COVID-19 Temporary Voluntary Arrangements between Jersey Landlords and Tenants residential

Due to the COVID-19 pandemic the Jersey Courts are giving priority to criminal cases and those involving children and are unlikely to be dealing with matters relating to property, including proceedings for rent arrears, lease cancellation, orders for possession and eviction (Tenancy Disputes). The Government of Jersey has issued Guidance for both commercial and residential leases (Guidance) to be read in conjunction with Practice Directions to be issued by the Courts to encourage Landlords and Tenants to negotiate temporary compromises in lease obligations in a reasonable manner if either party gets into financial difficulties arising from the COVID-19 pandemic. 

In relation to Residential Tenancies this has also been supplemented by Regulations which temporarily amend the Residential Tenancy Law (Jersey) 2011 (Law).

This Briefing Note deals solely with Residential Tenancies. We have issued a separate Briefing Note regarding Commercial Leases which you can find here.

The Guidance does not operate to release either party from its obligations and only operates during the period specified by Practice Directions. Whilst the Guidance is advisory and compliance with it is voluntary, the Courts will be entitled to take into account the conduct of both Landlord and Tenant in any future Tenancy Disputes (which the Government hopes will be a matter of last resort) once the moratorium on Tenant Disputes ends and may draw adverse inferences and make such orders as it sees fit in respect of any non-compliance with  the Guidance

In contrast the Regulations have the force of Law.

1          Regulations

The COVID-19 (Residential Tenancy) (Temporary Amendment of Law) Regulations 2020 (Regulations) were approved by the States of Jersey on 9 April 2020 and come into effect on 10th April 2020 and last until 30 September 2020 (Covid-19 Period) and only apply to Residential Tenancies under the Law.

The Regulations amend the Law during the Covid-19 Period and provide as follows;

1.1 If any fixed term  Residential Tenancy comes to an end during the Covid-19 Period it will continue as a periodic tenancy unless the Landlord and Tenant either enter into a new tenancy or both agree that it comes to an end.

1.2 A Landlord cannot give a Tenant a notice to terminate the Residential Tenancy during the Covid-19 Period unless both Landlord and Tenant agree that notice can be given.

1.3 Where prior to the coming into force of the Regulations either a Landlord or a Tenant has given notice to the other under the Law to terminate the Residential Tenancy, if the date specified in the notice has not yet passed, the Tenant can give written notice to the Landlord that the Tenant intends to remain in the accommodation and the tenancy continues as a periodic tenancy.

1.4 Where a Tenant has received notice from the Landlord prior to the coming into force of the Regulations terminating the Residential Tenancy and the date specified therein has passed, if the Tenant is unable to vacate the premises as a result of the Covid-19 outbreak, the Tenant may remain in occupation and the tenancy continues as a periodic tenancy.

1.5 Where prior to the coming into force of the Regulations a prospective tenant and a Landlord have entered into an agreement (either orally or in writing) for a Residential Tenancy to commence during the Covid-19 Period and the prospective tenant has not yet taken occupation of the premises which are not vacant due to an existing Tenant remaining in occupation under the Regulations, the Landlord must advise the prospective tenant as soon as is practicable that the accommodation is no longer available and the parties are released from their obligations and the Landlord must return any sums paid in advance.

1.6 A Landlord cannot increase the rent of the Residential Tenancy at any time during the Covid-19 Period or make any variation to the Residential Tenancy conditional upon a rent increase that takes effect during the Covid-19 Period. If the Landlord  has notified a Tenant prior to the coming into force of the Regulations of a rent increase and this has not yet taken effect, it must not take effect until 1 October 2020.  Any Landlord who does not comply with these particular provisions commits an offence and is liable to fine of level 3 on the standard scale (currently £10,000).

1.7 A breach of lease resulting from non-payment of rent or others sums will not be a breach that can result in lease termination or eviction if the Tenant has advised the Landlord in writing that this breach is due to financial hardship arising from the COVID19 outbreak, provided that the tenant has provided appropriate supporting evidence in line with the Guidance. The Landlord cannot charge interest on arrears of rent or other sums during the Covid-19 Period. This does not affect the liability of the Tenant to pay the rent nor does it affect the Court's ability to award interest if it decides that the breach was not caused by financial hardship arising from the COVID19 outbreak.   .

1.8 The Minister for Children and Housing must issue Guidance under the Regulations and can vary the regulations by Order.

2          Residential Guidance

2.1       Types of leases to which the Residential Guidance is applicable.

Any lease, tenancy, licence or other agreement which provides for the occupation of any residential accommodation.  This includes serviced accommodation and  accommodation provided by an employer.  This differs from the Regulations which only apply to Residential Tenancies as defined in the Law.

2.2       Guiding Principles

Both parties must act in an open, transparent, humane and reasonable manner under the Guidance.

2.3       Tenant Hardship.

• This covers both rental payments and obligations (e.g. repair, decoration ) due by the Tenant.
• The Tenant must give the Landlord at least 24hrs written notice of financial difficulties and how this will affect rent payments and/or other obligations under the lease
• Landlord can reasonably require evidence from the Tenant (which it will keep strictly confidential) including written evidence from an employer or other reliable source in relation to the Tenant or any person forming part of the Tenant’s household who contributes to the payment of the rent etc (Contributor):
  • loss of job; or
  • Covid-19 related ill-health causing a suspension or termination of employment; or
  • significant reduction in working hours; or
  • suspension of employment and/or payment of salary; or
  • a reduction in salary; or
  • the extent (if any) that the employer concerned is obliged to pay sickness benefit under the contract of employment;
• If the Tenant or Contributor is self-employed then the Tenant and/or Contributor must provide a written statement confirming his/her business activities have ceased trading or have been severely restricted or impacted by virtue of COVID-19 Government measures and setting out the nature of the  business, how it has been impacted and providing latest summary cash flow statements;
• Confirmation the Tenant and/or Contributor have no other independent income sources other than those provided by the Government of Jersey;
• Confirmation of the Tenant's and/or /Contributor’s monthly outgoing;
• Confirmation that the Tenant and/or Contributor does not have personal savings or other investments or property (either in Jersey or elsewhere) with a value in excess of £5,000, providing such evidence as may reasonably be required to support such confirmation;
• Confirmation of the Tenant's and/or Contributor’s family circumstances and dependents;
• Confirmation as to the Tenant’s and/or Contributor’s status as his/her entitlement to one of the following Social Security benefits:
  • Statutory sickness benefit;
  • Incapacity benefit;
  • Income support;
  • COVID Emergency Social Security Scheme for Registered persons
  • COVID Emergency Social Security Scheme for Unregistered persons
• Parties acting reasonably will seek to agree a temporary voluntary arrangement ( e.g. rent reduction, rent deferral, change from payment in advance to in arrears, deferral of obligations, and/or lease surrender) and document this in a written agreement.(Temporary Voluntary Arrangement)
• Any deferred payments will be paid by the Tenant over a minimum period of 12 months following the end of the Covid-19 Period unless the Tenant volunteers a shorter period.
• If the Landlord is also suffering financial hardship to an extent that it would not be reasonable for it to agree a payment or obligation concession the Landlord shall provide evidence of its financial hardship in writing to the Tenant and the latter will be required to keep this information confidential.   In these specific circumstances, the Landlord shall not be required to agree a concession.
• Each party must advise the other when their circumstances improve and when it is no longer suffering from financial hardship or is no longer suffering an inability to adhere to compliance with the Lease terms to the extent that they are once again able to discharge all obligations due by them under the Lease.
• Where a Temporary Voluntary Arrangement has been entered into, each party may advise the other if their circumstances (or those of a Contributor) have materially changed such that he/she is suffering greater or additional financial hardship which shall necessitate a reassessment of the Temporary Voluntary Arrangement, such reassessment to be made on the same principles as set out in the Residential Guidance

1.4 Landlord Hardship

• The Landlord can also give notice to the Tenant that because of financial hardship it cannot comply with certain of its obligations under the Lease and shall provide financial information to the Tenant in support of this claim. The Tenant must keep this information confidential.
• If the Tenant is suffering financial hardship to an extent that it would not be reasonable for it to agree a payment or obligation concession the Tenant shall provide evidence of its financial hardship in writing to the Landlord and the latter can be required to enter into a confidentiality agreement in respect of this information  In these specific circumstances, the Tenant shall not be required to agree a concession  

1.5 Effect of Temporary Voluntary Arrangement

• It may be used in any Tenancy Disputes or in respect of any application by the Landlord or the Tenant for any financial support package from the Government of Jersey.
• No Tenancy Disputes can be issued if the parties are complying with it.

1.6 Non Compliance with the Guidance

As indicated above the Guidance is advisory and compliance with it is voluntary but the Courts will be entitled to take into account the conduct of both Landlord and Tenant in any future Tenancy Dispute and may draw adverse inferences and make such orders as it sees fit in respect of any non-compliance withthe Guidance.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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