A new survey conducted by Landlord Action, has revealed that since government measures to prevent the spread of COVID-19 were introduced on 23 March, 74% of landlords have been contacted by tenants saying they will struggle to pay their rent.
This comes as renters’ unions are calling on the Government to suspend rents for the duration of the coronavirus crisis.
However, Paul Shamplina, founder of Landlord Action, says there is no ‘one size fits all’ approach, as landlords also have bills to pay and families to feed.
He comments: “This is a nightmare scenario for everyone - landlords and tenants alike. It is really important that landlords do what they can to sustain the tenancy if possible, bearing in mind the court system is suspended and if a tenant vacates, there is a worry the property could be empty for a while. It is about working together in a practical way, understanding each other’s limits and supporting one another as best we can to get through this. I know of landlords who are in a privileged enough position to hold their tenants’ rent and have done so. However, the vast majority of private landlords own one or two properties, many with mortgages, and they too will be facing the same challenges of job losses.”
In the survey, 36% of landlords said they would struggle to pay their mortgage if their tenant did not pay rent this month. Although landlords can apply for an up to a three-month payment holiday on their mortgage if their tenant’s income has been affected by this crisis, with proof, Paul says some landlords are worried about asking for this, because they think it will affect their credit rating. Also, landlords who had already fallen behind with mortgage payments due to rent arrears prior to the crisis may struggle to access a mortgage holiday.
Paul continues: “We’ve been inundated with phone calls from landlords concerned about rent payments and our advice is this: Speak to your tenants. Understand how they are financially impacted; explain how you will be financially impacted. Where possible try and come to an arrangement with them, understand what government support they are asking for. Having something to help cover the mortgage is better than nothing.”
Landlord Action has also drawn up Rent Repayment Agreements for landlords providing a template which enables them to set out agreed terms of the repayment with their tenant. Perhaps more reassuring for tenants, is that nearly 70% of landlords who were asked if they could hold off serving an eviction notice if their tenant falls into arrears within the next three months responded yes.
He concludes: “Good tenants do not become bad tenants over-night. These are extraordinary circumstances, and everyone is impacted in some way. Those landlords who work with their tenants throughout this difficult time will strengthen their relationship and be far more likely to maintain the tenancy in the long-term. We must all do a little more and give a little more where we can."