Leasehold in Lockdown
Over the last few weeks we have been faced with unprecedented changes that impact on how we operate within the leasehold sector. The Government has made it clear that, during the period of lockdown, rents payable under tenancies, which will include long leases and shared ownership leases, remain payable. However, the emergency legislation and directions implemented have severely restricted possession cases and could impact on rent, and potentially service charge, collection for many months to come.
Emergency changes due to Covid-19
- Notices seeking possession
The Coronavirus Act 2020 has extended the notice period under section 8 and section 21 of the Housing Act 1988.
From 26 March 2020, possession proceedings under both routes cannot commence unless tenants have been provided with at least three months' notice. This change extends the period for any notices served during the 'relevant period', 26 March - 30 September 2020 (which may be extended).
The precedent forms for a section 21 notice (form 6A) and section 8 notice (form 3) have been amended to reflect this change. In terms of Section 8 notices, the new form will apply to shared ownership leases as well as rented properties.
- Possession Proceedings
Practice Direction 51Z, Paragraph 2 (Civil Procedure Rules), which was introduced on 27 March 2020, provides that:
"all proceedings for possession brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession are stayed for a period of 90 days"
The only exemptions are possession actions against trespassers (PD51Z, Paragraph 2A).
The effect of this direction is that even if the possession action in relation to a long lease or shared ownership lease is based on non-monetary grounds or was commenced before lockdown, it still cannot proceed until after the 25 June 2020 , this being the expiry of the 90 day period. It is also worth noting that the 90 day period could be extended and so proceedings could be stayed beyond this.
However, on 30 April 2020, in the case of Arkin v Marshall, the Court of Appeal will consider how far the imposed stay under Practice Direction 51Z should extend. A further update will be provided following a decision from the Court of Appeal.
Whatever the outcome, any time available could be used to consider mediation and/or settlement options. Ultimately it may be more beneficial to avoid the court's input entirely as even when the courts resume full function they are going to be under a huge strain and further delays are inevitable.
Other recent changes
- Statement of truth on pleadings
Since 6 April 2020, the form of the statement of truth verifying a statement of case (Claim Form/Particulars of Claim), a response (Defence), an application or a notice of objection should be read as follows:
"[I believe][the Claimant] believe that the facts stated in this [name of the document being verified] are true. I understand that proceedings for contempt of court may be brought against anyone who makes, or causes to be, a false statement in a document verified by a statement of truth without an honest belief in its truth".
Please ensure you update all / any precedent court documents you may have to reflect this change.
- Witness statements
Similarly, the form of statement of truth for witness statement also changed on 6 April 2020, and should be as follows:
"[I believe] believe that the facts stated in this witness statement are true. I understand that proceedings for contempt of court may be brought against anyone who makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth".
Please ensure all precedent wording for your witness statements is updated in all cases to ensure the correct form of wording is used.
All statements of truth (in court documents or witness statements) must be dated with the date on which it was signed.
- Electronic signatures
In light of the Government lockdown and social distancing restrictions, signatories may not have access to a printer and scanner at home. Accordingly, in general, electronic signatures are acceptable when signing documents such as witness statements / pleadings.
We are happy to provide advice on specific documents however for general guidance, the following are valid forms of electronic signatures:
- Signatory typing their name or initials at the bottom of an electronic document, or in a signature block of a word document;
- A scanned handwritten signature that is incorporated into an electronic document or pasting an image of a manuscript signature into an electronic document;
- Using a stylus or finger to sign an electronic document via touchscreen or digital pad;
- Using a web-based e-signing platform (Adobe Sign or Docu-sign) to generate an electronic handwritten signature.
Whilst some of the above changes have been implemented to deal with issues around Covid-19, even when restrictions are lifted, there are likely to be ongoing delays as the courts attempt to catch up on possession and other housing related cases. The changes do not mean that rents and service charges are not due and leaseholders / shared owners should be encouraged to maintain payments wherever possible to avoid problems escalating.