August 3, 2020

Q&A: The expiry of the stay on possession proceedings – what happens next?

During the COVID-19 pandemic almost all forms of possession proceedings and enforcement action have been stayed. This means that, for parties currently involved in such proceedings, they have no choice but to wait until the stay period is over before they can continue their Court action.

We now know that the Civil Procedure (Amendment No 4) (Coronavirus) Rules 2020 (SI 2020/751) will come into effect on 23 August 2020 and end on 28 March 2021. These Rules amend Part 55 of the Civil Procedure Rules (CPR) to provide for a new Practice Direction 55C (“PD55C”) and impose additional procedural steps that will have to be complied with in respect of claims for possession going forward. Things will not (yet) be going back to how they were pre-COVID and different requirements apply depending on when the possession claim was first issued.

Chloe Benson, a Senior Associate in the Real Estate Disputes Resolution Team and Luke Drake, a Trainee Solicitor in the Disputes Resolution Team have answered some of the FAQs our clients have been asking us (mainly in relation to Assured Shorthold Tenancies (ASTs)) since the announcement was made:

1. What was the position in respect of possession proceedings pre-Coronavirus Act 2020 (i.e. pre 26 March 2020)?

  1. In respect of an AST, a landlord could serve notice on its tenant under section 8 of the Housing Act 1988 if 8 weeks’ or 2 months’ rent was unpaid.  The minimum notice period was 2 weeks.
  2. At least 2 months’ notice was required to be given by landlords under section 21 of the Housing Act 1988 to terminate an AST either on the expiry of the fixed term or after the fixed term has expired.
  3. If the tenant failed to vacate on the expiry of the notice, a landlord could apply to the county court for possession under CPR 55 and a possession hearing would usually be listed within 8 weeks of issue.

2. What restrictions have been imposed due to COVID-19?

On 27 March 2020, Practice Direction 51Z introduced a 90 day stay on all proceedings brought under CPR Part 55 and all proceedings to enforce an order for possession by a warrant or writ of possession. This was followed by CPR 55.29 on 25 June 2020 which extended the stay on possession proceedings and any enforcement action until 23 August 2020.

What this has meant in practical terms is that since March, all new and existing claims for possession (with the exception of those claims issued against “Persons Unknown” as well as claims for injunctive relief) were automatically stayed until 23 August 2020. The restrictions apply not only in circumstances where tenants have not paid their rent, but also where a tenant is in breach of other terms of their tenancy or where a landlord simply requires possession following service of a section 21 notice. Whilst landlords are still able to issue proceedings, they would be automatically stayed until 23 August 2020.

Further restrictions have meant that landlords must now give 3 months’ notice to their tenants (if notice is served on or after 26 March 2020) instead of the usual 2 weeks’ or 2 months’ notice referred to above. The restriction relating to the extended notice periods is currently in place until 30 September 2020 but there is a possibility that it could be extended.

3. I issued possession proceedings prior to 3 August 2020 and these have been stayed. What is the process for obtaining a new hearing date?

For those of you who have been waiting to continue proceedings originally commenced earlier in 2020 the first step will be to file and serve a Reactivation Notice.

There is no standard form for the Reactivation Notice but the new practice direction states that it must set out (i) that the party filing and serving it wishes the case to be listed, relisted or heard and; (ii) what knowledge the serving party (presumably the landlord) has as to the effect of the Coronavirus pandemic on the tenant and their dependants.

If case management directions had been given prior to the stay then with the Reactivation Notice you must also serve (i) a copy of the last directions together with new proposed dates and a draft order OR a statement that no new directions are required and any existing hearing date can be met; and (ii) a statement whether the case is suitable for a remote hearing.

Please note that the Court will not relist your matter automatically unless a Reactivation Notice is served. A Reactivation Notice filed and served prior to 23 August 2020 may not be valid so it is advisable to wait until the practice direction comes into force.

If no Reactivation Notice is filed and served, the claim will remain stayed. If you do not file a Reactivation Notice by 29 January 2021, the Court will impose another automatic stay.

4. There are substantial arrears of rent which is the basis of my possession claim. What information do I need to provide to the Court?

If your claim is based on arrears of rent, the first step is to file and serve a Reactivation Notice as detailed in question 3 above.

The Reactivation Notice must include an updated rent account for the previous two years. It is recommended that the two years is calculated from the date of the Reactivation Notice (and  not the date on which proceedings were issued).

5. What happens once the Reactivation Notice has been served?

Once a Reactivation Notice has been served, the receiving party has 14 days to file a response. The party responding must state whether there is anything contained within the Reactivation Notice that it does not agree with.

The Court must give at least 21 days notice of any hearing listed or relisted in response to a Reactivation Notice.

6. The Court set a hearing date before lockdown, do I need to still file a Reactivation Notice?

Yes, you will still need to file and serve a Reactivation Notice. If it is not filed and served 42 days before the hearing date, the hearing date will be automatically vacated. It is likely that you will need to provide evidence to the Court at the hearing that the Reactivation Notice has been served otherwise there is a risk that the hearing may be adjourned. It is crucial to ensure that all the required paperwork is in order.

7. I am proposing to issue a possession claim once the stay has been lifted. How soon can I expect the matter to be listed for a hearing?

There is going to be a significant backlog of cases given that proceedings have been stayed for so long, as such it has been decided that in relation to all claims, whenever issued, the standard eight-week period between issue and hearing under CPR 55.5 will not apply. Landlord should be prepared that they may have to wait for several months before a hearing is listed.

8. What is the impact on Section 21 “no-fault” and Section 8 arrears claims?

The practice direction does not grant the Court the power to refuse to grant possession in relation to possession proceedings brought under section 21 and section 8 claims based upon rent arrears. However, the Court may extend the time allowed for the tenant to vacate the property. In addition, there is a risk that if the Reactivation Notice did not contain the correct information, a Court may adjourn the hearing and order the landlord to re-serve a notice which is compliant with the practice direction.

As such, while the new rules require the landlord to disclose what knowledge they have as to the effect of COVID-19 upon the tenant and their dependants, this information will not be relevant/have no effect on the court in mandatory possession claims.

9. Is there any impact on serving notices after 23 August 2020?

As stated in question 2 above, landlords will still be required to give 3 months’ notice until 30 September 2020 at the earliest.

The full text of the new Rules can be found here and PD55C will be in force from 23 August 2020 to 28 March 2021. Please contact Chloe Benson at Goodman Derrick should you have any further questions.

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