HCR Law Events

Buying, selling and renting property Q&A

Whether you’re a commercial landlord or tenant, or you’re buying or selling a home, Covid-19 has affected the real estate market and it’s likely you’ll have questions. We’ve answered those our clients have asked us so far, below. Please call us on 08000 862 819 if you need advice.

Back to our Covid-19 Hub.

Questions from commercial landlords

How can I, as a commercial landlord, protect my investment?
If my business tenant fails to pay rent, what should I do?
Can’t I just evict them?
My tenant is already in trouble, what should I do?
Are there any circumstances where a commercial landlord can exercise their right to forfeit?
What about ‘keep open’ clauses in retail/hospitality tenants’ leases?

Questions from residential landlords

Can I fix property viewings at the end of a tenancy?
Can I inspect my property during lockdown?
Can I repair my property during lockdown?
Can I carry out routine health and safety inspections?
Can I evict tenants during lockdown?
Can a lender try to evict mortgage holders?

Questions from homebuyers

Can I change my mind about buying the property and pull out of the transaction?
If a delay affects my mortgage arrangements, who can help?
Can I require the seller to deep clean the property before I move in?
We were due to complete in the next two weeks but the seller is unwell or in isolation. How might that affect the transaction?

Questions from home sellers

I’m worried about the future and I no longer want to sell my house. What can I do?
My buyer has requested we deep clean the property before we move out. Where do I stand?
We were due to complete in the next two weeks but the buyer is unwell or in isolation. How might that affect the transaction?
Parts of the chain we’re in are being delayed – how can we protect ourselves financially?
Can I still buy or sell my home?
What if my property is already being marketed for sale?
If I receive an offer on my property, can I accept it?
Can I exchange contracts?
What happens if I have already exchanged contracts?

 

Questions from commercial landlords

How can I, as a commercial landlord, protect my investment?

Answered March 19 2020

The key points are:

  • Talk to your tenant – support them if you can, especially if that helps them to pay the rent
  • Talk to your lenders – discuss rent free periods or mortgage holidays
  • Consider the long-term – what maintains your property’s value?

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If my business tenant fails to pay rent, what should I do?

Answered March 19 2020

If you want to keep income from the building and you would prefer to keep your tenant, you need to negotiate a settlement which works for both of you, maintaining a healthy landlord and tenant relationship and setting a clear agreement as to how both will help each other through the crisis.

You should consider:

  • An agreed rent free or holiday period of, perhaps, one or two quarters in return for a fixed higher rent the following year
  • A rent free period in return for a longer lease being agreed, or perhaps break clauses being removed to give the landlord more certainty of income, once the crisis has passed
  • A rent free period just to keep the tenant in occupation. Some properties are hard to let. In this market it is unclear whether, if your current tenant vacates, there will be a ready supply of new tenants looking to move in in the foreseeable future, so keeping the building occupied and another party responsible for the rates and security may be attractive.

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Can’t I just evict them?

Answered March 25 2020

A commercial landlord’s right to forfeit a commercial lease for non-payment of rent has been frozen until at least 30 June 2020.

In its current form, this freeze on forfeiture appears to be a blanket ban. It is not limited to circumstances where a tenant is unable to pay their rent as a direct result of Covid-19. So a landlord who has a tenant in arrears pre-Covid-19 and is waiting for non-payment of the March quarter to forfeit, cannot forfeit the lease until after 30 June 2020.

Landlords and tenants may be able to use this time to come to a workable arrangement, to preserve their relationship and the tenant’s occupation, without the landlord having to resort to forfeiture.

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My tenant is already in trouble, what should I do?

Answered March 19 2020

If the situation has gone beyond rent-free periods, you should consider:

  • Using the rent deposit if available
  • Liaising with lenders and the local council to  explain your position; this would leave scope for a swift review of the situation
  • Liaising with your tenant to see if you could come to a new arrangement offering greater security or a cross-guarantee.

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Are there any circumstances where a commercial landlord can exercise their right to forfeit?

Answered March 25 2020

Technically a landlord can still exercise their right to forfeit for breaches other than non-payment of rent. However, appropriate notice still needs to be served on a tenant giving a ‘reasonable period’ to remedy the breaches complained of. Given that many tenants are currently unable to open and trade, this begs the question of what that reasonable period might be now. A court will have wide discretion (including taking account of Covid-19) when considering whether to grant a tenant relief from forfeiture.

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What about ‘keep open’ clauses in retail/hospitality tenants’ leases?

Answered March 23 2020

Most occupiers of shopping centres or retail parks will have a ‘keep open’ clause within their lease, so that the investor landlord can ensure that there are sufficient units open and trading to ensure a high volume of footfall across their portfolio.

In the current situation, it matters whether the tenant has chosen to close or has been compelled to do so as a consequence of government advice? If the latter, it is likely to have a defence relying upon the ‘force majeure’ clause.

If you are a tenant, notify your landlord of any changes and make it clear that there is a direct link with the Covid-19 situation, so that you do not inadvertently compromise any future defence for your actions if your landlord chooses to take a robust stance.

It is important to document changes with landlords. An exchange of letters or emails will not formally vary a lease which is completed as a deed, but it will act as helpful knowledge of the situation on the ground if required.

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Questions from residential landlords

Can I fix property viewings at the end of a tenancy?

Answered March 27 2020

Property viewings, which will often take place towards the end of a tenancy, should not take place at this time.  Some estate agents are continuing to make virtual viewings available. This remains an option for landlords.

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Can I inspect my property during lockdown?

Answered March 27 2020

All non-essential landlord inspections should be postponed at this time.  Ignoring the government’s controls on movement could result in the virus being spread.  It could also result in criminal prosecution if routine and non-urgent inspections take place.

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Can I repair my property during lockdown?

Answered March 27 2020

If repairs to a property are required, you consider how serious the need is.  Non-urgent repairs and maintenance should be delayed.  If essential works are required, to water supplies or heating systems, for example, landlords, agents and contractors must follow the government’s advice on social distancing. It is also important that landlords and tenants communicate. If tenants have any symptoms of coronavirus, then the agent/landlord should be told.

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Can I carry out routine health and safety inspections?

Answered April 26 2020

Gas Safe Register, the official gas registration body, and the HSE [Health and Safety Executive] have provided new guidance. Landlords are still required to take reasonable steps to carry out annual safety checks and each property must be considered on a case by case basis. Where a safety check takes place the engineer must follow the government’s guidance on social distancing.

Where the tenant, or a member of the household, is following government guidance and self-isolating (as they are a vulnerable person, shielded person or are showing symptoms of Covid-19) then the safety check can be delayed until after the isolation period ends. Once the isolation period ends then the safety check should be arranged to take place as soon as possible.  If the tenant contacts you as there is a gas emergency, whether the isolation period has ended or not, then you should arrange for the engineer to carry out the work as soon as possible. The engineer must follow the government guidance on social distancing.

Where the tenant, and the household, are not self-isolating (and do not fall into one of the previously mentioned categories) then the safety check can be carried out. The engineer must following the government guidance on social distancing when carrying out the check. If the tenant advises you that they, or a member of the household, are now showing symptoms of Covid-19 then the check should be postponed.

You are encouraged to keep records of the communication and correspondence between you and the tenant, and the engineer. This is to show that you have taken reasonable steps to arrange the safety check, but this has not been able to take place due to the tenant refusing access for a reason relating to Covid-19, or a registered engineer not being available to carry out the check. The safety check should be rearranged as soon as possible, once all parties are available.

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Can I evict tenants during lockdown?

Answered March 27 2020

The government has extended the periods of notice that need to be given to end residential tenancies to three months. The legislation includes Assured Shorthold Tenancies, which are the most common kind. This could be extended to six months later on if needs be.

In practice, courts had been adjourning hearings of possession claims for the coming three months. Landlords who had already obtained possession orders were finding that bailiff evictions had effectively been suspended simply because bailiffs were not attending properties to conduct evictions.

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Can a lender try to evict mortgage holders?

Answered March 27 2020

Borrowers can seek a ‘mortgage holiday’ of up to three months. Missed payments are being added to the balance due and interest continues to accrue; those who are already in arrears or going through recovery or possession proceedings are in a more uncertain position.

There is no legislation preventing the lender from enforcing their security at the moment. However, in practical terms it seems evictions will not take place. This is because of the way the courts are operating and the fact bailiffs are not attending properties.

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Questions from homebuyers

Can I change my mind about buying the property and pull out of the transaction? 

Answered March 20 2020

You are not contractually bound i.e. you are under no legal obligation, to continue with a purchase or a sale of a property until contracts are exchanged.

If you withdraw from the purchase of a property before you exchange, you could lose out on some of the pre-work you’ve already paid for, such as any searches or surveys, or a mortgage administration fee.

You will not be responsible for any legal fees or costs to the seller before exchange of contracts (unless it is a new build and you have paid a reservation fee). After exchange of contracts you could potentially incur significant penalties e.g. 10% of the deposit price and legal fees as a start.

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If a delay affects my mortgage arrangements, who can help?

Answered March 30 2020

If you have instructed a broker, this person would always be your first point of contact about any mortgage application.  If you have not instructed a broker, you will need to contact the lender directly.

Mortgage offers are valid for a certain period of time (depending on the lender and the type of product you have obtained).  However, an offer can always be withdrawn up to the point of completion, especially if your circumstances have changed.

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Can I require the seller to deep clean the property before I move in?

Answered March 30 2020

It is possible to ask for this to be included but the seller is under no legal obligation to agree to this.

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We were due to complete in the next two weeks but the seller is unwell or in isolation. How might that affect the transaction? 

Answered March 20 2020

If completion does not take place directly as a result of Covid-19, the losses arising from the failure to complete remains with the defaulting party. So, if the seller refused to complete in this instance, they would be liable to you for reasonable foreseeable losses unless you and/or the chain agreed to delay the completion date and decided against imposing any penalties.

If the seller still completed, you would not be able to delay completion – you would still have to complete on the day set. If you haven’t exchanged contracts yet, you could of course agree to move the completion date as that is not fixed until you have exchanged.

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Questions from home sellers

I’m worried about the future and I no longer want to sell my house. What can I do? 

Answered March 23 2020

If you have not exchanged contracts, you can change your mind without any financial penalties. If you have exchanged, you could be liable for any costs and expenses incurred by your buyer (and possibly the chain above if there is one). We would advise you on this further, if you were minded to pursue this option.

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My buyer has requested we deep clean the property before we move out. Where do I stand? 

Answered March 23 2020

You do not need to agree to this unless it is part of the contract. You could agree to allow the seller access for this to be done at their cost, if you wanted to but it is entirely up to you.

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We were due to complete in the next two weeks but the buyer is unwell or in isolation. How might that affect the transaction?

Answered March 30 2020

If you have exchanged contracts, the buyer is still legally bound to complete the transaction on the day contracted for.  If the buyer does not complete on that day, they are liable for any reasonable and foreseeable losses you might incur as a result of that failure to complete, though you could choose not to claim for any losses.  If you are not under contract, there is no legal obligation and you could simply agree to another date.

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Parts of the chain we’re in are being delayed – how can we protect ourselves financially?

Answered March 30 2020

This really depends at what stage of the transaction you are at.  Ensuring the contacts you use are able to operate electronically as much as possible would be helpful.  Do you have access to a printer to print out any required documents? If you know you are going to have to provide monies at some point in the transaction, it would be advisable to ensure you will be able to transfer funds without requiring attendance at a bank.

Plan ahead as much as possible e.g. obtain all quotes for household insurance and removals.  Check the terms of these companies; for example, what would your removal company do if you were unable to move on the planned day due to someone being in self-isolation?

Make sure you have returned and provided all required documents to your lender and/or solicitor.

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Can I still buy or sell my home?

Answered April 16 2020

The government has said that, whilst there is no need for parties to withdraw from their transactions, it is asking for people to be flexible and adaptable during these unprecedented times.

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What if my property is already being marketed for sale? 

Answered April 16 2020

You can continue to advertise your property but you should not allow any viewings to take place unless these are ‘virtual viewings’.

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If I receive an offer on my property, can I accept it?

Answered April 16 2020

Yes, and the conveyancing can proceed in the orthodox way, but the process might take slightly longer than normal.

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Can I exchange contracts?

Answered April 16 2020

If the property you are buying is vacant, then you can continue with the transaction, although you must adhere to the guidance on social distancing. If you are moving to an occupied property, then all parties are encouraged to delay exchange and completion until the stay at home restrictions have been lifted.

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What happens if I have already exchanged contracts?

Answered April 16 2020

Once you have exchanged contracts, you have entered into a legal agreement to buy/sell that property and the mechanism for reaching the completion date has been fixed. If you fail to complete on the agreed completion date, you will default under the contract. Parties who have already exchanged contracts are advised to work together to mutually agree a delay to the completion date.

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