Many tenants and landlords have questions about the implications of coronavirus on rent payments. Although we don't yet have all the answers, the Government has this week announced important measures designed to provide protection for tenants struggling to pay their rent and landlords reliant on rental income.
Current options for landlords
Given the current situation, it would be right to assume that a significant number of tenants may encounter some financial difficulties in the coming months. So how does the landlord respond?
Currently, the contractual obligation to pay rent will still remain throughout the duration of the tenancy unless the Government intervenes and legislates for rents to be cancelled. Such an intervention is considered highly unlikely but in such turbulent times, it cannot be dismissed entirely from being introduced.
However, many landlords will want to consider all the options available to them when it comes to rent payments. These are currently:
- The Rent is Due – The tenant is obligated to pay the rent and is expected to pay as contractually agreed. If the tenant does not pay, then the landlord can consider pursuing the tenant, the guarantor, commence a rent guarantee claim or serve the relevant possession notice.
- A Rent Holiday – The landlord agrees with the tenant that payments can be suspended for a period of time, with the arrears being paid at a later date. A simple letter from the landlord confirming that position would suffice.
- A Rent Decrease – The landlord and tenant agree, on a simple rent decrease for a period of time. A simple letter from the landlord confirming that position would suffice.
- A Rent Cancellation – The landlord and tenant agree that the rent due is cancelled for a period of time. A simple letter from the landlord confirming that position would suffice.
Arrangements to suit tenants’ circumstances
It may be prudent for any landlord to consider approaching the tenant and discussing their financial circumstances first. Some tenants will be employed and benefit from full remuneration whenever they are ill. Some will not be so lucky, and may have to rely on statutory sick pay, when either they are ill or have to consider self-isolation. This type of tenant may only require minimal assistance, if at all.
Then we come to the more seriously affected tenant, those that are either self-employed, working within the ‘gig’ economy, or have been made redundant. These tenants have fewer options when it comes to replacing that lost income. Some will have access to statutory sick pay, and most will be able to claim for Universal Credit, but that is unlikely to provide enough income to pay the monthly outgoings. In addition, the benefit system could be deluged with such claims, meaning payments could be weeks or potentially months away – little use if you need to do your weekly shopping or pay the rent.
The Government has promised shortly that they will bring proposals to the table to tackle that issue.
Buy to let mortgage holidays
The Government has announced that the mortgage holiday provided to homeowners will also be extended to those landlords who have a buy to let mortgage.
If this does apply to a landlord, then that should allow them to offer a ‘Rent Holiday’ to the tenant, to help ease the financial worries.
Rent and legal protection
If, as a landlord, you have rent and legal protection in place, now is the time to make sure you have familiarised yourself with the policy and followed it completely.
Considering the potential number of claims that could be submitted, it would not be an understatement to suggest that insurers will be under extreme pressure to decline any claims where the policy has not been followed as required.
Changes to eviction arrangements
If a landlord was to consider issuing a tenant who falls into arrears with a possession notice, then the Government has provided some brief details on how they are going to protect the tenant in the short term from such an action. The Government has proposed to ban any landlord from commencing Court proceedings for a period of three months. The landlord can still issue a notice, but they would have to wait until the exclusion period had expired before being allowed to issue proceedings.
In addition, the Government has added a further obligation upon the landlord, that before commencement of proceedings they provide evidence that they have explored all available options to allow the tenant to remain in occupation through staged arrears payments or other potential avenues. Failure to provide such evidence could result in the Court proceedings being dismissed by the judge.
Are you worried about arrangements for rent payments, either as a landlord or a tenant? Contact the team at Foxes today by emailing email@example.com or calling 01202 299600.