The rental market is still stuck in coronavirus limbo. While tenants can move again, many of them could lose their income over the coming months. Evictions are banned until next month, but what happens then?
Here is everything you need to know if you’re a landlord to weather the storm ahead, from rights to rent checks to carrying out repairs.
How do you negotiate a rent cut?
Tenants are legally bound to pay full rent as normal in the pandemic, unless the landlord agrees otherwise. It is “sensible to be proactive”, says the National Residential Landlords Association (NRLA). Call or email your tenants and ask if their income is at risk. If it is, tell them what government help is available (more below). Ask for evidence of hardship, such as a redundancy letter, which could help you to apply for a three-month mortgage holiday from your lender.
“Validate the situation of your tenant; it could be better than they are suggesting. Equally, it could be worse. Full understanding of the facts will lead to a better result for all,” says Franz Doerr, the founder of Flatfair, a rental deposit replacement scheme. This week it launched Resolve, a free new platform where any landlord or tenant can negotiate rent arrears with a shared, date-stamped record of correspondence (resolve.flatfair.co.uk). It allows the tenant to upload proof of distress and the landlord to propose a payment plan. If the tenant accepts, both parties can sign it online.
Be clear on what you agree: no rent, or lower rent? For how long? Is it a gift? Or must the tenant repay it later — and by when?
To formalise a rent reduction, record it in writing. Keeping copies of text messages or emails is enough — you do not need to draw up a new contract, says Robin Stewart, a senior associate solicitor at Anthony Gold, in a guide for the online lettings agency Open Rent.
Beware of accidentally agreeing a permanent rent cut if the initial contract term is near or beyond its end. If you don’t sign a new contract and the existing one rolls over into a periodic tenancy, you could be stuck with the reduced rent. “To avoid this, landlords could agree that no rent (or a reduced rent) applies for certain identified months,” Stewart says.
So how generous are landlords? It depends who you ask. A Generation Rent poll of 1,500 renters found that more than half had lost income in the pandemic. Of the 330 who had asked their landlords for help, 7 per cent were offered a rent cut, 25 per cent a deferral, and 56 per cent had to pay the full rent.
Yet a NRLA poll of 4,500 landlords found that 90 per cent had agreed to give their tenants support when requested. It included deferred, reduced or free rent, letting tenants leave early and giving service charge refunds to sharers.
Can landlords evict tenants?
Not yet. All court action to evict private and social tenants, including cases that pre-date the outbreak, is on hold until June 25. Until September 30 landlords must also give tenants three months’ notice, instead of two, to move out before they can bring new cases. This does not usually protect lodgers or property guardians.
Last weekend Labour set out a five-point plan to outlaw arrears in the pandemic as grounds for eviction, and to give tenants two years to repay debts. Robert Jenrick, the housing secretary, told parliament Labour’s plan would “encourage people not to pay and to build up potentially unmanageable degrees of debt so that in six months, nine months, 12 months’ time their credit rating would be shredded”. He says a new “pre-action protocol”, placing a duty on the landlord to try to agree a repayment plan with their tenants before they go to court, would stop a spike in evictions.
Lawyers aren’t convinced. They say that the law forces judges to grant evictions automatically for rent arrears or on “no-fault” grounds — regardless of whether the landlord tried to settle. Protocol details are yet to be announced.
How do mortgage holidays work?
Landlords whose tenants can’t pay rent because of coronavirus can apply to their lender for a three-month break in mortgage payments without affecting their credit score. Interest still accrues, however, and monthly payments will rise afterwards.
Although the government expects landlords to pass any mortgage freeze to tenants, Generation Rent says that many lenders “do not require any proof that tenants are struggling, and do not involve tenants in the process. Therefore, there’s nothing to stop unscrupulous landlords from continuing to charge rent against advice”.
Can landlords get other help?
Landlords who have lost rent usually don’t qualify for the government’s self-employment rescue package, but they can defer self-assessment tax due in July to January 2021. Scottish landlords can get interest-free government loans in the pandemic.
Some existing rent-guarantee insurance policies, such as those from Alan Boswell, do cover missed rent in the pandemic once the tenant is two months behind, but others exclude it. New policies usually exclude the first 90 days, so if you take one out now, you probably won’t be able to claim for arrears before the autumn.
Which repairs should landlords make?
Landlords have a legal duty to fix “serious and urgent issues” during the coronavirus lockdown, government guidance says. This includes a broken boiler that leaves tenants without heating or hot water, a plumbing issue that means they cannot wash or use a lavatory, or a problem with the building fabric, such as a roof leak. Other examples are critical security problems such as a broken window or external door, work to fit or fix equipment a disabled person relies on, and tests to fire alarms or emergency lighting.
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New advice allows home improvements too, such as fitting a new kitchen or painting. “It is a key way for households and landlords to improve the home environment and address poor quality accommodation while also providing important work for tradespeople whose businesses have been affected by the virus,” the government guidance says.
Tenants and tradespeople must all be free from coronavirus symptoms and try to stay in different rooms. As far as possible, arrange repairs and safety checks while the home is empty between tenancies. The government safety advice recommends a deep clean, while adhering to NHS guidance, or to leave 72 hours between moving.
Should safety checks continue?
Government advice says landlords should “make every effort” to comply with rules requiring engineers to check gas appliances and flues once a year, and, for new lets from July, the electrical installation every five years.
After at least three genuine attempts to arrange access, or if no engineer can be found after contacting five or six, landlords will not breach rules because they have taken “all reasonable steps”, the NRLA says. Keep copies of all contact with tenants and contractors, as well as previous safety certificates.
How do right-to-rent checks work?
Landlords no longer have to meet new tenants in person to check identity documents for their right to rent in England. During the pandemic, tenants can send scans or photographs of their documents. In a video call, tenants must show the original paperwork for the landlord to compare with the digital copies. If tenants lack the right documents, use the Home Office’s landlord checking service to find out whether they are allowed to rent without it.
When can viewings take place?
Viewings are allowed in England, as long as tenants are not vulnerable to the virus or staying at home with symptoms. Ask tenants to open all internal doors and go out or wait in the garden. If tenants refuse access for fear of strangers spreading the virus in their home, the NRLA says you should wait until the property is vacant before arranging viewings.