Section A - Introduction
These COVID-19 frequently asked questions (FAQs) explore general practical issues that face Managing Trustees given the impact of COVID-19 in respect of both Legal and Financial transactions. These FAQs are to be read in conjunction with the general guidance on licences, ASTs and non-residential leases available on TMCP’s website and also the information relating to payments made to and from TMCP in the Money pages of the website.
Section B - Frequently Asked Questions (Legal)
Q1. Licences - Cancellation due to initial outbreak of COVID-19
Q1.1 Some of our licensees have called us to cancel their use of our church hall for the time being. How should we respond to this?
A1.1. Managing Trustees across the Connexion are receiving requests from third party hirers to temporarily cancel their use of church premises. Given the Government guidance on social distancing, the groups on which so many communities rely have become impossible and cancellations are inevitable. Managing Trustees also need to be mindful of the guidance from the Connexional Team on closing church buildings except in limited circumstances where they are ‘host[ing] essential voluntary activities and urgent public support services’ (The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020). This includes food banks, other services for the homeless or vulnerable people, blood donation services and emergency support.
If some or all of your licensees wish or need to cancel in accordance with Government and Connexional Team guidance, Managing Trustees have little choice but to accept the cancellation while doing what they can to ensure that the group will come back once the restrictions are lifted. The Methodist Church website guidance also suggests that Managing Trustees may also feel they would like to emphasise the pastoral support that is available.
Q1.2. In accordance with the guidance on the Methodist Church website we have suspended all our Church groups. We allow a number of local community groups to use our premises under licence. Can we insist that these third party groups stop using our premises aswell? We are using the Standard Licence.
A1.2. Yes, Managing Trustees are free to make this decision and may feel that it is in the best interests of the charity to do so to follow Government guidance on social distancing and to protect third parties as well as those volunteers who would need to manage such use. Please refer to the guidance on the Methodist Church website (Coronavirus Guidance).
Under the terms of the Standard Licence Managing Trustees can suspend use/cancel sessions at their ultimate discretion on a temporary basis or end the arrangement altogether. Please refer to FAQ 2.1. Although notice is required under clause 5, in the circumstances the Managing Trustees and the groups involved could mutually agree to the notice having immediate effect.
Q1.3. The majority of our licensees have requested a break in their licence due to COVID-19. However, we have a food bank which uses our premises under licence and given the ever great need for food banks we are anxious that the building remains open so that they can continue to use it. Is this possible?
A1.3. Ultimately this is a decision for the Managing Trustees bearing in mind Government guidance and the guidance on the Methodist Church website (Coronavirus Guidance). Please refer to FAQ 1.1. Managing Trustees will want to ensure that they are not putting their own vulnerable volunteers in danger while ensuring that the food bank using their premises can continue its vital work.
Managing Trustees should consider the position carefully and keep it under review as the wider situation develops over the coming weeks and months. Can the Managing Trustees make arrangements to ensure those volunteers or other church members who would be “overseeing” the use of the premises by the food bank are not classed as “vulnerable” in accordance with Government guidance? Please also keep under review the need for use of the premises to be shared i.e. not used by the food bank exclusively. Refer to FAQ 3.5 for guidance on exclusivity during the COVID-19 outbreak.
Please refer to the guidance that is available on the Trussell Trust website which highlights the pressure being placed on them in the current situation and “ways to help”.
Further to the Connexional Team’s guidance on re-opening buildings in response to the Government’s announcements on the provision of early years provision from 1 June 2020, please also refer to the guidance and resources in FAQ 3.2 and note the liability issues discussed in FAQ 3.7. Managing Trustees will need to ensure that the procedures including the COVID-19 specific risk assessment (see FAQ 3.3) are completed in relation to buildings which have continued to be used by essential services during the COVID-19 outbreak.
Q2. Licences - How to cancel third party use under licence due to COVID-19.
Q2.1. Some of our licensees have called us to cancel their use of our church hall for the time being. We are minded to agree but how do we go about this in practice? Can we agree this informally or do we have to ask our licensees to terminate their licences and then get them to sign new licences when they return? We are using the Standard Licence.
A2.1. Legally, a contract is in place and this can be terminated under the termination provisions of clause 5 of the Standard Licence . If you terminate under clause 5 then written notice (not email) should be given. A new licence would be needed once ‘normal service’ resumes and this will be dependent upon advice from the Government.
Although the Managing Trustees may prefer the certainty of an outright cancellation of their licences, given the inherent uncertainty at this time, they may want to consider whether a more flexible approach works for both them and their licensee?
Under the Standard Licence, use is at the times specified in the licence or otherwise at the Managing Trustees’ absolute discretion. Managing Trustees may prefer to speak to their licensees informally (telephone/email) to agree to suspend their licence for the time being. Once an end to this period of social distancing is in sight, an agreement can be reached as to when the licence will start again (and the obligation to pay the licence fee). The licence would then run to the current End Date. This could be agreed by email or over the telephone with a record kept of what is agreed.
Q3. Licences – Re-opening church buildings for pre-school licensees.
Q3.1. Can we allow the third party pre-school that uses our Sunday school hall under a licence to re-open now that the Government guidance has changed?
A3.1 Provided that re-opening is (and continues to be) permitted under Government guidelines, there is no reason why Managing Trustees cannot make the decision to allow pre-schools and other early learning provision run by third parties (Third Party Pre-Schools) and by Local Churches (Church Project Pre-Schools) to re-open. This is confirmed in the Connexional Team’s Early Years Covid-19 Advice.
However, Managing Trustees do need to (1) consider the position very carefully and (2) take the steps and use the resources referred to in the Connexional Team’s Early Years Covid-19 Advice, and summarised in FAQs 3.2 and 3.3. The difficulty is not establishing whether Government and Connexional Team guidance “allows” a pre-school to re-open, but whether Managing Trustees can allow Third Party or Church Project Pre-schools to re-open safely in their particular setting.
Q3.2. What do Managing Trustees need to do to plan for the re-opening of Third Party Pre-Schools?
A3.2. Before allowing part of the building to re-open, Managing Trustees need to consider the Connexional Team’s Early Years Covid-19 Advice and follow the recommended steps including completing the Re-Opening a Building Checklist (pdf) and carrying out a full risk assessment using the Connexional Team’s template; Covid-19 Risk Assessment (docx).
Please also refer to the summary of Managing Trustee responsibilities in the Managing Trustees’ Responsibilities Re-Opening Pre-schools table.
Managing Trustees also need to bear in mind that re-opening and keeping open remains strictly subject to Government guidance and social distancing requirements at any time. You can keep up-to-date by accessing the Government’s main Coronavirus page.
Q3.3. What resources and policies are available to help us plan for allowing the pre-school that uses part of our church building to re-open?
A3.3. There is a wealth of new guidance and resources to help Managing Trustees to consider and plan for re-opening pre-schools run by third parties (Third Party Pre-Schools) and by Local Churches (Church Project Pre-Schools) on the Methodist Church Website:
- Methodist Church Coronavirus Guidance for Property page –Guidance and links to the Connexional Team’s resources on the implications of COVID-19 on property with a focus on re-opening church buildings and what Managing Trustees need to do before doing so.
- “Education in early years settings in Methodist property following government advice from the 13th May 2020” (Early Years Covid-19 Advice) – Focusing on re-opening church buildings for pre-schools, this guidance highlights the main points for Managing Trustees to consider before re-opening parts of their building for Third Party and Church Project Pre-Schools and the planning process prior to re-opening. Managing Trustees will find the checklists within this guidance on pre-school related considerations and practical tips of particular assistance.
- Re-Opening a Building Checklist (pdf); A checklist of practical steps for Managing Trustees to take before allowing Methodist buildings closed during the COVID-19 outbreak to be used again. The checklist aims to help Managing Trustees ensure that their properties are safe and fit for purpose.
- Covid-19 Risk Assessment (docx) – A template risk assessment produced by the Connexional Team, based on the HSE template. Managing Trustees must conduct a risk assessment before re-opening church buildings.
The extent of the risk assessment will depend upon whether the pre-school in question is a Church Project Pre-School, a Third Party Pre-School under a lease or a Third Party Pre-School under a licence. (See the Managing Trustees’ Responsibilities Re-Opening Pre-schools table for a summary of the differences.) The risk assessment will help Managing Trustees manage the risk posed by COVID-19 in these different scenarios and ensure they are taking reasonable steps to reduce the risk of spreading COVID-19 to those who use the building.
Managing Trustees also need to bear in mind that re-opening and keeping open remains strictly subject to the Government’s guidance and social distancing requirements at any time. Managing Trustees therefore need to use the Connexional Team guidance in conjunction with the ever changing Government and HSE guidance. You can keep up-to-date by accessing the Government’s main Coronavirus page. Please also refer to the additional external links in the Connexional Team’s Early Years Covid-19 Advice and the External Resources on TMCP's COVID-19 page.
Q3.4. Our licensee is hoping to re-open the pre-school they run from our church hall shortly in accordance with the Government’s guidelines on re-opening early years educational provision. Do we need to make any changes to the licence agreement to ensure they are obliged to follow the Government’s guidelines and the rules we are introducing to keep our buildings and Church members safe?
A3.4. If the Managing Trustees are already using the standard pre-school licence (Pre-School Licence) provided by TMCP, there should be no need to vary this to ensure that the licensee follows COVID-19 specific legislation or any additional guidelines or controls that the Managing Trustees need to impose to protect the safety of the building and other users due to COVID-19.
Clauses 3(l) (m) and (nn) of the Pre-School Licence oblige the licensee to adhere to all appropriate rules and regulations. You may however want to point out the additional requirements that have been imposed due to COVID-19 and ask your licensee to confirm that they have taken steps to accommodate these in the way they operate from your premises.
As regards specific COVID-19 rules introduced by the Managing Trustees, Clause 3(n) of the Standard Pre-School Licence obliges licensees to; “observe any rules and regulations the Managing Trustees make and notify to them from time to time…” These could include any COVID-19 specific housekeeping type rules introduced, provided that you ensure your licensee is aware of them. The drafting intends to catch the usual conditions of use or rules attached to the noticeboard or the Pre-School Licence itself. Due to the importance of these particular rules, you may want to specifically point them out to your licensee e.g. attach them to an email and/or ask your licensee to print and sign a copy to confirm that they will adhere to them.
Managing Trustees can refer to the Connexional Team’s Early Years Covid-19 Advice for guidance on what types of practices to introduce e.g. wiping surfaces including light switches, hand-washing, use of hand sanitiser and treatment of rubbish etc.
Please bear in mind that if you wish to introduce any changes to your arrangements with your licensee that would change the terms of the Pre-School Licence itself, then TMCP would need to approve the same. Please contact TMCP Legal if you are unsure. TMCP Legal would be happy to look at the type of COVID-19 rules and regulations that you want to impose on your licensees if you are unsure whether they go beyond “housekeeping” type arrangements and change the terms of the licence itself.
Q3.5. We have considered the Connexional Team guidance and are happy to allow the pre-school that uses our church hall to re-open. However, they will be the only group using our church building as it is otherwise closed. Can we let them have exclusive use?
A3.5. While Managing Trustees need to ensure that use of their premises by any licensee is not “exclusive”, the COVID-19 crisis is an exceptional and hopefully temporary situation. It is important that it is understood by the pre-school group that although, in practical terms, they may be the only regular physical users of the premises at the current time, their use is on the basis of a mere licence. Technically use will be non-exclusive as the pre-school cannot prevent the Managing Trustees from accessing the premises.
On the basis that the current situation is only temporary, Managing Trustees and other third party groups will use the church building increasingly as the restrictions are lifted, and access will necessarily be required from time to time to enable the Managing Trustees to fulfil the requirements under their risk assessment, pragmatism is required. Managing Trustees need to ensure that the situation is reviewed and whatever can be done to demonstrate non-exclusive use is done. Please speak to TMCP Legal if you have any concerns.
Q3.6. Our Third Party Pre-School wants to use additional space to enable them to accommodate the Government’s social distancing requirements. We are happy to accommodate this. Can we simply agree informally?
A3.6. If Managing Trustees want to allow their licensee pre-school to use more of the church building than is used under the current licence agreement, then this would need to be documented carefully. A new licence agreement setting out the proposed extended “Premises” would be required. This will make it clear that all the terms that apply to the existing premises also apply to the additional areas and avoid any confusion as to the basis of use of the additional areas, particularly given the issues surrounding “exclusive use” discussed in FAQ 3.5.
If you have a soft copy of the current licence agreement you can simply amend the description of the “Premises" on the second page to include the additional area, or, if this is for a temporary period only, have a separate licence for the additional area. Again, if you have a soft copy of the current licence agreement you can use this document changing the “Premises" to refer to the additional area only, the “Start Date” to the date the pre-school starts to use the premises again and the “Licence Fee” to any additional sum that you charge for use of this area.
The Managing Trustees would then need to ask the licensee to sign and return the amended licence or additional licence to you by post so that it can then be signed and dated by the Managing Trustees. The “End Date” for the amended licence or additional licence can be the end of the period of use of the additional area (provided this is no longer than 12 months after the “Start Date”) or the current “End Date”.
Please contact TMCP Legal if you would like further guidance.
Q3.7. Our licensee wants to re-open and we are happy to accommodate this as we welcome the income we receive. However, we are worried about our liability should one of the children or their carers contract COVID-19. Is our liability excluded under clause 8 of the Pre-School Licence?
A3.7. Although the liability of the Managing Trustees is limited under clause 8.1 of the Pre-School Licence, liability is only excluded so far as it is possible to do so by law. Please note clause 8.2 of the Pre-School Licence (this is not available on the TMCP website but you can refer to the mirror provision in the Standard Licence).
With this in mind, it is of critical importance that Managing Trustees follow the procedures that have been set down by the Government and put in place by the Connexional Team to keep everybody safe. The steps set out in the Connexional Team’s Early Years Covid-19 Advice must be completed before any use of the building is resumed with appropriate risk assessments and measures being in place to ensure the building is safe and to protect Managing Trustees who are liable as managing trustees of the building. Please refer to FAQ 3.3 for links to the Connexional Team’s guidance and resources.
Managing Trustees also need to ensure that insurance cover is not compromised. Please refer to Methodist Insurance’s website for guidance on the general position and speak to your insurer if you have specific concerns.
Q3.8. What do Managing Trustees need to do to plan for the re-opening of a Church Project Pre-School?
A3.8. Managing Trustees are encouraged to refer to FAQ 3.3 for links to the guidance that is available on the Methodist Church Website on steps that must be taken before Church Project Pre-Schools re-open. Managing Trustees need to bear in mind that their responsibilities and considerations are very different where they provide Early Years provisions themselves (Church Project Pre-Schools) compared to where they allow a third party to provide early years provision on their premises under a licence or lease (Third Party Pre-Schools). The Managing Trustees’ Responsibilities Re-Opening Pre-schools table summarises these differences and provides guidance on where to find help.
The following links are especially helpful for Church Project Pre-Schools:
- https://www.eyalliance.org.uk/coronavirus-info-for-nurseries - Nursery specific guidance from the Early Years Alliance with links to appropriate Government early learning specific guidance.
- Actions for early years and childcare providers during the coronavirus outbreak – Government guidance detailing actions to be taken by early years providers which would include Church Project Pre-Schools.
Given the safeguarding and employment dimensions to a Church Project Pre-School, please also ensure that you are following any guidance relating to re-opening specifically or COVID-19 more generally provided by the Connexional Safeguarding Team and the Personnel and Development Team at MCH.
The Conference Office will also be able to answer any governance based questions that you may have on running the pre-school itself in the current circumstances.
As a Church Project Pre-School is run as a Local Church project, this type of pre-school does not have the same “third party use of property” type considerations as Third Party Pre-Schools and TMCP would not therefore usually be involved.
Q4. Leases – Tenant requests due to COVID-19
Q4. We rent out part of our premises to a business tenant who has indicated that they will struggle to pay rent going forward due to the impact of coronavirus. Do we have to release them from the lease or agree rent concessions? Can we do this under charity law and Methodist law and policy?
A4. It is very unlikely that the lease will give your tenant the right to be released or to withhold rent due to COVID-19 even if the premises are closed.
It is recommended that the Managing Trustees check the lease carefully and contact their solicitor if they are unsure. Please refer to the Panel Solicitor page on TMCP’s website for contact details.
These are very unique circumstances and ultimately it will be for the Managing Trustees to decide, on a case by case basis, how they wish to proceed. If the tenant argues that it has the right to terminate the lease or unilaterally vary rental payment terms you should take immediate legal advice. Please refer to FAQ 5.1 for guidance on what to consider and FAQs 5.2 and 5.3 for the Methodist perspective.
Q5. Leases – Rent payments
Q5.1 We have a number of investment properties which we let out. This income is crucial to the Mission work that we carry out. One of our tenants has sent us a letter from their solicitor requesting that we reduce the rent or allow a rent holiday. What should we consider in deciding whether to grant these types of concession?
- Discuss the current situation (remotely) with your tenant as soon as possible to achieve the best possible outcome. Make it clear that this is on what is known as a “Without Prejudice” basis. This should help the Managing Trustees to avoid finding themselves contractually bound to changes to the lease before they have had chance to consider the position fully, obtain appropriate advice and agree the full details. (Please also refer to the guidance on “side letters” in FAQ 5.2).
- Ask the tenant to confirm what rent concessions they want. Do they want a rent reduction, a rent discount (i.e. a rent free period), or a rent deferment (where unpaid rent is to be repaid later on an agreed schedule with or without interest)? What do they propose in relation to any service charge or other payments due under the lease? Do they also want these payments to be reduced or suspended? Do they want to pay their rent monthly rather than quarterly? When would normal payments be resumed and on what terms?
- How will the tenant’s proposals affect the Managing Trustees’ income/cash flow? Do the Managing Trustees wish to put forward any alternative proposals?
- What is the tenant’s financial position? Is there a genuine need or risk of the tenant becoming insolvent? It is recommended that the Managing Trustees ask to see financial information showing how COVID-19 is affecting the tenant’s business and whether the tenant has explored possible support from central or local Government (e.g. loans or rates relief). What are the tenant’s likely long term prospects? You can ask your solicitor or agent to help you with this.
- Does the tenant have insurance which would cover rent? Managing Trustees should also check with their own insurance.
- Did the Managing Trustees take a rent deposit when the lease was entered into which can now be used to pay rent? Please speak to your solicitor about this before using the deposit. Usually the deposit would be held by your solicitor.
- Can the tenant offer anything in return to help the charity once the current crisis starts to ease e.g.an increased rent at a later date or waiver of any right they have to break the lease? Is there a tenant’s break clause?
- Would the Managing Trustees be able to find a replacement tenant and on what terms if this tenant defaults or becomes insolvent? Can the Managing Trustees’ surveyor provide any advice on this point to help them make an informed decision?
Managing Trustees may also find it helpful to refer to the Rent Concessions for non-residential tenants background paper produced in conjunction with Blake Morgan LLP.
If the Managing Trustees are uncertain about any of these points it is strongly recommended that they take advice from their solicitor, surveyor or accountant. Please refer to the Panel Solicitors page on TMCP’s website for contact details for the solicitors on the Methodist panel. For information on the panel surveyors please refer to the Panel Surveyors page on the Methodist Church website.
Q5.2 We let out shop premises to a commercial tenant. The tenant has approached us asking for a rent holiday due to the impact of COVID-19 on their business. We know they are struggling and would like to help if possible, however, are we able to do so under charity law and Methodist law and policy?
A5.2 On 23 March 2020, the Government announced unprecedented measures to help commercial tenants who cannot pay their rent over the next three months because of coronavirus and protect them from eviction (Extra Protection for Businesses). The Government is encouraging landlords and tenants to come to a voluntary arrangement in an attempt to protect jobs and livelihoods. From the Managing Trustees’ perspective, they will be anxious to do what they can to preserve the landlord/tenant relationship so once the restrictions are lifted they know they have safeguarded future income and provided what support they can to the wider community during this time.
Accordingly, in these exceptional circumstances and in accordance with current Government guidance, charity law and Methodist law and policy would not prevent Managing Trustees from looking at options such as rent holidays. However, please bear in mind that the legislation proposed in March 2020 seeks to prevent landlords from evicting their tenants, it does not remove the liability to pay rent; payment is deferred rather than written off entirely. As prudent charity trustees Managing Trustees may be expected to ensure that payment is made once the situation improves in accordance with the Government guidance at that time. You should refer any requests to pay rent arrears in instalments with your surveyor.
However, before looking at rent holidays, the Managing Trustees may want to explore other options with their tenant. The Government has announced a whole host of ways to support businesses and it could be that your tenant can continue to pay rent which will help the charity in the short term and avoid the tenant falling into arrears. Although we understand this is not covered in many cases, it is worth double checking whether your tenant has business continuity insurance. Managing Trustees may also find it helpful to refer to the Rent Concessions for non-residential tenants background paper produced in conjunction with Blake Morgan LLP.
In tandem with the above questions, in accordance with the current guidance from the Charity Commission (COVID-19 Guidance for the Charitable Sector), Managing Trustees need to think about the long term effects on the charity:
- If the rent is not paid, will the Managing Trustees still be able to cover the insurance costs in accordance with their landlord obligations under the lease?
- Can the tenant pay part of the rent or the insurance rent?
- Speak to your surveyor to help the Managing Trustees negotiate terms that are in the best interests of the charity in these very difficult circumstances.
Managing Trustees will also need to document emergency arrangements carefully. The Managing Trustees should speak to their solicitor about putting in place what is known as a “side letter” to record the temporary arrangements that have been agreed.
To assist Managing Trustees TMCP have worked alongside Blake Morgan, one of the firms on the panel of solicitors, on a streamlined process which can be followed to deal with such requests. A questionnaire has been produced for Managing Trustees to complete, detailing the reasons why they are agreeing to reduce or suspend the rent, setting out the length of the suspension/reduction and what the repayment terms will be. Once the questionnaire has been completed it should be sent to TMCP and Blake Morgan together with a copy of the lease. Blake Morgan will review the questionnaire and prepare a side letter for the Managing Trustees detailing what has been agreed, which can then be signed by the parties and kept with the original lease. Blake Morgan have agreed to charge Managing Trustees £200 plus VAT for producing the side letter on the basis the questionnaire is completed correctly. Please refer to the Non-Residential Leases – requests from Tenants to a rent concession News hub article for details of the process.
If you decide to instruct another firm of solicitors to help you, please send the proposed side letter that they have prepared to TMCP so that we can ensure that a record is kept. However, please bear in mind that if you use the process that has been agreed with Blake Morgan they will be using a form of side letter that has already been approved by TMCP meaning that approval under SO 931(3) will be given without delay.
This is an ongoing situation and Managing Trustees are encouraged to keep talking to their tenants to find the best way to deal with this.
Q5.3 We have seen the announcements in the media about protection from eviction for business tenants. The tenant of our church hall is a charitable organisation that is now unable to continue with its work due to the Coronavirus. Are we allowed to be flexible in terms of rent payment? The charity wishes to keep their lease so that they can continue their work once the restrictions are lifted. They have suggested being given a rent free period or paying a reduced rent.
A5.3 Although the Government’s announcements and measures to be introduced in the emergency Coronavirus Bill focus on businesses and commercial tenants, it is difficult to see why Managing Trustees cannot follow the principles discussed in response to FAQ 5.2 when dealing with their not-for-profit or charity tenants.
Managing Trustees do however need to bear in mind the need to negotiate an arrangement that also protects the best interests of their own charity. Managing Trustees will also be experiencing difficulties due to loss of income and still need to ensure that the premises are fully insured and secure during periods of non-use.
Is there anything that your tenant can do assist you as their landlord?
- Does your charitable tenant have any insurance that could help them to continue paying the rent?
- Would any of the measures being brought in by the Government assist your tenant? Managing Trustees may also find it helpful to refer to the Rent Concessions for non-residential tenants background paper produced in conjunction with Blake Morgan LLP. Government guidance makes it clear that landlords and tenants should work together where possible, so the burden is not placed on the landlord completely. Having said that, at the moment it is acknowledged that most of the help is for businesses but this could change and Managing Trustees are encouraged to keep the situation under review.
Having considered the above, it is ultimately a decision for the Managing Trustees to make; can the Managing Trustees afford to agree a reduced rent and continue to fulfil their own obligations under the lease? Do the Managing Trustees’ finances allow for a rent free period? What would the impact of the reduced rent/rent free be set against losing the tenant and the potential delay in finding a new tenant? The Managing Trustees as prudent charity trustees should speak to their Surveyor and ensure that any decisions are made in accordance with that advice. How does your Surveyor advise you to proceed to protect the best interests of the charity?
As discussed in the response to FAQ 5.2, please ensure any temporary measures are recorded carefully in a “side letter” and forward this with the surveyor’s advice to TMCP for approval.
Q5.4 We are Managing Trustees of a small shop that was left to the Local Church in a will many years ago. Our current business tenant runs a number of shops and has asked us for a rent holiday or reduction in the rent due to coronavirus.
What is our position if we do not agree to these concessions?
A5.4 This question has been considered by Sintons, one of the panel solicitors along with TMCP.
If tenants default on rent or other payments due under the lease then the Managing Trustees, as prudent charity trustees would usually be expected to enforce the terms of the lease, including enforcement of any guarantees and accessing rent deposits as well as forfeiture (terminating the lease) or action in the courts for breach of tenant covenants. It is recommended that the Managing Trustees take immediate legal advice particularly as the tenant may become insolvent and rental recovery become very difficult during the current crisis.
However, as discussed in the response to FAQ 5.2, Sintons advise that on the 23rd March 2020 the Government announced that all commercial tenants in England, Wales and Northern Ireland who miss rent payments (including service charge and insurance) are to benefit from a Government ban on landlords evicting their tenants. This will be in effect until 30th June with a government option to extend.
It is strongly recommended that Managing Trustees considering taking legal action against their tenants speak to their solicitor to see whether they need to take action now to enable them to enforce the terms of the lease in the future, once the restrictions are lifted. However, please also consider the responses to FAQs 5.1 – 5.3 above to help you decide what course of action would be in the best interests of the charity.
Q5.5 We are Managing Trustees of a small shop that was left to the Local Church in a will many years ago. Our current business tenant runs a number of shops and has asked us for a rent holiday or reduction in the rent due to coronavirus.
If we do agree to rent concessions, how should we proceed?
A5.5 As discussed the response to FAQ 5.2, Managing Trustees need to ensure that the new arrangement is documented carefully. As prudent charity trustees, this should be documented by your solicitor. Please refer to the Panel Solicitors page on TMCP’s website for contact details.
This question has been considered by Sintons, one of the panel solicitors, along with TMCP and we confirm:
The new arrangement should be documented as soon as possible. This can be by “side letter”, as discussed in the response to FAQ 5.2, or, depending on the circumstances, by a deed of variation. This is a more formal legal document which varies the terms of the lease until the end of the lease term or a further variation.
A side letter is usually better for Managing Trustees as it is quicker, cheaper, and can be personal to the tenant. Unlike a deed of variation, it does not need to be registered at the Land Registry which means that it is therefore more confidential. The side letter should set out (1) all the new terms, (2) how long the arrangement is to last and importantly (3) that it ceases and the original lease terms prevail if the tenant becomes insolvent, breaches the new arrangement or otherwise substantially breaches the terms of the lease. If you have a guarantor under the lease, they should also be party to the side letter.
Please refer to the response to FAQ 5.2 for details of the charity law and Methodist law and policy requirements for side letters.
Q5.6. Our tenant plans to re-open their private nursery but is likely to see a drop in income due to parents choosing to keep their children at home for the time being. They have asked for a temporary reduction in rent, can we agree to this?
A5.6. Any requests from tenants for rent concessions in view of COVID-19 must be considered and documented very carefully. Please refer to the guidance in the Non Residential Leases – requests from Tenants to a rent concession article on the TMCP website and refer to FAQs 4 and 5.
Q6. Leases – Termination due to COVID-19
Q6.1. We let out a garage which forms part of our premises as a car repair shop to a sole-trader. Our tenant has asked us to terminate the lease as he has been forced to close due to the latest Government announcements and has already had to lay off his employees. Can we simply agree to this; we have little choice. He simply cannot pay the rent? We are a small community and want to do what we can to help this family business.
A6.1 These are very difficult and unprecedented times and it is ultimately for the Managing Trustees to decide how they wish to proceed. There would be nothing preventing the Managing Trustees from agreeing to this if they felt it was in the best interests of the charity to do so and this was in accordance with the advice of their surveyor.
The Managing Trustees may however wish to consider the options discussed in the responses to FAQs 5.1 to 5.3 to see whether these would allow the tenant to continue with the lease. Depending upon how difficult your surveyor feels it may be to find a new tenant in the short term, does your surveyor advise that it would be in the better interests of the charity to consider arrangement such as a rent holiday (FAQ 5.2) or reduced rent (FAQ 5.3)? Alternatively, does your surveyor think agreeing a surrender is in the best interests of the charity?
It is also worth considering whether, given the raft of emergency Government help, it would be possible for your tenant to continue to honour their obligations under the lease. Where possible, the tenant should be encouraged to do all that they can. Can the tenant help the Managing Trustees? Please refer to the response to FAQ 5.2.
If the Managing Trustees did decide to proceed with a surrender, please bear in mind that there are charity law and Methodist law and policy requirements to be fulfilled. Please contact TMCP Legal if you wish to proceed so that we can clarify the requirements:
- Surveyor’s advice would be required confirming the value (if any) of the surrender and why it is in the best interests if the charity to agree to the same in these very exceptional circumstances.
- A deed of surrender would also need to be prepared by your solicitors including the usual template clauses and submitted to TMCP for approval.
- Please bear in mind that the deed would need to be sealed and signed by the Board of TMCP.
The firms on the Methodist panel of solicitors are familiar with the charity law and Methodist law and policy requirements for surrenders and it is recommended that you contact one of these firms to deal with this for you. Please refer to the Panel Solicitors page on TMCP’s website for contact details.
Q6.2. We let out our old Sunday school to a pre-school who continue to provide care for key workers. They have told us that they will continue to operate for the time being. One of the church stewards is concerned as we have been told to close the building and nobody else is using the premises anymore. She thinks it would be easier just to terminate the lease. Should we terminate the lease?
A6.2. In this case you have confirmed that the pre-school is a tenant under a lease rather than a mere licensee. They have legal rights under the lease and are likely to be protected from eviction once the Coronavirus Bill comes into force.
As the pre-school is a tenant and has exclusive rights to possession under the lease in any event, the Managing Trustees do not need to be concerned about the pre-school being the only occupier. The Managing Trustees do however need to bear in mind the legal rights that their tenant has under the lease and ensure that they do not do anything to remove rights that the tenant enjoys finding themselves in breach of the lease themselves.
A lease would usually include a provision requiring the tenant to comply with legislation. Responsibility for this would therefore lie with the tenant. The restrictions are ever changing and it is not always clear what is and what is not permitted in terms of leaving buildings open. While there are restrictions on places of worship, the Sunday school is now let out in the same way as other commercial premises and is subject to the terms of the lease. The Managing Trustees should keep in contact with their tenant (remotely e.g. by telephone or email) and remind them of the need to ensure that they continue to operate within the current regulations. If the Managing Trustees were notified by the local council for example that there was an issue with the pre-school remaining open, they would then need to take steps to try and address this.
In terms of the Managing Trustees’ involvement in the pre-school, perhaps offering pastoral support, this would need to be reviewed given the current crisis. Please refer to the guidance on the Methodist Church’s website (Coronavirus Guidance). The Managing Trustees may feel this is a good opportunity to explore ways to offer pastoral support remotely. If the Managing Trustees have previously attended meetings, it is likely that these will now be conducted via skype or a similar service in any event allowing the Managing Trustees to continue to be involved.
If the Managing Trustees previously offered services to their tenant e.g. cleaning, please refer to the response to FAQ 7.1.
Q6.3. Can we allow the third party pre-school that uses our Sunday school hall under a lease to re-open?
A6.3. Legally, the situation is very different to a licence (see FAQ 3.1). In most cases Managing Trustees will have no right not to allow their tenant to re-open their pre-school – or any other business or operation it runs from the premises under a lease. Unlike a licensee, a tenant has legal rights to; “quiet enjoyment” and “without any interruption by the Landlord or any person claiming under the Landlord”. This means that re-opening is very much in the tenant’s hands. Please refer to the explanation of the legal position in FAQs 6.2 and 7.1.
However, most leases of parts of Methodist buildings involve an element of shared access/use e.g. entrance areas and/or communal facilities such as a kitchen and restrooms. The same procedures will need to be followed for these areas including a completed risk assessment as are required under the Connexional Team’s re-opening advice for church buildings generally.
Managing Trustees are encouraged to refer to FAQs 3.2 and 3.3. and the Connexional Team’s guidance on re-opening church buildings for pre-schools and the procedures and steps that must be followed (see FAQ 3.3). This will help the Managing Trustees plan for their tenant’s re-opening and the associated property considerations that they will have as landlord. The guidance should be read bearing in mind the differing Managing Trustee responsibilities where the Managing Trustees are landlord as highlighted in the Managing Trustees’ Responsibilities Re-Opening Pre-schools table.
Q7. Landlord obligations under a lease – services and communal space
Q7.1 We let out office space to a couple of small businesses. Under the lease there are communal areas and we have to perform a number of services including cleaning. We are usually happy to do this and enjoy the interaction with our tenants. However, can we continue to do this given the dangers posed by the coronavirus? Should we stop the tenants from using the communal areas including access to the offices?
A7.1. Managing Trustees should keep under review the guidance provided by the Government and the Connexional Team. Please refer to the FAQs available on the Methodist Church Website and the Connexional Team’s guidance on re-opening church buildings for pre-schools (see FAQ 3.3) and the procedures and steps that must be followed..
However, Managing Trustees also need to bear in mind the legal requirements under the lease and if they can no longer fulfil these obligations, that this is expressly agreed with the tenant.
In terms of the rights granted under the lease to use communal areas and access the offices, it is an important legal principle that if a landlord gives a right, such as a right of access, to their tenant with one hand, they cannot take it away with the other. In many cases the lease will be drafted in such a way as to allow the Managing Trustees as landlord to change the access routes so this could be a possibility if you need to change the access and can do so.
However, it is unlikely that the Managing Trustees would be able to completely close all access to the offices unless you were obliged to do so by law. The situation is ever changing and the Managing Trustees should keep the position under review. TMCP Legal will also keep the FAQs updated.
Often a lease would also allow the Managing Trustees as landlord to impose reasonable rules or regulations relating to use of the communal areas and access. It is recommended that the Managing Trustees speak to a solicitor to help them consider what proportionate measures should be introduced to keep the tenant (and the Managing Trustees) safe. Please also refer to the Connexional Team guidance on re-opening church buildings (see FAQ 3.3). It is likely that such rules would be deemed “reasonable”. Please refer to the Panel Solicitors page on TMCP’s website.
In relation to the services provided by the Managing Trustees, as the COVID-19 restrictions are lifted the Managing Trustees’ ability to provide cleaning and other services need to be kept under constant review.. What are the risks of cross contamination and infection to those carrying our the cleaning; whether Managing Trustees, employees or third party service providers? Are those who usually carry out the services “vulnerable” and/or are they “self-isolating”? Care must be taken to ensure that all appropriate risk assessments have been completed given the liability of the Managing Trustees. Refer to the Connexional Team’s guidance on re-opening church buildings referred to in FAQ 3.3.
Again it will be necessary to look at the drafting of the lease and speak to your solicitors to see what services absolutely must be provided and what steps can be taken to ensure they can be provided safely:
- Are the Managing Trustees actually obliged to provide the services in these circumstances?
- Can an agreement be reached with the tenant in the short term?
- Is there scope to reduce the services or for these to be carried out by third parties at the tenant’s cost?
- Practically, would anybody else be able to deliver the services in accordance with current Government guidance?
It is recommended that the Managing Trustees obtain clarification from their solicitor of the services they have to provide and rights they have to accommodate, how these can be adapted in the circumstances and to speak to their tenant so that agreement can be reached.
Q8. Non-Residential Leases - Insurance
Q8.1 Our tenant wants us to either suspend the rent or terminate their lease due to the impact of COVID-19 on their business. Can we claim on our insurance?
A8.1 It is strongly recommended that the Managing Trustees check the position with their particular insurer. The situation is changing rapidly and companies are responding to the challenges posed by COVID-19 in different ways and adapt their stance in light of developments. You may want to keep checking the position.
TMCP is liaising with Methodist Insurance alongside the Connexional Team to establish what support is available for Managing Trustees and whether any further help can be provided.
You may also want to ask your tenant to check with their own insurer. Do they have business interruption insurance? If the tenant will be covered should they stay in the lease and continue to pay the rent until the current crisis subsides?
Please refer to FAQ 6 for guidance on how to approach the termination question.
Q9. Residential Tenancies – Rent queries due to COVID-19
Q9.1. One of our Manses is currently let on a residential tenancy (an AST). The tenant has contacted our local Minister to say that they have lost their job due to coronavirus and can no longer afford to pay the rent. We want to play our part during these difficult times. Can we agree not to collect rent during the current crisis or to reduce the rent temporarily?
A9.1 Clearly these are unusual times and the decision as to whether your tenant continues to make full payment in the immediate future will come down to the particular circumstances of your tenant and negotiation between the parties. To help Managing Trustees to decide how to respond to their tenant’s request, we advise that you consider the following legal points:
- Managing Trustees, as prudent charity trustees are under a duty to act in the best interests of the charity. It follows that Managing Trustees should therefore try to obtain payment of rent due under the AST as best they can in accordance with the existing terms of the AST.
- If full payment of rent is categorically not possible, Managing Trustees should negotiate the best position they can, document it and keep it under review.
- It is strongly recommended that Managing Trustees try to communicate with their tenants (remotely) so that any agreement reached takes into account the particular circumstances of a situation and your tenant understands that while you would like to help, there are expectations placed on you as charity trustees. Face to face meetings are currently very difficult due to the need to comply with social distancing restrictions. Managing Trustees may therefore want to conduct a virtual meeting if at all possible e.g. over Skype or Zoom etc. or contact their tenant by telephone. Although not ideal due to the sensitivity of the topic, at the moment these “remote” means of communication are the only ones available.
- Due to the emergency measures being put into place by the Government and the welfare position generally, it may be that the tenant can in fact continue to pay the rent. Is the tenant entitled to universal credit or housing benefit? If so, Managing Trustees should explain the need to continue paying the rent. Would a rent holiday pending the arrival of the first payment help the tenant in these circumstances? A rent holiday means that rent is delayed rather than not paid at all. An arrangement would need to be reached about bringing payments up to date.
- Managing Trustees should check whether there is a guarantor. If so, can they be asked to pay or help the tenant pay the rent?
- In accordance with the current guidance from the Charity Commission (COVID-19 Guidance for the Charitable Sector) Managing Trustees also need to think about the long term effects on the charity. If some or all of the rent is not paid; will the Managing Trustees still be able to cover their outgoings for the property e.g. the insurance costs? You may want to speak to your agent and/or solicitor to help the Managing Trustees negotiate terms that are in the best interests of the charity in these very difficult circumstances.
As a general consideration, Managing Trustees need to be aware of the Government’s expectation for landlords to “reach out” to residential tenants, “show compassion” and work together to agree a way forward taking into account their tenant’s individual circumstances. This backdrop will inevitably set the tenant’s expectations in relation to any negotiation between the parties.
It is essential to document any agreement reached very carefully. Please refer to FAQ 9.2.
Q9.2. One of our tenants has contacted our local Minister to say that they have been forced to accept a pay cut and their partner has lost their job due to coronavirus. We have considered what we can agree to, given the tenant’s circumstances; what they can still continue to pay us with the help announced by the Government and the need to protect the best interests of the charity. Do we have to document this formally?
A9.2 As you suggest, Managing Trustees do have the flexibility to come to an arrangement with their tenant in these very exceptional circumstances after considering the points set out in FAQ 9.1. However, it is vital Managing Trustees document any changes in the rent payment terms very carefully.
It is important for Managing Trustees to document any changes in the level of rent or payment terms immediately, taking care not to unintentionally invalidate or negate the underlying agreement that the Managing Trustees intend to continue e.g. the existing tenancy agreement (AST).
TMCP recommends that Managing Trustees speak to their solicitor or agent about how to document any emergency arrangements that have been agreed. Managing Trustees are encouraged to speak to one of the firms on the Methodist panel of solicitors to see whether they can help you. Please refer to the Panel Solicitors page on TMCP’s website. Please note that one of the firms on the Panel, Sintons LLP, has agreed to produce a side-letter to document temporary arrangements for a fixed fee subject to Managing Trustees completing a specially designed questionnaire with full details of the AST and the agreement reached with the tenant(s). Please contact TMCP for further details.
Please also bear in mind that any agreement will need to be approved by TMCP. Please send the draft to us with confirmation of who has helped you to draft the same and what has been decided in relation to the points set out in FAQ 9.1.
Q10. Residential Tenancies – Impact of COVID-19 on new tenancies
A10.1 As discussed in FAQ 11.1, there is now a Government embargo on movement and unless the proposed tenant’s move is essential, you should consider whether the new tenancy should be delayed until the current crisis eases and the Government’s restrictions are lifted. Do the Managing Trustees feel that this move can still take place in practice bearing in mind the points discussed in FAQ 10.2? Do you believe this move should take place given the current Government restrictions on movement?
If the Managing Trustees feel that the proposed tenant’s move/the new tenancy is essential e.g. the tenant can no longer live in their current home or they are seeking to house a key worker, then it can go ahead provided the practical arrangements followed are in accordance with Government guidelines to keep everyone safe:
The Government’s guidance is ever changing and care will need to be taken to ensure that whatever is proposed is in accordance with the guidance in force at that specific time. TMCP is working hard to keep our FAQs updated but please do double check the position before entering into a new tenancy.
Before entering into a new tenancy, Managing Trustees must also ensure that the usual charity law and Methodist law and policy requirements on the grant of a new AST have been met. Please contact TMCP Legal if you have not done so already and refer to the detailed guidance on our website (Residential Tenancies Page). The Residential Tenancy (Landlord) Checklist is a good place to start.
For more guidance on housing key workers, please refer to FAQ 10.3.
Q10. 2 We will not need to use one of our Manses for the foreseeable future and had considered letting it out on a residential tenancy (AST). Is this still a possibility due to COVID-19? Can we enter into a new AST?
A10.2 Given the possible issues that may arise with Manses already let out not being available for incoming Ministers at the start of the new Connexional year, the Managing Trustees should first liaise with the Circuit or District to check whether a Manse should be made available for those incoming Ministers instead of being let out.
If the Managing Trustees still wish to proceed with a new AST, please consider the following issues:
- Managing Trustees should consider the Government’s embargo on movement discussed in FAQ 10.1 and 11.1 and how this impacts on their plans.
- Practical difficulties may arise due to issues of access to the property for cleaning/decontamination, carrying out gas and electrical safety tests, obtaining an Energy Performance Certificate (EPC) and any works required before a new tenant moves in relating to improving energy efficiency or otherwise. Can any additional costs be covered by the new tenant? Can arrangements be made to fulfil the statutory requirements while still complying with the strict social distancing rules and Government guidelines? (Please refer to FAQs 13.1 to 13.3 .)
- Viewings of the property and face to face negotiations may be difficult if not impossible with new prospective tenants. Thought would need to be given to whether these issues could be resolved perhaps through virtual meetings over Skype or Zoom etc.? Have you spoken to your agent to see what they can suggest in terms of promotional material/photographs if these have not been produced already?
- In finding a new tenant, Managing Trustees as charity trustees would need to ensure that they were acting prudently and in the best interests of the charity. The Managing Trustees would need sufficient information to enable them to satisfy themselves that the new tenant could pay the rent and fulfil the other tenant obligations in the AST. Although the Managing Trustees may feel that this is obtrusive or have great sympathy with the prospective tenant’s financial predicament, the prevailing duty to act prudently will still apply.
- Managing Trustees should consider what protection their new tenant can provide to ensure they can comply with their tenant obligations under the AST. Although rent deposits may be difficult for tenants to produce in the current climate, Managing Trustees need to investigate the possibility. In addition Managing Trustees should consider:
- requesting strong financial references for the new tenants;
- if the tenant is a couple, having both of them named as tenant on the AST; and
- having a guarantor
- Managing Trustees should also consider the length of term carefully. If the Managing Trustees are entering into a new tenancy as a stop gap measure perhaps a shorter term than usual would be prudent. Please also bear in mind that the minimum period of a residential tenancy is 6 months; you would be unable to end a tenancy before the expiry of 6 months notwithstanding any agreement by the tenant for a shorter arrangement. Please also bear in mind the emergency measures brought in by the Government and the longer notice periods required to serve notice on residential tenants (please refer to the questions and answers in FAQ 12).
The Managing Trustees need to consider the above points to help them decide whether finding a new tenant is feasible now due to the practical implications of the emergency restrictions necessitated by COVID-19. This may hinge on what steps the Managing Trustees had taken before the restrictions came into force.
Q10.3 “One of our Manses is currently vacant as our new minister has been unable to join the Circuit from overseas. We would like to be able to offer accommodation to Health Service workers who may need to live away from home due to family members self-isolating for example. Is this possible?”
A10.3 There are Managing Trustees across the Connexion seeking ways to help during the current crisis. Using empty Manses to house key workers is a possibility subject to the issues discussed elsewhere in FAQs 9 to 13 including the embargo on movement, social distancing requirements and the practical impact on getting premises ready for occupation as well as the need to fulfil the usual charity law and Methodist law and policy requirements. Please refer to FAQ 10.1, 10.2, 11.1 and FAQ 13 in particular.
In addition, thought needs to be given to how to structure the proposed tenancy.
If Managing Trustees are considering making the property available to different key workers during the crisis on a short-term basis, this could be difficult to manage practically due to the need for multiple documents with different occupiers (and difficulties in signing documents due to social-distancing requirements), consideration of the charity law and Methodist law and policy requirements every time the occupier changes as well as ensuring the property is safe for the key worker(s). Would deep cleans and decontamination works etc. be required between occupants particularly if the key worker or anybody involved in preparing the property for occupation developed symptoms or had to self-isolate?
If you were considering a series of short-term occupancies, would a corporate let to the local NHS Trust for example be the simplest way for Managing Trustees to proceed? Responsibility for the COVID-19 specific safety of the individual occupants and documenting any short-term occupancy would then largely fall to the tenant rather than the Managing Trustees. The relationship would between the Managing Trustees and the body arranging the accommodation of the key workers which may be more beneficial than having an arrangement documented between the Managing Trustees and individual key worker(s)?
If the Managing Trustees were instead intending on entering into an Assured Shorthold Tenancy with an individual key worker on a longer terms basis – a minimum of 6 months subject to how the notice periods evolve (see FAQ 12) – then this would be a possibility subject to the points discussed elsewhere in FAQs 9 to 13.
If you are considering anything like this please speak to TMCP Legal so that we can assist you depending on exactly what it is you are proposing.
Q11. Residential Tenancies – Impact of COVID-19 on tenants moving out of residential rented accommodation at the end of a tenancy
Q11.1. We have been letting out one of our Manses for a while now but will need it from August to house our new Minister and her family. The tenancy is due to end imminently but the tenant has contacted us to say this may not be possible. What can we do?
A11.1 During the COVID-19 outbreak, it is anticipated that there will be issues with residential tenants remaining in properties when current tenancies come to an end. Tenants may not vacate at the end of their tenancy for a number of reasons relating to COVID-19. These could include illness due to COVID-19, self-isolating, the current embargo on movement, the tenant’s next accommodation no longer being available.
The wider question of the impact of COVID-19 on Manse moves has been referred to the Connexional Team and we will update these FAQs with a link to their guidance when this is available. In the meantime, these FAQ's have been produced to provide help and guidance to Managing Trustees on the legal position.
Managing Trustees need to take into account the Government’s guidelines on not moving house during the current crisis. These are set out in the advice note below:
Paragraph 3.5 of the Coronavirus (COVID-19) Guidance for Landlords and Tenants makes it clear the embargo on movement also applies to residential tenancies. The Government stipulate in this (non-statutory) guidance that renters should, as far as possible: “delay moving to a new home while emergency measures are in place to fight coronavirus”. Managing Trustees contemplating entering into new tenancies or granting new tenancies during this period are encouraged to refer to the Government’s Advice on Moving. Due to the embargo on movement, it is difficult to see how the Managing Trustees could even come to an informal agreement with their tenant if their tenant did have somewhere else to move to. The risk of cross-infection and social distancing requirements would make a move very difficult.
In the circumstances, it may be that the Managing Trustees have no choice but to allow their tenants to continue living in the property until the crisis ends, by which time the incoming Minister should be able to move into the property and the tenant should be able to move into alternative accommodation. The Managing Trustees do however need to protect their position to ensure that once the embargo on movement is lifted, there will be nothing preventing the Minister from moving into their new Manse.
In order to protect the charity’s position and safeguard the future move of the Minister, it is recommended that notice is served on the tenant in accordance with the longer notice period now required (see FAQ 12.1). Pending any advice from the Connexional Team on Manse moves, this is merely to try and protect the Managing Trustees’ legal position and ensure that steps can be taken to obtain vacant possession should this be necessary e.g. the tenant refuses to move despite being able to find alternative accommodation, as soon as possible once the restrictions are lifted. Managing Trustees may want to assure their tenant that they are not trying to force them out during the crisis, you are just trying to ensure that the Minister will have somewhere to live once life starts to return to normal. Please speak to a solicitor to ensure that any notice is served correctly and in accordance with the emergency legislation that is being brought in.
What steps need to be taken in the meantime?
While in practical terms Managing Trustees may have little option but to allow the tenants to stay in the property until the current crisis is over, legally Managing Trustees need to protect their position and ensure that the usual charity law and Methodist law and policy steps are followed.
Please refer to FAQ 9.2 for guidance on documenting any emergency arrangements so as to protect the best interests of the charity .
Q12. Residential Tenancies – Impact of COVID-19 on evictions and notice periods
A12.1 The Government has brought in emergency measures to protect tenants during the COVID-19 crisis. The Coronavirus Act 2020 (CA 2020) came into force on 25 March 2020. As your question suggests, notice periods have been extended to ensure that tenants cannot be forced to leave their homes during the current crisis.
Before the CA 2020 came into force, Managing Trustees as landlords were able to serve a minimum of two months’ notice on their tenants under section 21 of the Housing Act 1988 to bring a tenancy to end. This notice period has been extended to three months for any notices served between 26 March and 30 September 2020. This means that any Managing Trustees seeking to end a tenancy, e.g. because they need the property to house a minister, are now required to give at least three months’ notice. The Government can extend this period further up to 6 months e.g. if the crisis is continuing at the end of the initial 3 months.
This longer period is required whether Managing Trustees are seeking to end a tenancy on a “no fault” ground e.g. because they simply need the property to house a minister or on what are known as the “fault grounds” under section 8 of the Housing Act 1988 e.g. if a tenant has failed to pay the rent.
It is important to bear in mind that the CA 2020 does not prevent notice being served on a tenant. Instead, it delays the date at which Managing Trustees could issue possession proceedings should this become necessary e.g. because the tenant did not move out.
As discussed in FAQ 12.4, the Government’s emergency legislation also seeks to prevent tenants from being evicted if a notice served before the emergency measures came into force has already elapsed or proceedings have already commenced. The CA 2020:
- Prevents new evictions from social or private rented accommodation which would include Manses and other residential property let out by Managing Trustees;
- Bans landlords, including Managing Trustees from starting new possession for at least the next three months (this period can be extended); and
- Widens the ‘pre-action protocol’ on possession proceedings. This aims to encourage landlords and tenants to work together to resolve disputes rather than resorting to court action.
The Government has produced the following guidance for landlords (and tenants) available from the COVID-19 and Renting page of their website:
- Government support available for landlords and renters reflecting the current coronavirus (COVID-19) outbreak
- Technical Guidance on Eviction Notices – for details on the form of notice to be served and accompanying Government guidelines.
Although there are some measures to protect landlords, these mainly help landlords who have mortgages which is rare for Methodist Managing Trustees.
Please consider the points in FAQ 11.1 very carefully before serving notice on tenants at this difficult time. If you do decide, due to your particular circumstances, that notice must be served e.g. you need the property to house a minister or lay worker, then it is strongly recommended that you seek the help of your agent or solicitor to ensure that the correct form of notice is used (the required Form 6a has been amended to reflect the extended notice periods) and correct notice period is given in accordance with the emergency measures now in force. Please ask your agent or solicitor to help you before taking any steps to serve notice on a tenant. Managing Trustees are encouraged to speak to one of the firms on the Methodist Panel of Solicitors if possible to see whether they can assist you with this. Please refer to the Panel Solicitors page on the TMCP website.
A12.2 The emergency measures to protect tenants during the COVID-19 crisis contained in The Coronavirus Act 2020 (CA 2020) have also been adopted in Wales. This means that like England, Managing Trustees in Wales would need to serve a minimum of 3 months’ notice on their tenants if they need to terminate the tenancy. However, there is talk of the National Assembly for Wales using devolved powers to increase this period to 6 months so please watch this space.
Please note that this is completely separate to the proposed overhaul of residential tenancies in Wales under the Renting Homes (Amendment) (Wales) Bill (the Bill). The Bill is currently going through the National Assembly for Wales. Not only will it require landlords to give a six months’ notice to their tenants in most cases, but it prohibits landlords from serving notice within the first 6 months of the tenancy term. This Bill will go much further than the emergency COVID-19 measures.
Details of the changes to be introduced under the Bill are available on the National Assembly for Wales’ website:
- Renting Homes (Amendment) (Wales) Bill - National Assembly for Wales Guidance
Unless amendments are made to the Bill as it progresses, it appears that there will be no provisions allowing Managing Trustees to terminate residential tenancies on shorter notice even where properties are required to house ministers. This point was raised specifically by Cytun and supported by TMCP during the consultation process. Please refer to point 16 of the Correspondence to the Minister for Housing and Local Government available from the National Assembly for Wales website. Accordingly, Managing Trustees in Wales should consider short-term lets of Manses very carefully because, if the legislation does not include any relaxation of the 6 month notice requirements, Managing Trustees could find themselves unable to use their Manse to house an incoming Minister if they are relying on being able to give 2 (albeit now 3) months’ notice. TMCP is keeping the situation in Wales under review and will be providing guidance to Managing Trustees in Wales on the non-COVID-19 related changes as further details are revealed.
Q12.3. What are the new rules on serving notice on tenants during the COVID-19 outbreak in Scotland?
A12.3 The Coronavirus (Scotland) Act 2020 is now in force in Scotland and includes similar measures to protect residential tenants as those seen in England and Wales.
The Private Housing (Tenancies) (Scotland) Act 2016 sets out particular grounds that landlords can give to seek possession of residential property. These include where the property is to be;
“occupied by a person engaged in the work of a religious denomination as a residence from which the duties of such a person are to be performed” (Ground 7).
In most cases, including where possession is sought to house a minister, the emergency measures will extend notice periods to a minimum of 6 months. Managing Trustees should also bear in mind that while Ground 7 was previously a mandatory ground (meaning that the tribunal had to give possession if that ground was proved), the proposed emergency measures would enable tribunals in Scotland to exercise their discretion.
For details of the changes relating to the eviction of residential tenants, please refer to Schedule 1 of the Coronavirus (Scotland) Act 2020.
Q12.4. We have been having difficulties with one of our tenants who, amongst other issues, has repeatedly failed to pay rent.
The tenant refused to move out when we served a notice seeking possession and we were forced to issue court proceedings for eviction. A hearing has been listed. We have heard that residential tenants will now be protected from eviction until the end of the current crisis, where does this leave our current court case?
A12.4 As you are aware, emergency legislation (The Coronavirus Act 2020) is now in force to protect residential tenants in both social and private rented accommodation. Measures include the suspension of new evictions. This means that the Managing Trustees will have to wait until the ban on evictions is lifted to be able to enforce any court orders which are obtained.
The Managing Trustees should immediately speak to their solicitor to discuss what steps they need to take pending the restrictions being lifted to safeguard their position. Please also refer to FAQ 12.5. Is there a possibility of the Managing Trustees engaging with their tenant despite the historic problems?
In the Government’s Technical Guidance on Eviction Notices published 28 March 2020, the (non-statutory) guidance begins:
“We strongly advise landlords not to commence or continue possession proceedings during this challenging time without a very good reason to do so. It is essential that we work together during these unprecedented times to keep each other safe.”
It is recommended that Managing Trustees consider any tenancy issues in light of this very clear guidance and try to work with their tenant where possible, keeping a record of what they have done to try and resolve matters before resorting to action to evict their tenants.
Q12.5. We have been having difficulties with one of our tenants who, amongst other issues, has repeatedly failed to pay rent.
We were just about to serve a notice seeking possession before COVID-19 took hold. We have heard that residential tenants will now be protected from eviction until the current crisis ends, can we still serve notice on the tenant?
A12.5. Managing Trustees need to bear in mind that new possession proceedings have been suspended for an initial period of 3 months from 27 March 2020, a period the Government can extend. Please refer to FAQ 12.1 for details of the extended notice period that must be given. You can still serve notice on your tenant but will need to ensure that sufficient notice is given under the new emergency measures; a minimum of 3 months.
Please refer to the following Government press release for a summary of the measures subsequently brought into force under The Coronavirus Act 2020:
However, there are important things for Managing Trustees to consider before serving notice on their tenants. Unlike in response to FAQ 11.1, it is understood that the Managing Trustees do not need this property to house a Minister and their family; this is a rental property and the Managing Trustees are seeking to resolve an ongoing issue with their tenant. Please be aware of the Government’s expectation for landlords to “reach out” to residential tenants and “show compassion” and work together to resolve any issues. Although Managing Trustees may feel they have been struggling with this tenant for a while, the climate has changed dramatically and Managing Trustees may want to consider whether they can reach agreement with their tenant.
In the meantime it would be prudent for Managing Trustees to check that there will be nothing preventing them from serving a valid notice if they later decided that this was the only option. Please refer to the guidance set out on page 5 of the Government’s Technical Guidance on Eviction Notices including protecting your tenant’s deposit correctly and repaying any unlawful fees or deposits.
Q13. Statutory requirements placed on residential landlords
Q13.1 We let out a number of residential properties in our Circuit and the annual gas safety checks fall due over the next month or so. Will we be in breach of the gas safety requirements if we are unable to obtain gas certificates due to COVID-19?
A13.1 As landlords, Managing Trustees are required to comply with the Gas Safety (Installation and Use) Regulations 1998. This includes ensuring that an annual gas safety check is carried out by a Gas Safe engineer. The certificate must then be served on the tenant.
The Government provides clear guidance on a landlord’s responsibility for gas and electricity checks during the COVID-19 outbreak in their response to FAQ 3.9 of the Coronavirus (COVID-19) Guidance for Landlords and Tenants. The response confirms that Managing Trustees need to do everything that they can to comply. If you are unable to arrange the required checks due to your tenant having symptoms or not being able to find a Gas Safe Engineer who can carry out the check, then you must document what you have done to try and comply.
It is recommended that Managing Trustees check when their Gas Safe checks fall due and, if possible, try to arrange for early checks to reduce the risk of meeting obstacles later. Checks can be carried out between 10 and 12 months after the previous check. Copies of any correspondence (telephone notes or emails) with your tenant and potential engineers should be kept to show what you have done to try and arrange the checks.
The requirements already provide protection to landlords who have taken all reasonable steps to comply. Please refer to the boxes at the end of the Government’s FAQ 3.9 . Please therefore ensure that either the checks take place on time or you can show that you took all reasonable steps and the checks are then carried out as soon as circumstances allow.
Q13.2 A tenant in one of our Manses has raised concerns about damp. Immediately before the COVID-19 outbreak, we had arranged for a contractor to carry out work which we hoped would address the problem. Can the works go ahead?
A13.2 Government guidance suggests that while routine inspections carried out by landlords may no longer be appropriate during the COVID-19 outbreak, landlords need to do what they can to ensure that their properties are safe to live in.
The Government has already produced detailed guidance to help landlords and tenants understand what their corresponding obligations and rights are during the COVID-19 outbreak. This guidance encourages landlords and tenants to be pragmatic and decide between themselves what issues require urgent attention at this time. Do the Managing Trustees (and their tenant) believe that these repairs are urgent and must take place without delay to ensure the property is “safe” or can they be delayed until the end of the outbreak? If they are urgent, how can they take place in accordance with the Government’s guidelines on social distancing to protect the tenant and the contractor?
Paragraph 3.2 of the Coronavirus (COVID-19) Guidance for Landlords and Tenants suggests what types of work should continue during the COVID-19 outbreak. These include mending a broken boiler where your tenant would otherwise be left without heating or hot water. The guidance also clarifies when your tenant should allow you and your contractors access to their home.
Managing Trustees are also encouraged to refer to paragraph 2 of the Government guidance on Visiting Properties to Make Repairs for information on how to manage urgent repairs within the social distancing guidelines. Part 3 (from page 14 onwards) of the Government’s Coronavirus (COVID-19) Guidance for Landlords and Tenants is also helpful. This provides guidance on access arrangements and performing statutory requirements through a series of FAQs.
While local authorities are expected to be pragmatic and not unfairly penalise landlords where COVID-19 restrictions prevent them from meeting their obligations, Managing Trustees still need to take “appropriate” action. It is recommended that Managing Trustees document the decision reached with their tenant over whether the damp works should go ahead and why. If there is a reason why you cannot carry out works that are urgently required e.g. the tenant or the contractor is self-isolating, then it is strongly recommended that you record the steps that you have taken and why COVID-19 is preventing you from fulfilling your requirements.
Q13.3 We had agreed a new tenancy before the restrictions surrounding COVID-19 came into force. We were working through the statutory requirements placed on landlords with our agent including works required to ensure the property meets the Minimum Energy Efficiency Standard Regulations (MEES) and the gas safety test. Where do we stand given the social distancing requirements? Can we access the property to carry out the works? Will our gas inspector still carry out the test?
A13.3 Please refer to the guidance in FAQ 10 in relation to entering into a new tenancy at this time.
In terms of the statutory requirements in particular, Managing Trustees need to do what they can to ensure that they fulfil the requirements that they need to fulfil before a tenancy is entered into while ensuring that they adhere to the social distancing requirements. Please refer to the Residential Tenancy (Landlord) Guidance for details of the statutory requirements that need to be fulfilled before a tenancy is entered into and FAQs 13.1 and 13.2 for guidance on the impact of the COVID-19 outbreak on the requirements and how to approach access and works at this time.
If the Managing Trustees decide that the tenancy must be entered into now and cannot not be delayed, they need to ensure that they do not act in breach of the law.
Please refer to FAQ 13.1 in relation to the gas safety check required.
In terms of the energy efficiency works, can you find a contractor who is able to carry out works to address the energy efficiency requirements to avoid Managing Trustees who may themselves be classed as “vulnerable” from doing the work or the house being accessed by multiple people increasing the risk of contamination? Are some of the proposed works more critical than others? Can they be carried out immediately after the outbreak?
You will need to contact TMCP Legal before the tenancy is entered into in any event and we can assist in deciding what must be done to comply with the statutory requirements and what points are extras that can be fulfilled at a later date in these exceptional circumstances.
Section C - Frequently Asked Questions (Finance)
Q1. We may need to withdraw some funds in the near future but it is unlikely that we will be able to hold a Circuit Meeting or Church Council. Will you accept a resolution that has been sent round the Circuit or Council members by email?
A1. We cannot accept applications in retrospect and before an application to withdraw monies can be processed TMCP must receive confirmation that the relevant meeting has taken place and a resolution has been passed, e.g. A Church Council meeting. Given the current COVID-19 crisis it is acceptable for meetings to take place via the following:-
- In person (only when social distancing guidance is relaxed)
- Virtually (i.e. Zoom meeting)
- Over the telephone (i.e. Conference Call)
- By post or email, for urgent decisions
The Connexional team have provided guidance on the conduct of meetings in the current situation, as well as information on compliance, the insurance position and the use of reserves which you may find helpful.
Q2. Will you accept scanned signatures on the Application forms 1, 2 and 3?
A2. The document must be signed by two Managing Trustees (from the appropriate level depending on whether application 1, 2 or 3) in the following way, either :-
- Hard copy is signed and then scanned-in and emailed; or
- Electronic signatures are added to the Application form
We can also accept application forms 1,2 and 3 by email on behalf of managing trustee bodies from individuals who are registered on the TIS system or on the Methodist Church Database, such as the Superintendent, the Minister in pastoral charge, the Local Church or Circuit treasurer.
Q3. Will you accept a cheque sent by post drawn on our local church account for payment into our Trust account with you?
A3. The best way of transferring money to TMCP is by Bank Transfer. Please contact TMCP Finance to request our bank details. You can contact us in the following ways:-
• Send an email to firstname.lastname@example.org
• Use the contact form available on the TMCP website https://www.tmcp.org.uk/contact
• By telephone
As the TMCP office is currently closed and all staff are working remotely, post is being redirected and may take longer than usual to reach us. We are also currently only able to bank cheques on a weekly basis. To ensure that your monies are paid into your trust account promptly a bank transfer is therefore the quickest and securest way to proceed, but if you do not have access to online banking then please contact the Finance Team to confirm that a cheque is on its way so we can look out for it and let you know when it arrives safely.
If you have any queries in relation to these FAQs please feel free to call members of TMCP Legal and Finance using the telephone numbers which you will have at the foot of emails received from members of the team.