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COVID-19: The effect on residential and commercial recoveries

In the last few weeks all of our processes and your processes have, been dramatically and understandably altered.

In the last few weeks all of our processes and your processes have, been dramatically and understandably altered.

We are here to offer support and guidance to enable your business to function as efficiently as possible within the current constraints. Most importantly, we all need to focus on the long term position and the gains that can be made for managing agents through their sensitive handling of leaseholders, which is the aim of this guidance.

Residential premises

  • Think carefully about any budgets that have gone out to leaseholders. It is very possible that these can be revised down as only essential services and maintenance will be required for the next few weeks or months. Possibly cleaning and cyclical maintenance have to be reduced or cancelled which would mean that the budget is overstated. You can win considerable support from residents if you are able to revise any new budgets that have gone out and, likewise, revise their payments down. It is expense for leaseholders that can be slightly reduced and will show that you have their interests at heart.
  • Talk to the residents by email or telephone. Stay in contact regularly and be ready to react to any urgent requests which impact on health or security. If they have financial issues you can consider whether it is feasible, as a concession, to offer monthly instalment plans.
  • We are unable, at present, to make any threats of forfeiture. As a result this reduces the ability to collect unpaid service charges where there are persistent offenders. There are, however, ways in which we can facilitate recovery:
    • The first letter sent will be less threatening and more in sorrow than in anger. We can offer different options for payment or deferred payment plans.
    • The second letter would be less understanding if no attempt had been made to make contact and would have to make it clear that action cannot be deferred forever as it impacts on the other leaseholders.
    • We can still issue money claims online and obtain default judgements.
    • We can treat unpaid service charges as a breach of lease and seek a determination of breach from the First-tier Tribunal.
    • Whilst mortgages are reluctant to make payment where they know forfeiture is not imminent we can, nevertheless, ask for payment on the basis that if they choose to wait until we can forfeit this will simply increase costs and interest payable.
    • Whilst enforcement is curtailed at present, all recovery matters can be set up for enforcement as soon as this is available again.

Above all, where there is likely to be a delay in recovering service charges, keep expenditure to a minimum and postpone all but the most urgent major works projects.

Commercial premises

  • Bear in mind that the last thing the Landlord wants is empty units. It may be many months before they can be re-let. Show support for businesses where possible.
  • Consider whether a payment break or reduction in rent is feasible for a period. Any reduction can then be added back in the next 6 or 12 months by increased rent payments.
  • Discuss with tenants what they can afford. There are some tenants who will be unaffected by or will benefit from the current lockdown. There will be others who cannot trade.
  • If recovery is desperate for the Landlord go for a county court judgment whilst forfeiture is unavailable. This is a short-term solution but may prompt payment if the judgment is likely to affect credit of the business. The leaseholder will be anxious to avoid such measures.
  • Make sure that the leaseholders have multiple points of contact for you and your organisation. Be approachable and easy to reach.

If you have any recovery matters, residential or commercial, we are here to assist at any time.

Helena Bannister helena.bannister@weightmans.com

Sian Evans sian.evans@weightmans.com

Charlotte Collins charlotte.collins@weightmans.com

 

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