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13th October, 2020

Update on the stay of residential possession proceedings

residential building

The latest stay on residential possession proceedings ended on 20 September 2020 with no indication from the government that it intends to implement a further stay over the winter period.

However, if a claim is being or has been started from 29 August 2020 it must be born in mind that the government has further increased the notice which landlords must provide to their tenants to at least 6 months. This will last until 31 March 2021 and is very much seen as a measure to protect tenants from eviction over the winter period. In exceptional circumstances Landlords can bypass this lengthy notice period and only provide 4 weeks’ notice if their tenant is in more than 6 months’ arrears, the eviction is for antisocial behaviour, domestic abuse or false statement, and 3 months notice for breach of immigration rules ‘Right to Rent’.

To restart stayed cases Claimant’s will have to adhere to the further procedures as set out in Practice Direction 55C. A “reactivation notice” will need to be filed at Court confirming that they wish the case to be listed, relisted, heard, or referred to a Judge and setting out what knowledge they have of the effect of the Coronavirus pandemic on the Defendant and their dependants. The second part is very much open to interpretation, however, it would be prudent for a Claimant to detail and provide copies of any communications received from the occupier detailing whether they have contracted the virus, lost loved ones, are a key worker, or whether they have lost their job or have a lower income due to the pandemic. If the Landlord has no knowledge of how their tenant has been affected, in the notice they should state this and provide evidence of their attempts to obtain this information.

This is very much a trap for the unwary as the Claimant’s case could be struck out if they fail to serve the reactivation notice.

What use the Court will make of this further information will depend on the facts of each individual case, however, it is well established that the Court has discretionary powers to stay possession proceedings where it would cause exceptional hardship on the occupier. However, the Court will balance that with the needs of the Landlord to receive revenue and not accrue unsustainable debt and for mortgagees to be able to recoup their loan within a reasonable time.

Furthermore due to their undoubtedly large backlog of cases when the Courts do resume eviction hearings they are likely to prioritise the most serious of cases that include anti-social behaviour, domestic violence, or other crimes, and extreme rent arrears of at least 12 months or 9 months if the arrears are more than 25% of a landlords’ total annual income from any source.

If a Landlord is lucky enough to receive a hearing date before 31 March 2021 as a result of the reactivation notice the Courts will require that a Review Hearing take place. The parties do not need to attend this hearing but there are obligations on the Claimant to provide the Court and the Defendant with a bundle including the evidence they seek to rely upon. At this hearing, if the case cannot be resolved by agreement between the parties then the Court will review the Claimant’s evidence in the bundle and decide whether to list the claim for a substantive hearing to decide whether the order for possession should be given. The Claimant will need to ensure that the bundle provided to Court is in order or they should expect their case to be dismissed.

Homeowners on the other hand have been afforded added protection as mortgage companies have essentially been ordered by the FCA, absent exceptional circumstances, to not commence or continue possession proceedings until 31 October 2020. In the FCA’s latest update they confirm their view that such proceedings at this time would breach Principle 6 “a firm must pay due regard to the interests of its customers and treat them fairly” and MCOB 2.5A.1R “a firm must act honestly, fairly and professionally in accordance with the best interests of its customer”. This will give many a homeowner who have defaulted on their mortgage payments a further stay of execution after the ending of the general stay on possession proceedings.

There has yet to be any further indication by the FCA if they will extend this period. With the likelihood of a second wave of the pandemic becoming ever-present one would argue that Principle 6 and MCOB 2.5A.1R should continue to bind a mortgagee’s hands from commencing or continuing with possession proceedings. We shall, however, have to wait and see if the FCA agrees.

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