During the coronavirus crisis, a landlord might have a lot of questions. What are the new measures to protect your income and your tenants’ housing status? What if you’re currently looking to let your property? How about the new eviction rights?
Safety is more important than ever during the coronavirus crisis, both for landlords and tenants. But it’s natural to wonder what it means for your money, too. This is especially true if you’re still paying a mortgage on the house you’re letting, or if your margins are razor-thin.
Read on for the lowdown on the new regulations and what they mean for landlords and tenants, including the rules on mortgage holidays and what they could mean for you.
- What are mortgage holidays?
- What if tenants are struggling to pay rent?
- Getting new tenants or moving home
- If you’re looking to start eviction proceedings
- The outlook on the UK housing market
- Your questions answered
As a landlord, a mortgage holiday is a short-term measure to stop you losing your property. Mortgage holidays are available for your primary residence as well as buy-to-let properties – so every home owner can apply for one.
Chancellor Rishi Sunak announced that banks should give mortgage holidays to those struggling to make payments because of the coronavirus pandemic.
You’ll need to get in touch with your mortgage provider and ask them what they can do for you. Be aware that phone lines are very busy right now, so keep at it or try contacting them through their website if possible. All high-street lenders are now offering a minimum of three-month mortgage holidays for those who can’t currently afford to make repayments.
But before you rush to contact your bank, remember that a ‘holiday’ isn’t the same as repayments being wiped out altogether.
You’ll still have interest gathering on your payments if the bank agrees to a mortgage holiday, meaning a higher overall payment in the end. If you’re still able to pay something, this could be a better option than not paying altogether. So, talk with your bank about what the best option could be for you.
Worried about your income? Also see: Our articles on how to find a job during the coronavirus pandemic, and help for the self-employed.
You may already have been in touch with your tenants over the past few weeks to talk about the situation with their rent. Many are still working right now, but many others have been made redundant or lost their income altogether.
For those who have suddenly lost their jobs, make sure they’re doing everything they can to find a way to boost their income. Help them with their Universal Credit application, for example, by ensuring their tenancy contract is clear – and by writing a letter confirming what expenses are included (and excluded) in the rent. This will help them apply for the housing element of Universal Credit – and if that doesn’t cover it all, they can also apply to their local council for a discretionary housing payment or hardship grant to top-up the rest.
How you can help your tenants
If you’re in a good financial position yourself, consider giving your tenants a rent holiday. It’s up to you and your tenants to come up with an agreement. But you could use the same model the banks are using for mortgage holidays. Agree that you’ll give a rent holiday for a time, but interest will still be payable.
Or, if possible, be altruistic and agree that the rent can be paid later, but no interest will be added. Another idea is to take some or all of the security deposit when the tenant leaves, in lieu of them paying rent now. Make sure that whatever you agree is put into writing.
And if you’re really financially comfortable, you could even let your tenants stop paying rent altogether for a while, without expecting it back later. Of course, this simply won’t be possible for many landlords with their own bills to pay. But if you can do this, it will net you some serious brownie points with your tenants and be a great thing to do during these difficult times.
It’s up to you to look at your own financial situation and discuss your tenants’ finances with them. Together, come up with a plan that works for both parties.
Whatever you do, make sure your amended agreement is put down in writing. It would be wise to get in touch with your property solicitor by phone to check over the agreement and act as a neutral third party to handle the documents.
If you’re currently in the process of getting new tenants in, this could be tricky right now.
The Government hasn’t (yet) put an outright ban on following through with existing transactions. However, you must be following advice to stay safe.
This Government page has an excellent overview of advice on coronavirus as a landlord, renter, and moving home and property in general during the UK lockdown. They say, “There is no need to pull out of transactions, but we all need to ensure we are following guidance to stay at home and away from others at all times, including the specific measures for those who are presenting symptoms, self-isolating or shielding. Prioritising the health of individuals and the public must be the priority.”
What does that mean?
Basically, you should avoid moving new people in or moving home yourself during this time. You should have all parties negotiate how they can delay this. It could be difficult for tenants to move in anyway, as most removal companies and van hire depots aren’t operating at the moment.
Also, you’re not currently allowed to give viewings in person, as this would obviously be impossible without coming into direct contact with each other.
However, it is possible to do video or 360 photo tours, which you then send digitally to potential tenants. You could also do a live walkaround on a Facetime or WhatsApp video call. So, talk to the agent selling the house about how this is possible. Remember it will be more vital than ever to follow strict hygiene rules, including wiping down surfaces, door knobs, etc. between visits by you or the agent.
Following Government guidance, lenders are also looking to extend mortgage offers which have already gone through by three months. This means you won’t necessarily have to look for someone else if an offer has already been accepted. The government site says, “[…] lenders will work with customers to help them manage their finances as a matter of urgency.”
There’s been a lot of confusion on the government’s so-called ‘complete ban’ on eviction proceedings.
Usually, you have to give tenants two months’ notice before you evict them (say, for unpaid rent). It’s always preferable to get in touch with a tenant first no matter what the reason for the eviction. If they’re not paying rent or causing damage or disturbances, it’s sometimes possible to resolve this amicably between you.
Essentially, the new Coronavirus Act means the process has been extended by two months to three months. This applies in England and Wales from 26th March 2020 to 30th September 2020, barring any unforeseen extensions to the bill.
To date, the Scottish Parliament has announced extra measures, but those details are still forthcoming. So you’ll need to stay tuned to news developments coming soon. The Northern Irish government is said to be urgently reviewing the issue.
As a landlord, coronavirus has made the law confusing. Far from an outright ban on evictions, in England and Wales it seems the notice period has simply been extended. Scotland and Northern Ireland look set to bring in tougher measures to protect tenants. So, you’ll need to keep checking for updates.
It’s fair to say that predicting the housing market is tricky in the best of times. As a landlord, coronavirus only adds to the complexity. Right now, it looks like we’re heading for another recession, which could have a big effect on housing.
With so many people losing their jobs, and general uncertainty due to unease surrounding coronavirus as a landlord, the outlook could be bad in the months to come.
In fact, it was just announced that the UK mortgage market has itself gone into partial lockdown, with many lenders scrapping their mortgage deals. For example, Nationwide are now only offering new mortgages to those with 25% equity.
Still, some experts believe the market will suffer only temporarily. The best thing you can do is work together with your tenants if they’re struggling to pay rent. After all, if you can keep them in the property and recoup your lost rent in the long-term through higher repayments, it’s a win-win.
With coronavirus, a landlord should be cautious about new investments right now, and try to minimise the impact of sudden lost income. You may find our article on how to deal with creditors handy. It’s vital you keep the lines of communication open between you, your tenants, and your own creditors.
Ask your tenants how they’re coping, and let your own lenders know if you need help with your repayments. Setting up a payment plan with your tenants and/or creditors could help give everyone some much-needed extra time.
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*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.