These are unique and difficult circumstances for us all. In the property sector, landlords are likely to see a decrease in their rental income stream and possibly vacant properties for the next few months. Tenants are unable to continue trading owing to government lockdown measures. In the residential rental sector, tenants may be out of work and unable to meet rental payments.
We are hearing that some tenants are now refusing to pay rent owing to the coronavirus pandemic. A question on many a landlord’s mind will be, can they do this? This blog takes a brief looks at some of the civil remedies and solutions available to a landlord in the event a tenant refuses to pay rent.
If your tenant has entered into a tenancy agreement or lease, in which a quarterly, monthly or weekly rental payment is set out, they are contractually bound to make the agreed rental payments, on the basis set out in the agreement or lease.
If they refuse to do so, they are in breach of contract or covenant. A contract cannot be varied without express agreement from both parties. Therefore, if a tenant does decide to withhold rent owing to the coronavirus pandemic, they would have no reasonable grounds to do this without the landlord’s consent.
If this issue does arise, it would be prudent to attempt to reach an amicable solution. A landlord does not want to be left with a property that is occupied but not producing rental income. Similarly, a tenant does not want to be in position where they accumulate rent arrears, with no means to clear these. Both parties are free to negotiate a temporary reduction to the rent or even rent holidays amongst other solutions.
If no agreement can be reached and a tenant still refuses to pay rent, a landlord would have a number of potential remedies, such as, but not limited to:
- Issuing a money or debt claim against the tenant to recover rent arrears;
- Grounds for forfeiture/possession of their property. However, as discussed in my previous article, under the government’s emergency powers, possession proceedings have, for the time being, been suspended, and so this remedy is not readily exercisable; and
- Issuing bankruptcy or insolvency proceedings.
If you are having issues related to the above, or a property dispute in general, please do get in touch with our Property Litigation and Dispute Resolution Team who will be more than happy to assist. They can be reached at 020 7228 0017 or email@example.com.
Jack Glover is a Trainee Solicitor in Hanne & Co’s Property Litigation and Dispute Resolution Team