The impact of the COVID-19 pandemic continues to be felt across the UK.
One affected area is the private rental sector. We have reported throughout the past year on the various measures introduced to protect tenants from being evicted. On the flip side, what about those who are continuing to pay for accommodation that they can’t occupy?
In the case of students, there are two main situations:
- Student accommodation where access is being restricted and/or amenities removed (for example, those in halls with full or partial catering services); and
- Students in private rental accommodation who, whilst have not been prevented from occupying their properties, are unable to travel to the properties to stay there.
Whilst students who had entered into tenancy agreements in 2019 could reasonably assert that the pandemic was an entirely unforeseeable event, the same cannot be said for students who started, or returned, to university (and thus entered into tenancy agreements) for the 2020 academic year.
For legal practitioners, there are both contract law and landlord and tenant law considerations but often the position is far from clear. Whilst a review of the terms of the tenancy agreement will be the starting point, the reality is that no situation and agreement is identical. Poorly drafted tenancy agreements can further complicate matters.
In the absence of Government involvement there are, generally speaking, two main legal arguments that can be raised by student tenants in these situations. The first is that the contract has been “frustrated”. Frustration is a legal concept that can be asserted when an event occurs after the contract is entered into that renders it ‘physically or commercially impossible to fulfil the contract…’ Over the years, the doctrine of frustration has been further developed through case law. The “frustrating event” must:
- Occur after the contract was formed;
- Be so fundamental that it impacts the primary nature of the contract and be entirely beyond what was contemplated by the parties when they entered into the contract;
- Not be the fault of either of the parties; and
- Render further performance of the contract ‘impossible, illegal or make it radically different’ from that which was contemplated by the parties at the time of the contract.
As the pandemic is a known event for those contracting in 2020, it follows that it is unlikely to be considered as an event that occurred after the contract was formed. However, depending on the facts of the case, there may be scope to suggest that the lockdown restrictions are a frustrating event, depending on when the contract was formed, when the particular lockdown restrictions were imposed and how the said restrictions affected the parties’ abilities to perform their obligations.
The effect of pleading ‘frustration’ is to end the contract. The parties’ objectives should be carefully considered before doing so: not only would this end the liability to pay rent, but it also ends the landlord’s obligation to provide the accommodation.
There is then the issue of how to deal with the tenant’s belongings where they cannot attend the property to collect them. A former tenant who leaves their belongings in a property without the owner’s consent could face a claim for damages for trespass. Compensation for trespass is usually calculated at a daily rate, which in these circumstances could be based on the rent. If that was the case the tenant might not actually save any money by seeking to terminate the tenancy before the end of the fixed term.
From the landlord’s perspective, the tenant’s belongings will have to be removed from the property before they can rent it out again. This could also give further rise to an “involuntary bailee” situation: for more information, please see our article here.
Frustration, therefore, may not be the best practical solution.
The second legal argument is that of breach of contract. A party alleging breach of contract can either claim compensation for losses suffered by them, or assert that the breach is so serious they are entitled to terminate the contract.
Asserting a claim for breach of contract is possibly more applicable to situations involving halls of residence provided by a university, where they have prevented students from returning to their accommodation. A claim may also arise in the situation where students are permitted to return to campus but where some of the amenities are not being provided. For example, where catered halls are not providing catering services due to the pandemic.
It may be that the failure to provide such services could entitle the tenant/student to terminate the tenancy or claim damages. This will depend on the wording of the contract, so those affected should seek legal advice based on their particular circumstances.
It is unlikely that a breach of contract argument would assist a tenant in privately rented accommodation unless the landlord has prevented access. By contrast, if a tenant is unable to travel to and use the accommodation, they could face a breach of contract claim by the landlord, even if they continue to pay the rent. Many tenancy agreements include a term stating that the tenant cannot leave the property unoccupied for more than X number of days. This is usually to ensure compliance with the landlord’s insurance policy.
Whilst most insurance companies have relaxed this requirement, some tenants could be in breach of contract without realising it. If any damage occurs to the property and the insurance company refuses cover owing to the tenant’s absence, the tenant and the guarantor could potentially be on the hook for a claim by the landlord.
Unfortunately, there is no clear and easy solution in these circumstances. The pandemic has affected everyone in some way. Landlords and universities providing accommodation rely on rental income to cover their expenses. On the other hand, some students and their guarantors are paying rent where the benefit of the contract is not being received, so it is understandable they may want to terminate the tenancy agreement. From a practical point of view, it could well be in both parties’ interests to continue the contract but perhaps on temporarily varied terms, most likely for a reduced rent, to reflect the reduction of benefit received.
If you would like further advice or information about this or other tenancy issues, please contact Adina-Leigh Collins, Angus Young or Claire Mac Mahon the Grant Saw Landlord and Tenant team.