How Landlords Can Offer Assistance to Tenants During the Pandemic

As our coronavirus series for landlords continues, we’re moving on to take a look at how landlords and property management companies can offer assistance to their tenants during the pandemic. From payment holidays to rent reductions and helping with a steer on third party financial support, there is plenty that can be done for mutual benefit.

Many tenants have been hit hard financially by the COVID-19 pandemic, with the knock-on effects widely affecting landlords. The best advice for landlords is to be open and take time to have conversations with tenants. Compromise is the name of the game wherever possible. At the end of the day, if you have good tenants, you’re not going to want to lose them. There may be things you can do to help them make their rental payments, or steps you can take to reduce your own costs. Or both.

Rent reductions and rental payment holidays

We’ve already explored the various lines of financial assistance you can explore as a landlord. From coronavirus mortgage holidays to deferred loan and credit card repayments and energy company schemes, there are various support programmes you can tap into. If you are able to reduce your outgoings, then it may be possible for you to temporarily reduce the rent payable by your tenants, or even put the payments on hold for an agreed period.

Do remember that if you qualify for and take a buy to let mortgage holiday as a landlord, you will be expected to pass the relief on to your tenants in the form of a rental payment holiday. If your tenants have been directly or indirectly financially impacted by the pandemic, it is likely you will qualify for the repayment holiday.

Tenants will need to be made fully aware that any reductions in rental payments, or rental payment holidays, are purely temporary and that shortfalls will need to be made up in the future. After all, you will need to do the same with your outgoings. All owed mortgage repayments will be payable in the long run.

Government support schemes for financially impacted tenants

There are various lines of support available to tenants who may be finding it difficult to meet rental payments:

• The Coronavirus Job Retention Scheme – tenants may be furloughed by their employers who will apply for a grant to cover a portion of their usual monthly wage costs.
• The Self-Employment Income Support Scheme – self-employed tenants or those in business partnerships may be able to claim a grant if they have been adversely affected by coronavirus.
• Universal Credit – tenants who find themselves on a low income or out of work can claim to help with living costs.

Residential property management companies and landlords should encourage tenants to find out more about how these schemes can help them navigate a clearer financial route through the pandemic.

Not everyone is eligible for support however, so it is important not to assume that tenants will automatically be protected by any of these government schemes. Talk to them about their individual situation.

Other financial support for tenants

There are a number of financial support schemes that tenants can make use of to help with their financial difficulties in the wake of the coronavirus pandemic:

Loan and credit card repayment holidays

Most banks and building societies are offering credit card and loan repayment holidays of up to three months to qualifying applicants. Not all lines of credit will be covered though. Payday loans and buy now, pay later agreements aren’t included, but credit and store cards; personal, guarantor and logbook loan; home collected credit and some other types of finance are, providing they are regulated by the Financial Conduct Authority (FCA). Taking the pressure off repayments could help tenants make their rental payments.

Energy supplier programmes

A lot of the energy suppliers have set up programmes to help customers during the COVID-19 pandemic. From free top-up cards to payment reductions and breaks, to billing plan reviews, debt repayment plans and extended time to pay, many of the suppliers are doing what they can to provide assistance, including agreeing not to disconnect credit meters for the foreseeable future. Property management companies are directing tenants to their energy suppliers so they can see what help is available to them.

Council tax support

For those who have seen their income reduced, Council Tax Support may be available. This is a scheme designed to pay up to 90 per cent of the Council Tax due.

Tenants are well advised to visit their local council website and read the guidance on COVID-19 support to find out more about the specific help available to them.

The COVID-19 Council Tax Hardship Fund has been launched to help manage the individual situations across local authorities. As part of the scheme, councils will write to households that appear to be falling into arrears, setting out the support available. All action taken through magistrates’ courts has been postponed, giving residents the opportunity to get in touch and discuss the support they need and are entitled to before legal action is pursued to recover unpaid tax. Special payment plans may be offered, and advice and assistance will be on hand for those struggling financially.

Dealing with rent arrears

If you are considering legal action for rent arrears, property management companies will always advise that before you go ahead, always consider whether it is really worth doing so. Your key question should be, does the tenant have the means to pay? If not, it will be a hollow victory for you. Best to instead find a compromise, one that will preserve the relationship beyond the times of difficulty. But do not waste any time in reaching an agreement. The longer you leave it, the bigger the problem will become.

Remember that often significant legal fees are involved in tenant evictions. Sourcing and settling in another tenant requires even more financial input. If your property is void in between, you will still need to meet costs. Again think: is it worth it?

Writing off a debt could quite possibly be a better option financially in some circumstances. It all depends on the situation surrounding the arrears. If the tenant had a good track record prior to the coronavirus pandemic, you may wish to provide some leeway.

Finally, a note that repossession rules have been temporarily changed in light of the pandemic. For the latest information on repossession, see the Government’s Coronavirus (COVID-19) Guidance for Landlords and Tenants.

Do bear in mind that if tenants have not been affected by the pandemic, then they should carry on paying their rent as usual. If you do make the decision to defer rent, then it will still be due later, so it is wise for the tenant to continue to pay if they are able.

Achieve peace of mind with a rent guarantee scheme

By choosing a rent guarantee scheme, you won’t have the underlying worry of whether your rental payments will continue because even in the most trying times, even when tenants are facing financial difficulties and cannot pay, even when your property is empty, you will still get your rent. With rent guarantee insurance currently suspended, this really is the only way you can safeguard your income.

The homes2let guaranteed rent scheme not only guarantees a monthly rental payment by standing order, it also allows landlords to enjoy their investment totally hassle-free. With our rent guarantee plan, properties are let to local authority tenants, which means income is secured regardless of the economic situation.

Interested to discover how this scheme could benefit you? You are welcome to get in touch with our friendly team.