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Cannes Lions Special Section

Covid-19: Lockdown plans for tenants and landlords

All tenants who were due to move at the end of March will now need to do so before midnight on Thursday 26 March, or they will have to remain in place at least until after the nationwide lockdown, which currently ends at midnight on 16 April.
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The State of Disaster regulations prohibit one from moving from one home to another during the lockdown period, and it would also be advisable in these times for tenants to ensure that their new home has been properly cleaned and sanitised before they move in.

So unless they are able to arrange this with their new landlord/rental agent and take occupation of the property before midnight on 26 March, they will not be allowed to move from their current homes. They will also not be required to pay rent to the new landlord until they can take occupation because these circumstances are beyond their control, and the landlord/agent will not be able to let the property to someone else during lockdown, even if it is empty.

Meanwhile, the best advice for landlords/rental agents with tenants currently in place who are supposed to move out by 1 April, is to offer them a one-month extension on their lease so that they can also remain in place during the lockdown. They will also then be liable for rent for that month.

Similarly, for those who have been given notice or have given notice to vacate their current home by 1 April, the best option actually would be to talk to the landlord/rental agent about getting a month’s extension yourself. This will of course make you liable for another month’s rent where you are.

Loss of income

Taking a broader view, landlords also need to know what options are open to them if tenants lose their income due to the lockdown or the economic effects of the Covid-19 pandemic. If they are quality tenants who have previously always paid their rent in full and on time, we would suggest that they be asked to sign a waiver to the effect that their deposit may be used as rent for a certain time instead of it having to be held in trust.

It would be best if this agreement were drawn up by a professional rental agent and it should also contain a provision that the deposit is to be re-instated, perhaps in instalments, by a certain date, and that the landlord will be able take legal action if the tenant reneges on this arrangement.

Alternatively, landlords may decide to give good tenants a “payment holiday” during the lockdown or even for the next couple of months, especially if they have been given a similar indulgence by their bank on their bond instalments. The banks are currently working on plans to suspend certain loan payments during the lockdown.

However, they do need to proceed with caution and make sure there is a written agreement in place that provides for them to withdraw the indulgence under certain circumstances, for the unpaid rent to also be re-instated before the end of the lease, and for them to be able to take legal action if the tenant reneges on the special arrangement.

Possible freeze on evictions

When it comes to tenants who had been given notice to move because they were already defaulting on their rent, landlords may now be obliged to let them stay on at least until the end of the lockdown period.

However, if they again don’t pay rent, it is important that the landlord or rental agent keep reporting this to the credit bureaux and continuing to follow the correct legal procedures so that the eviction process can begin promptly after the State of Disaster is lifted.

On a different note, landlords with units in sectional title (ST) schemes – and especially large, multi-storey buildings – should find out as soon as possible what the situation will be during lockdown as regards the maintenance of lifts, cleaning of the building and refuse removal, and advise their tenants accordingly.

About Andrew Schaefer

Andrew Schaefer, MD of Trafalgar

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