Business

Letting agencies advised to have robust systems in place to cope with payment holidays

Warren Lewis
|
26th March 2020
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One of the measures recently announced by the government to help ease the pressure of the financial impact on society from the coronavirus outbreak was the introduction of payment holidays.

In order to cope with this disruption, letting agencies are being advised that they must have robust rental payment and record-keeping systems in place.

Lettings payment automation provider PayProp says agencies can provide peace of mind to customers by having the ability to implement and track changes to payments.

Tenant payment holidays - what to consider?

There is currently no official guidance from the government on whether landlords should give payment holidays to tenants affected by Covid-19.

However, over the next few months, there are likely to be many informal agreements between landlords and tenants to reduce or defer rent payments temporarily.

Agencies, therefore, need the ability to record and action any changes to clients' payment schedules. If they can do this automatically, maintaining a full and transparent paper trail, it will help all parties to keep track of how much they owe or are owed.

Neil Cobbold, Chief Sales Officer at PayProp, had this to say: "Agents will need to notify landlords if tenants come to them saying they can't pay their rent. Many landlords will be open to helping their tenants during tough times. Agencies can play their part by organising payment changes seamlessly so everyone knows where they stand and can prepare for the future accordingly."

Deferred buy-to-let mortgage payments explained

The government has given more clarity to landlords by confirming that they can apply for a three-month buy-to-let mortgage payment holiday.

The terms of the payment holiday will be up to the landlord's lender - their payments could be increased across the whole of their remaining term or their term may be extended by three months to cover the repayments.

Cobbold says: "If landlords are changing their mortgage repayment structure, they will need to factor in how their portfolios will be affected and consider any changes to their expected rental income from tenants.

"Agencies need to remind their landlords that they must actively apply for a buy-to-let mortgage holiday in order to benefit while providing them with an update on how their incomings and outgoings are being affected."

Have the essentials in place

Cobbold explains that during this uncertain period agencies will need to ensure they have the basics in place to provide the best possible service.

He says: "Letting agents will be working remotely for the foreseeable future, so they need the technology in place to offer an uninterrupted service for customers, who will be looking for stability and certainty above all else at the moment.

"Effective communication will be more important than ever, so agencies will need to consider ways to speak to clients remotely, including video call check-ins and regular updates of important information.

"As the industry waits for normality to return, agencies should also focus on their most basic duty of all – processing rent payments. This means having an effective and robust payment system in place so they can continue to receive incoming rents, pay landlords and factor in any changes to payment schedules."

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