In his winning essay in the Property Bar Association’s annual student essay prize, Charles Connor answers the question: Has the government’s legislative and regulatory policy in response to Covid-19 struck a fair balance between landlord and tenant?
On 20 March 2020, Robert Jenrick, the secretary of state for housing, communities, and local government, sent a letter to every English MP, outlining a “radical package of measures to protect renters and landlords affected by Covid-19”. Those measures were radical. They were designed as temporary solutions to a short, sharp emergency. In that sense, they worked. For their originally conceived “shelf-life”, they struck a fair balance between landlord and tenant. As the pandemic morphed into a prolonged crisis, that balance slipped. The government, by repeatedly extending emergency provisions, has, in the medium term, prejudiced landlords. In the long term, the balance looks likely to swing the other way, to severely impact tenants.
‘Radical’ measures
The March measures, introduced through the Coronavirus Act 2020, provided strong protections for both residential and commercial tenants. Residential possession claims were to be stayed for 90 days. New residential evictions were suspended. Under section 82, forfeiture rights under business tenancies were made unenforceable during the “relevant period” (initially until 30 September 2020). The rights of both residential and commercial tenants were strengthened in April by restrictions on taking control of goods. Crucially, these measures were complemented by actions to safeguard the position of landlords (in particular, a three-month mortgage payment holiday).
This package was warmly received. Both tenant groups and landlords’ associations welcomed it as a proportionate response to the immediate health crisis. They were right to do so. As a short-term fix for a short-term health problem, the measures were perfectly pitched – striking a neat balance between landlord and tenant.
The medium term: landlords prejudiced
It is important, however, to recognise the assumptions on which the March package was constructed. The government’s approach, in March, was to put the pre-pandemic world on ice. The country would hunker down for a few weeks, then emerge in late-spring sunlight, restored to normality. That assessment of Covid-19 underpinned the furlough scheme. The chancellor intended, at the outset, for it to last for three months.
Much like the furlough scheme, the March tenant protections have been extended – repeatedly. The section 82 “relevant period” was extended, first to 31 December 2020, and then to March 2021. The end date for the suspension of residential evictions was also pushed back to March 2021.
Unlike the furlough scheme, however, landlords have not been offered grants/loans to cover income shortfalls, triggered by tenant inability to pay rent. The March mortgage holiday has not been extended (though the Financial Conduct Authority has developed a robust scheme designed to prevent pandemic repossessions).
This medium-term balance, in favour of tenants might, ostensibly, appear to be fair. The government, at the moment, is picking between bad options. Landlords with broader shoulders should, seemingly, carry the burden of a reduced income stream. That argument ignores the actual economic position of landlords. Most landlords rent out a single property. Many of those rely on those rents as a major source of income. Leaving them responsible for the upkeep of their premises without either the prolongation of mortgage holidays or scope for recouping Covid-related arrears cannot be deemed to be fair. In fact, it risks tenancy failure.
The government offered some weak words in September on its decision to extend the eviction moratorium. It introduced several grounds that would disapply that extension (anti-social behaviour, trespassing, pre-March 2020 substantial arrears). It phrased the introduction of those grounds as a means of preserving landlord-tenant balance. That phrasing, however, missed the mark. The March tenant protections – short-term means of tackling an immediate emergency – have been stretched into the medium-term course of a lengthy public health crisis/economic downturn. It was fair to ask landlords to take a hit early on, especially when their mortgage payments were suspended. It is unfair for them to have to do so now as the tenant protections are repeatedly extended.
Long term: prejudice to tenants
The government has failed to adjust to this new, protracted phase of the pandemic. There has been no attempt – unlike in Scotland and Spain, where rent loans have been introduced – to turn the rent tap back on. There have been no major moves, beyond vague enjoinments for tenants to continue to pay and for landlords to vary tenancy terms, to restimulate the capital flows which give energy to the landlord-tenant system. That system has remained in ice. This prejudices landlords in the medium term. It will, however, severely prejudice tenants in the long term.
Much as with furlough, there is a real risk that medium-term government tenant protection is keeping arrangements in place which should have failed. Economists have forecast a surge in unemployment on the conclusion of the furlough scheme, as businesses make adjustments to meet new economic realities. Housing experts have made much the same point viz the conclusion of the eviction moratorium. Once Covid-prompted arrears are allowed to be demanded by landlords – landlords who, during the prolonged period of tenant protection, were not adequately compensated by government – those demands will be made. Many tenants will be unable to pay. The government will, at that point, seemingly be met with an unenviable choice: write off the arrears or allow mass evictions.
The government has, admittedly, in collaboration with the judiciary, suggested a via media – deprioritising Covid-influenced possession claims and requiring landlords to evidence the pandemic’s impact on their tenants’ inability to pay. These moves will delay repossession. They will not stop it.
The willingness of the government to continue emergency measures into the medium term of this pandemic has, therefore, destabilised the tenant-landlord balance. Low-interest loans would be one way of restoring equilibrium, by boosting the medium-term position of landlords. That could be accompanied by a gradual phasing out of the moratorium, to safeguard the long-term position of tenants. More important than individual measures is the need for the government to develop a holistic landlord-tenant policy which recognises and responds to the profound, long-term impacts of Covid-19 on the sector. The longer we go without such a policy, the more unfair both the medium-term landlord position and the long-term tenant position will be.
Charles Connor is a Bar vocational studies student at City, University of London
Property Bar Association essay competition 2021
The PBA’s annual competition is open to all undergraduates, LLM, GDL and BPTC students. This year, the question posed to all entrants was: “Has the government’s legislative and regulatory policy in response to Covid-19 struck a fair balance between landlord and tenant?”
The final round judges – Brie Stevens-Hoare QC and Tiffany Scott QC, respectively chair and vice-chair of the PBA, awarded Charles Connor of City, University of London, first prize – £1,000, a copy of Megarry and Wade: The Law of Real Property and the winning essay published in EG.
Of Connor’s entry, they said: “A very mature analysis of the challenges facing landlords and tenants of commercial and residential properties in the medium and long term, demonstrating a clear understanding of the issues at play. The writer focused on the purpose and context of the restrictions when imposed and evaluated the impact over time, by reference to that purpose and the developing context. This essay was well structured, well presented, well argued, and enjoyable to read, showing originality and independence of thought.”
Second prize (£500) went to Jenny Guan, also a Bar vocational studies student at City, University of London and third prize (£250) to Francesca Jackson, LLB hons, Lancaster University. Each will also receive a copy of Megarry and Wade: The Law of Real Property.
The PBA will shortly be launching its 2022 essay competition, with the question set to be released on 1 November and entries to be submitted in early January.
