Coronavirus - Tenant requesting rental break

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    Coronavirus - Tenant requesting rental break

    I am expecting tenants to start asking for rental breaks or rental holidays soon. Some may even feel they are entitled to one.

    Does anyone have any plans in place or ideas on how we are going to address this? Clearly, a mortgage payment holiday is just the interest added onto the end of the loan and you are still liable to repay the full amount.

    Whilst the tenant may have the liability to pay the rent, even if you give them a rental 'holiday, it is going to be a lot harder to recover that outstanding rent if they refuse to pay it back or they cannot afford to pay it back in installments.

    There is nothing stopping the tenant from not paying and then moving out. Or not paying, knowing that there is nothing you can do about it whilst the possession process is frozen.

    I would like to be as flexible as possible in these difficult times, but I also don't want to rack up huge rental arrears that I will never be able to recover.
    I offer my advice freely, but I am not an expert, solicitor or judge. It is simply my experience of being a landlord and what I have learnt along the way. I make no warranty for my opinion.

    #2
    Assuming you're not going to agree to a rent free period, that's the question for the tenant.
    If they do stop paying rent, how are they going to pay the arrears that accumulate?

    If someone's not able to pay rent, the change in their circumstances must be severe and they'll need to either find new employment or use Universal Credit/savings (yeah, I know).

    So a payment holiday possibly isn't the best outcome.

    The change being proposed at the moment seems to be limited to ending s21 repossessions (but there's no remotely accessible court system in place at the moment).
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      The corollary is that one needs to be super careful (even more super careful) with choice of tenant these days -- plenty of cash in the bank, a secure job, all adult tenants employed, unblemished record..... Might often be best to leave the property vacant if the alternative is to take a massive financial hit

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        #4
        I have a feeling that once this is all over, finding a tenant that ticks all of those boxes is going to be extremely difficult.

        Comment


          #5
          Originally posted by ExpertInAField View Post
          I have a feeling that once this is all over, finding a tenant that ticks all of those boxes is going to be extremely difficult.
          I'm not so sure.

          Finding one in a short space of time, possibly.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Originally posted by AndrewDod View Post
            The corollary is that one needs to be super careful (even more super careful) with choice of tenant these days -- plenty of cash in the bank, a secure job, all adult tenants employed, unblemished record..... Might often be best to leave the property vacant if the alternative is to take a massive financial hit
            Yes, but ironically the best tenant in the current crisis could be one that's already receiving housing benefit/UC.

            Comment


              #7
              I've had my first tenant asking if there will be a rent cut in April as they are self isolating.

              My approach will be to offer a rent holiday with accrued arrears being paid off over 6 - 12 months after the crisis.

              I think it is important that tenants realise the rent will need to be paid eventually so they should pay as much as they can so the arrears are as small as possible or it will really hurt afterwards. I will take a view of writing off debt at the end of the crisis if necessary.

              Tenants should also be claiming everything they are entitled to as the Govt is throwing a lot of money at individuals and businesses - not LLs though - so that the shortfall in their earnings may be made up.

              I am assuring them they will not lose their home, but they need to understand they are not the only ones affected and we all need to work together through this. If at the end of this crisis they cannot afford the property anymore they will eventually have to leave. I really hope it doesn't come to that - but I am not a charity.

              Lets all help each other through this and where possible Be Kind

              Comment


                #8
                I will give them the facts. The firmness of that will depend on the tenant behaviour and history.
                • The law requires them to pay.
                • The law allows interest to be charged on late payments.
                • If they do not pay and have no repayment plan then they are likely to lose their home at the end of the 3 months.
                • Any agreement we reach is a deferral of payment, not a release from payment.
                • Costs of recovering the property will be added to their debt.
                • I will look favourably on them if they cannot pay the full amount, explain why, and pay as much as they can.
                • I will take court action to recover the debt and get a CCJ if necessary.
                • They will find it difficult to find a new place to rent, both private and social.
                I will also ask for details of their financial position and suggest what they might do, e.g.
                • Apply for benefits
                • suggest that their outgoings will be lower because they cannot go to the pub or get takeaway meals.
                • encourage them NOT to use on-line gambling sites (I can see their use increasing because of boredom or thinking one can get money that way)
                • Maybe even meal planning and cooking advice.

                Comment


                  #9
                  Originally posted by MdeB View Post
                  I will give them the facts.
                  ...[*]If they do not pay and have no repayment plan then they are likely to lose their home at the end of the 3 months.
                  ...
                  Really? What fact is that?

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                    #10
                    Originally posted by AndrewDod View Post

                    Really? What fact is that?
                    S8 notice. Current proposals appear to allow S8G8 with 2 weeks notice to be issued after 3 months.
                    Or S21 to be issued now with 3 moths notice.

                    I was not including court delays, and probably should have put "after the 3 months"

                    Comment


                      #11
                      Sounds like the sensible (but nasty) thing to do is issue a s21 notice as soon as tenant asks for a rent holiday, isn't it? Then if they don't start repaying you as soon as things are back to normal, you can apply for a possession order.

                      Comment

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