Clarke Willmott LLP has one of the largest national teams of specialist social housing solicitors in the UK, acting for over 100 registered providers as well as major frameworks including HALA, CHIC, SEC and ASW. Here, the Joint Heads of the sector, Lindsay Felstead and Vicky Kells, look at the most common FAQs received by the social housing sector team in recent months.
Clarke Willmott LLP
What is the current position with possession proceedings?
All possession proceedings except for trespass proceedings were stayed until 23rd August 2020. This means that no possession cases are being dealt with at this time.
Notices served up until 20th September 2020 must include a three-month notice period (with the exception of most Notices to Quit). This includes notices for Assured, Secure, Assured Shorthold and Rent Act tenancies.
How should anti-social behaviour be dealt with during this time?
Injunction proceedings for ASB are still being dealt with by courts both on a without notice and on notice basis. For urgent cases – cases that involve the use or threatened use of violence and/or significant risk of harm – consideration should be given to applying for a without notice injunction to obtain protection
How does ‘lockdown’ impact on mutual exchange?
There has been no change to the legislation on mutual exchange in that a landlord has 42 days to refuse consent.
For many landlords, it is not possible or practical to carry out property inspections at the moment. As such, tenants submitting a mutual exchange request could be written to explaining what the limitations currently are. They should also be reminded that a failure by a landlord to give consent does not amount to consent and that if they go ahead anyway they will be at risk of losing their home.
What are the implications of the pandemic on construction contracts?
The pandemic and its effect on supplies will be treated as a force majeure event and/or the exercise of Government powers. Those events will most likely entitle the contractor to an extension of time (and a shield to liquidated delay damages) but not to any extra money (loss and expense).
It is worth stressing the importance of not conflating a closure of the site and a suspension of work under the contract. Even if the site is closed, there may well be certain important activities which the contractor can progress. In addition, the contractor will always have an overarching duty to mitigate any delays.
The key for registered providers dealing with this is to make sure they maintain a dialogue with their contractors and get all the information they and their consultants need; including understanding exactly what the contractor has done to mitigate any delays and to get the site open. Once the registered provider and its professional team have this information, they can understand what extension of time the contractor is due as a result of the pandemic.
Banking and finance
What can we do to safeguard existing borrowing arrangements during the pandemic?
Registered providers should consider existing financial covenants and, if possible, run revised modelling based on current conditions to see if breaches are likely in the forthcoming testing periods. The Government, Bank of England and Financial Conduct Authority are strongly encouraging lenders to maintain and extend lending, support their customers and not let fundamentally sound businesses collapse. If a registered provider has concerns about its ability to meet its obligations, it should speak to its lender(s) as soon as possible.
What will funding in the social housing sector look like in a post-coronavirus world?
After initial volatility, lending markets have stabilised, and there is strong investor appetite in the bond and private placement arena – as well as amongst more traditional lending – with historically low borrowing costs. However, because there is still economic uncertainty, being able quickly to put in place property security for your funding is more important than ever – this may involve working with your solicitor to undertake pre-charging reviews or perhaps charging properties to a security trustee on an unallocated basis.
What guidance is there for registered providers with urgent procurement needs?
The Cabinet Office issued a Procurement Policy Note (PPN 01/20) to provide guidance to contracting authorities on the options available to help them achieve urgent procurement needs under the Public Contract Regulations 2015, and the circumstances in which each option may be used.
The options are not exhaustive. There are other grounds in the Public Contracts Regulations, which may be applicable, for example, the light touch regime for certain health and social care related services.
Do registered providers need to maintain payments to suppliers during the coronavirus pandemic?
The Cabinet Office issued a Procurement Policy Note (PPN 02/20) which applied to all contracting authorities until 30th June 2020.
PPN 02/20 requires contracting authorities to determine which of their suppliers are at risk and to continue to pay those suppliers to ensure that normal contract delivery can resume once the pandemic is over. Payment to at-risk suppliers carries its own risks, and each contract should be looked at on its own merits. We advise seeking legal advice to help you in the procurement and contractual analysis, as well as preparing a formal contract variation to make it clear that the changes relate only to the current coronavirus situation and are limited in time.
Vicky Kells has 21 years’ experience and specialises in secured lending and large-scale due diligence exercises (including stock transfers) within the affordable housing sector. She has extensive experience of working with housing associations, including large national RPs and Welsh RSLs, and lenders on all property security aspects of loan facilities, private placements and bond issues.
Lindsay Felstead has 18 years’ experience in social housing, providing representation on behalf of local, regional and national housing providers and local authorities in all aspects of housing management.