Help available for landlords and tenants
Uncertainty. We’ve used that a lot to describe our current situation. With a plethora of government advice, it’s important to know what help is available for landlords and tenants, if you’re eligible and how to claim it.
Help available for landlords
Mortgage holidays – Banks have agreed with the Chancellor to extend the offer of three-month mortgage payment holidays to those with buy-to-let mortgages who are struggling to pay.
Here’s what you need to know about the three-month holiday:
- You’ll need to be up to date with your mortgage payments.
- You don’t need to prove your financial problems have been caused by coronavirus.
- You’ll be charged interest, but it will be spread across future repayments. This means that payments will go up after the three-month mortgage holiday.
- An agreed payment holiday will not affect your credit score.
- You need to apply direct to your mortgage lender.
Use tenants’ deposits – If you are holding say 5 weeks rent as a deposit, you could use some of that as rent payments. If you have tenants you really trust that have looked after your property and are temporarily struggling with the rent then offering to swap some of the deposit for rent can result in a win for both parties.
Review your current mortgage rate – With interest rates lower than they’ve ever been, you should see lower repayments if you have a tracker or variable rate mortgage. It’s also worth looking at the mortgage offers to see if you could get a cheaper deal on your current mortgage.
Right to rent checks – The checks, which require landlords to check that all tenants who occupy their properties have legal status to live in the UK, started in 2016. From 30 March 2020, the following changes have been made:
- You can now carry out checks via video calls.
- Tenants can send scanned documents or a photo of documents for checks, rather than original copies.
- Landlords can use the Landlord’s Checking Service if a prospective or existing tenant cannot provide any of the existing documents.
- Checks will continue to be necessary. You must continue to check the prescribed documents in the code of practice on illegal immigrants and private rented accommodation, and right to rent document checks: a user guide.
- It remains an offence to knowingly lease premises to a person who is not lawfully in the UK.
Help available for tenants
Government support packages – The Chancellor has already announced details of worker support packages. The government will pay up to 80% of a worker’s wages, up to a total of £2,500 per month, where workers are placed on the Coronavirus Job Retention Scheme.
Both Universal Credit and Housing Benefit will increase, and from April, Local Housing Allowance rates will pay for at least 30% of market rents in each area.
Talk to your landlord – If these measures are not going to be enough or you are not eligible, you may wonder how you are going to cover your rental payments. It’s really important to speak to your landlord as soon as possible. The earlier you have these discussions the greater the options.
You could suggest paying a reduced rent, paying your rent at a later date than usual or taking a break from payments. This final option may only be possible if your landlord is willing to take a mortgage holiday. But you should look at this as a last resort as it’s never a good idea to accumulate debt unless there is no alternative.
Legal support – The government is working with the Master of Rolls — judge of the Court of Appeal and President of its Civil Division — to help landlords and tenants agree reasonable repayment plans where rent arrears may have arisen.
Coronavirus Act 2020 – The Act will mean that, until 30 September 2020, most landlords will not be able to start possession proceedings unless they have given their tenants three-months’ notice. After the three months, tenants can not be evicted without a court order.
Maintenance – Despite the coronavirus outbreak, landlords are still legally obligated to keep properties to the required standard. If you have a leaking roof, no hot water or your fridge breaks down, for example, tell your landlord. These repairs should still be made as long as current Public Health England social distancing advice is followed.
Remember though that all non-urgent visits to the property, such as viewings, should be postponed.
Easier onboarding – If you need to rent a property during these uncertain times, zero deposit renting may be a good option. A Zero Deposit Guarantee replaces the traditional security deposit. It’s faster and more affordable for tenants. You only need to pay the equivalent to one week’s rent, plus a yearly £26 admin fee instead of the traditional security deposit. Speak to your landlord or agent to see if this could be an option for you.
If you’re a renter:
- Speak to your landlord as soon as you can regarding problems paying rent.
- Make sure you write everything down, including agreements about payments.
- Check which, if any, of the government’s support packages are available to help you financially.
- Remember that if you can pay your rent you should continue to do so. Accumulating debt unnecessarily is never a good idea if other savings can be made elsewhere first.
If you’re a landlord:
- Speak to your mortgage provider to see what support they’re offering should you need it.
- Keep in contact with tenants to find out who may find it difficult to keep up with payments.
- Don’t forget to continue with legal maintenance on your properties and right to rent checks.
- Don’t forget your accountants. They will be able to provide financial advice for you and can often come up with ideas you may not have thought of.
For more practical advice and business insights, you can follow us on Twitter and LinkedIn.