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Reasonableness and residential tenancies – an update for residential tenants and landlords

New legislation in light of new challenges

Further to the Government’s recent guidance on regulating commercial tenancies during the Covid-19 period, broadly similar guidance relating to residential tenancies has also now been released. Both sets of guidance promote reasonable conduct by landlords and tenants, with the overall objective of sustaining the relationships between landlord and tenant which would otherwise have been fractured.

The guidance recommends that should a tenant struggle to pay the rent because virus linked financial difficulties then interim concessions should be made and formalised with the landlord in a Temporary Voluntary Arrangement (TVA). The Guidance can be found here and serves as a useful starting point for any landlord or tenant concerned about their Residential Tenancy.

The expectation is that both parties should do their best to avoid disputes. Landlords in particular may need to revise their expectations. There is a thinly veiled warning within the Guidance that failure to adhere to its recommendations will be looked upon unfavourably when deciding such proceedings.

Whilst the Guidance in both cases is purely advisory, the Government has gone a step further in respect of Residential Tenancies, by implementing temporary legislative amendments to the existing Residential Tenancy (Jersey) Law 2011.

The COVID-19 (Residential Tenancy) (Temporary Amendment of Law) (Jersey) Regulations 2020 (the “Regulations”) came into force on 10th April, 2020 and applies to all Residential Tenancies until 30th September, 2020 (the “COVID-19 Period”).

Three key non-negotiable, protective measures have been introduced:

  1. Prevention against tenants being evicted

Landlords cannot give a tenant notice to terminate a tenancy during the COVID-19 Period (unless both parties agree otherwise).

But what if notice to terminate has been served by either party prior to the 10 April, 2020 and the tenant is due to vacate within the COVID-19 Period?

In this case, the tenant can give written notice to the landlord that they intend to remain within the property and the tenancy will therefore continue on a periodic basis.

Where notice to terminate has been given by a landlord and the expiry date of the notice has been and gone, the tenant is entitled to remain in the property and continue the Residential Tenancy on a periodic basis provided that the tenant is unable to move out of the property as a result of the pandemic.

My tenant was due to move out and I have agreed a new Residential Tenancy with new tenants before the Regulations came into effect…

It is not an ideal situation for a landlord or the tenants they may have lined up, but the Regulations take such a scenario into account. If an existing tenant has remained in occupation as a result of the pandemic, landlords should let the intended new tenant know as quickly as possible that the property is no longer available. It goes without saying that any sums already paid by the new tenant should be refunded to them without delay. Neither party will be held to the new Residential Tenancy in these circumstances.

Will I be evicted if I cannot pay my rent due to COVID-19?

The short answer is “no”. Provided that a tenant has (a) advised their landlord in writing that any breach is as a result of COVID-19 induced financial difficulty; and (b) given supporting evidence of this (as detailed in the Guidance).

Landlords should bear in mind that they will not be entitled to charge interest on such arrears but equally, Tenant’s should take note that any shortfall in rent during the COVID-19 period will not automatically be waived and will generally expected to be made up for when normality resumes.

  1. A moratorium on rent increases

Landlords are expressly prohibited from implementing any rent increases during the COVID-19 Period. Further, no variation can be made to a Residential Tenancy that is conditional on the rent being increased. Any already agreed rent increases that have not yet taken effect must be suspended until the expiry of the COVID-19 Period. This is a must for landlords given that failure to do so is an offence, carrying with it a fine up to £10,000.

  1. The ability for tenants to extend their current Residential Tenancy should they be due to expire on or before 1 October, 2020.

If a fixed term Residential Tenancy is due to end during the COVID-19 Period, the Regulations trump the contract and it will automatically continue as a periodic tenancy, unless both parties agree otherwise.

It is also worth noting that the Regulations expand upon the types of leases covered, beyond the terms of the existing Residential Tenancy legislation, to include serviced accommodation and accommodation provided by an employer.

Regulations v Guidance

The Regulations and the Guidance should not be confused. The Regulations provide for a limited number of legally enforceable protective measures. The Guidance relates to suggested voluntary adjustments which landlords and tenants may want to consider, to give both parties a better chance of seeing out their contractual obligations throughout the practical and financial difficulties they may experience during the Pandemic.

The Pandemic is a fast moving and ever-changing situation. As expected, the Government has also reserved a right to amend or extend the Regulations. Viberts are ready to assist both tenants and landlords by providing up to date advice and formalising interim arrangements, a must in order to avoid future disputes as to what was or was not agreed.

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