We’re all saying it – these are unprecedented times. There are so many things to be thinking and worrying about (families, jobs, security, home-schooling, etc). As landlords, we also need to be making plans for what to do in the event that our tenants can’t pay their rent.
As I’m sure you’re aware, the Government have announced that they expect landlords to accommodate rent arrears by offering tenants “delayed rent periods” or “rent holidays”. To be clear, they have said the rent would still be due, and would need to be re-paid at a later date.
If your tenant advises they are unable to pay rent because of the UK coronavirus lockdown, there is some important information and evidence you will need to request from them before granting a rent holiday.
Communication, flexibility, and understanding are going to be key to working through this, and to devising reasonable repayment plans. For example, you can’t expect double rent for subsequent three months!
It’s a difficult balance to achieve, but we have a social responsibility to acknowledge this difficult – unprecedented! – time we are all going through whilst also helping our tenants to avoid unmanageable debt in the future.
Here are 11 questions you need to ask your tenant before you grant a rent holiday:
1. Have you been laid off or furloughed? If your tenant is home on furlough, they are entitled to 80% of their wages. This now includes self-employed people who are entitled to 80% of their profits over the last 3 years, though this help won’t be available until June 2020.
2. If you were laid off prior to the Government offering furloughing, have you spoken to your employer and asked to be furloughed instead? The employer may have acted too quickly and not realised they could get Government support; if your tenant hasn’t requested this, they will need to.
3. Can you provide a copy of the notice letter received from your employer? As a landlord, your mortgage company may request this if you are speaking to them regarding a subsequent mortgage holiday.
4. Have you created an expenses spreadsheet to demonstrate the need behind your request?
5. Do you have any loans, credit cards other expenses you can get more flexible payment holidays on? If your tenants haven’t contacted them, this would be advisable as they may be able to request payment holidays there. Evidence they have done so may also be required.
6. Do you have savings? Tenants may be reluctant to use savings, but this question will highlight to them that they must look into all reasonable methods for paying the rent.
7. Is there anyone else living in the household? If there is, are they still earning a wage and can they work together financially? Ask your tenant to provide details of this second person’s situation, and provide evidence if possible.
8. Are you aware that rent is still legally due and will become a debt if you don’t pay? Information surrounding rent holidays in the press hasn’t, to date, been too clear, so it’s worth clarifying this with your tenant and ensuring they understand that if their request is granted, repayment terms will need to be arranged and agreed by both parties, and the terms of the tenancy agreement will still apply. It isn’t a rent-free period.
9. If yes to Question 8, how are you proposing to pay back the arrears after June/July 2020? Ask your tenants to propose a repayment plan. Remember, it needs to be reasonable.
10. Have you made a claim with Universal Credit? Claims can be made online, and will cover an element of their housing cost (extra thousand pound per year and increased housing element).
11. Are you requesting a full or part rent payment delay? Paying a smaller amount towards their rent will reduce ongoing debt. If they are able to make part payments, ask them to specify how much.
If tenants of landlords on our managed service request rent holidays, we will be requesting this information from them before putting requests forward to you.
Want to know more? DOWNLOAD the full version of our Landlord Guide on rent holidays HERE, which includes a FREE LETTER TEMPLATE to send to your tenants if they request a rent holiday.