Can landlord claim back a COVID rent discount?

by Readers Question

13:58 PM, 31st March 2021
About 2 weeks ago

Can landlord claim back a COVID rent discount?

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Can landlord claim back a COVID rent discount?

I’d appreciate any thoughts and experiences on this matter, but I think it might take a binding court case to settle the question, and then some! I’m hearing of landlords who gave their tenants rent discounts during the first lockdown, without specifying whether the difference was to be paid back and in one or two cases not even stating how long the arrangement would last.

When the landlords tried to recover the rent now the tenants’ circumstances have improved, they are finding the tenants won’t pay saying they were not told the discount was only a loan, not a grant! One landlord tried to get around it by using Section 13 to increase the rent only for the tenants to serve notice and move out.

It boils down to this, and opinion seems to be divided between:

1) The rent specified in the tenancy agreement still stands and is payable in full unless the landlord categorically agrees otherwise (so if the landlord reduces the rent from £1000 to £500, but the terms are vague once the condition that gave rise to the discount is resolved, the full rent plus the discount is payable).

2) The terms of a rent discount will override the tenancy agreement, so if the landlord doesn’t state whether the discount is repayable, the landlord is not entitled to recover the discount.

While I agree a tenancy agreement could set the terms for a rent concession, most agreements were not drafted with COVID in mind so don’t include this.

Many thanks,
Mandy

Comments

Puzzler

10:16 AM, 3rd April 2021
About 2 weeks ago

I had one tenant only (a very good one) for whom a new agreement was drafted allowing a short holiday and increased rent until the arrears were repaid. Now up to date. It was a deferral not a discount and my agent was at pains to explain that to them.

Edwin Cowper

15:12 PM, 3rd April 2021
About 2 weeks ago

THIS IS NOT LEGAL ADVICE OR REPRESENTATION. IT CANNOT BE RELIED ON. THE LAW MAY NOT BE UP TO DATE OR CORRECT. READERS MUST OBTAIN LEGAL ADVICE
There has been a case in this already. It was in the High Court so binds County Courts. High Trees case 1948 Mr Justice Denning (Later Lord Denning Master of the Rolls). Each landlord and tenant will need to see if it applies. It created the Doctrine of Equitable Promissory Estoppel.

What does that mean? Well Lord Denning said that if a Landlord made an agreement to accept a lower rent then IF the Tenant relies on it TO HIS DETRIMENT then the Landlord cannot claim the money later and rely on the lease terms.

An example in the case was that the Tenant did not give up the lease and stayed on when it would other wise have left. Detriment could be all sorts of things.

There are a lot of cases on the issue after 1948. Good old Denning.

Mandy Thomson

16:44 PM, 3rd April 2021
About 2 weeks ago

Reply to the comment left by Edwin Cowper at 03/04/2021 - 15:12
Thanks for that, Edwin - that's very helpful.

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