claiming housing benefit.

    This is just one example of many such cases I hear about in my role as a landlord advisor. I can give you another example of a case where a tenant owes more than £30,000 in rent arrears and hasn’t paid ANY rent for several years, despite getting housing benefit. This tenant has recently reported some disrepair in the property (that she has partly caused herself) to the local authority to make it even more difficult for the landlord to evict her.

    Clearly, small landlords such as those above need protecting from themselves, but while measure are being brought in to protect vulnerable tenants, it should be easier to remove tenants who commit acts of anti social behaviour and withhold rent without good reason.

    I believe there should be gate keeping in place to ensure all tenants who rent from small landlords are properly referenced, and that only private landlords who have the resource, knowledge and specialist insurance in place house more challenging tenants. All other landlords should be prevented from accessing tenant finding services, buy to let mortgages and landlord’s insurance if they can’t demonstrate a basic level of knowledge in letting property, similar to the Rent Smart Wales scheme.

    Reply
    • Giles Peaker

      Mandy, these proposals from the select committee were precisely about what takes the place of the general PD 51Z stay. So ASB possession claims would go ahead as usual.

      Reply
  3. Tony Prynne

    As someone who has been involved in on both sides, I profoundly disagree with Mandy Thomson’s conclusions. Mandy says “all tenants who rent from small landlords [should be] properly referenced”. An excellent idea, but just how would that work? Any prospective tenant can fake references – they are more or less useless. “..landlords…need protecting from themselves.” No, we don’t. We need less nanny state and bureaucracy, not more. What we do need is a legal system that gives quick and effective remedy to both sides where the other party has not lived up to their obligations; and in my opinion it is currently not up to the task. As for restrictions on private landlords housing more challenging tenants; I am not sure what is being referred to here, I assume known challenging tenants referred by local authority. That makes sense, but I suggest that most small landlords don’t want challenging tenants; the problem is that they only find out they are challenging after they have moved in. Some of the worst behaviour I have witnessed has been by agency companies – being professional does not rout out bad practice.

    Reply
  4. HB

    I presumably cannot be alone in thinking that there is also a missed opportunity to remove the ‘priority need’ test from Part 7? If the future is about ‘everybody in’ this test has to go.

    Reply
  5. Martyn

    Interesting piece, but are you suggesting that money claims by landlords should be restricted whereas money claims by everyone else can continue as usual? Or is it that renters, as a class, should be protected from all money claims insofar as their debts are a result of coronavirus? Or is it that absolutely everyone should be protected from money claims from everyone else insofar as their debts are a result of coronavirus?

    On the PAP and discretionary possession claims, don’t lose sight of the fact that many people haven’t (yet) been affected financially by coronavirus. What about the tenant who doesn’t pay their rent “because of coronavirus”, but is known to be still working full-time at their same employer and who refuses to provide any further information about their financial circumstances … It happens.

    Reply
    • Giles Peaker

      There are currently many restrictions on money claims (eg by commercial landlords) in place, and plenty of deferrals of liability (commercial rates, VAT, etc). There are also extensions and deferrals on overdrafts and credit card debts. It is notable, in fact, that the only arena in which there is no limitation, restriction or deferral of any kind, is residential rent.

      On your second point, it would obviously be for the tenant to establish the coronavirus-related cause of the rent arrears.

      By the way, these aren’t my suggestions. These are from the cross-party (Tory majority) Commons Select Committee.

      Reply
  6. Ben Reeve-Lewis

    “many people haven’t (yet) been affected financially by coronavirus.” Martyn? what planet are you on? Who do you hang out with?

    Not only are most of Safer Renting’s cases, really suffering from losing zero hours contract work and delays in UC being paid out, including being illegally evicted as a result, my own circle of friends and family are taking massive hits. Many of them self employed. My own wife, a self employed travel agents has dropped to a few hundred quid a month, so the pressure is on me as the salaried member of the household to pick up all the slack and I’ve lost considerable income from not being able to work as a housing law trainer. I was talking to a delivery driver just yesterday, trying to keep his head above water, who is normally a well paid consultant.

    The only people in my wide family circle and groups of friends not being financially affected, right now, is my sister, who has just retired.

    Reply
  7. Paul Kennedy

    If the law is to change so that landlords will have to prove why it is reasonable for the court to make a possession order and will have to prove rent arrears, then it would be beneficial if there was a standard format for statements of rent account. A standard format would make it easy for the courts and the tenants to understand the situation and for tenants’ advisers to give advice. The format need not be complicated – it needs little more than columns for date, rent charged, payment made and running balance, very easy to set up on a spreadsheet.

    I write as a retired housing manager and a current advice worker.

    Reply
    • Giles Peaker

      It would make practical sense for all parties, I agree.

      Reply

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