Property litigation weekly update — June 11 2021


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Members of the team this week have reported on the lifting of the residential evictions ban, Home England's new model shared ownership lease and industry support for the ring-fencing of commercial rent arrears. All this, alongside recent insights from our colleagues around the firm and some positive news.

Residential evictions resume

The Coronavirus Act 2020 provided protection to social and private tenants by creating a moratorium on evictions (other than in the most serious of cases). After several previous extensions the ban on residential evictions came to an end on 1 June 2021. This means that bailiffs can now proceed with evictions, although government non-statutory guidance asks that orders are not enforced if anyone living in the property has coronavirus symptoms or is self-isolating.

Notice periods have also been reduced. In most cases, from 29 August 2020 to 31 May 2021, landlords were required to give 6 months' notice (save for serious cases such as antisocial behaviour, domestic violence and rent arrears over 6 months, where reduced notice periods apply). From 1 June 2021, the notice period was reduced to four months in most cases, including where rent arrears are less than four months. Where there are 'serious arrears' (arrears equivalent to four or more months' rent) the notice period is four weeks.

It is envisaged that from 1 August 2021 the notice period will be reduced to two months for cases where there are less than four months' unpaid rent.

In light of these changes, the model notices have been amended and can be found by clicking on the following links:

New model shared ownership lease

Homes England has now published the new shared ownership model leases as well as updating the relevant sections of the Capital Funding Guide. Further updates are expected over the summer in relation to the model DPA and OPSO leases. The updated CFG sets out Homes England's requirements for grant funded Shared Ownership Homes under the 2021-26 Affordable Housing Funding Programme and also clarifies the position for leases granted under previous programmes.

For shared ownership homes constructed using 2021-26 AHP funding, as well as for future Section 106 shared ownership properties, the changes to the Shared Ownership Model largely reflect those set out in the recently published outcome to MHCLG's Technical Consultation.  The main changes include:

  • The minimum initial share that purchasers can buy is reduced from 25% to 10%;
  •  For the first 15 years of the lease there is the option to staircase in 1% increments;
  •  For the first 10 years, the landlord will be responsible for certain essential maintenance and repair costs rather than the shared owners;
  • The shared owners now only need to give the landlord a 4 week nomination period for right of first refusal to buy the property on sale or to nominate a purchaser.

Alongside the new leases, Homes England have also published a new Key Information Document pack which must be completed for the sale of new shared ownership homes. This is intended to provide a customer facing document to explain the main features of shared ownership and to give potential buyers a customised example of the costs they can expect to incur under the lease. As a condition of grant funding, the key information pack must be completed by the provider and given to the purchaser by the reservation stage.

The relevant guidance on funding as well as the new model leases can be found here. 

Support for ring-fencing commercial rent arrears

With the moratorium on commercial lease evictions coming to an end on 30 June 2021 and the government yet to confirm what will happen from 1 July 2021 onwards, there has been discussion across the industry as to the best way to emerge from these restrictions.

Members of the Property Litigation Association (the PLA) took part in a survey, which revealed that a number of respondents felt more time should be given for tenants to pay their COVID-19 arrears if needed. Notable responses to the government's call for evidence showed favour towards lifting the moratorium at the end of June and returning to normal market operation, subject to the moratorium continuing until December 2021 in respect of rent arrears that accrued during the period for which COVID-19 related restrictions were in force. Where this ends up remains to be seen.

Insights from our colleagues around the firm

Positive news stories

 

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