Information for landlords around COVID-19
You will have heard that the Government have eased some of the restrictions around moving house.
The following activities can take place; a visit to an estate or letting agent, a viewing to look for a property, preparing a property to move into, moving home and visiting to undertake any activities for the rental or sale of the property. However, each visit to any property has to be assessed and planned and therefore cannot be spontaneous or rushed.
Whilst the amended regulations state that someone can visit our offices this will be by appointment only. We will then be able to keep a record of who has been in contact with who, allowing us to communicate with members of staff and visitors to our office(s) alike in the event of possible transmission of the coronavirus. We will be taking other social distancing measures into account in our office(s).
The regulations, whilst amended, have not changed the regulation requiring us to work from home unless that work cannot be done from home. We will therefore be taking measures to maintain a minimum level of cover in the office(s) to do only what cannot be done from home.
The government initially planned to suspend the ability of a landlord to start court proceedings seeking possession of a property during the current COVID-19 situation. This was changed and the final legislation increased the period of notice required under section 21 and all section 8 Grounds to 3 months. The legislation confirms that this will remain the same until the 30th September.
There is a provision to extend the notice period from three months to six months. This suggests that possession proceedings may be started after the expiry of the notice although it is worth bearing in mind that the current Government guidance says that the courts will not be hearing possession proceedings for a period of 90 days from 27 March 2020 although this could be extended.
If a tenant is not paying the rent either by an agreed deferment or simply inability to pay this will cause you concern, with the potential loss of income. You may have a mortgage to pay. It was previously discussed that homeowners should get a three month holiday on mortgage payments if COVID-19 was causing hardship. This has now been confirmed to apply to buy to let landlords as well.
The Financial Conduct Authority (the regulator for lenders) have said they do not expect lenders to take action on arrears at this time.
It is important to stress that the rent and mortgage rules “suspend” payment but do not remove the obligation to pay. In other words the money will accrue as a debt.
It has been suggested that tenants should, in the case of hardship, be able to request a full or partial deferment of rent payments. If an agreement is reached then this will prevent landlords from seeking possession on the basis of those arrears accrued within agreed time period. An agreement to defer rent will have an impact upon when a section 8 notice Ground 8 can be served. If an agreement is reached to defer 50% of the rent then it will take 3 months and a day before two months’ rent is in arrears in most cases it may be preferable simply to allow the arrears to accrue.
A payment plan would need to be agreed giving the tenants time to pay but a failure to pay on going rent may result in service of a section 21 or section 8 notice seeking possession and / or a Money Claim Online for the arrears. Before you make an agreement with your tenant we would urge you to discuss the situation with us as there may well be unintended consequences if not done in the correct manner.
We will continue to persuade your tenant to pay what they can to avoid storing up a bigger problem for later. If your tenant loses their work as a result of the current situation, we will encourage them to seek to apply for whatever benefits they are entitled to. Many ‘furloughed’ tenants will be able to take advantage of the Government’s commitment to pay 80% of their salary meaning they could at least pay a proportion of the rent.
The rules for those who are self-employed are similar but cannot be the same and there are limits on claiming if the persons profits exceed £50,000 p.a. Those self-employed with profits above £50,000 p.a.and those that have recently become self-employed currently can only rely on the benefits system.
If a tenant is unable to work due to self-isolation or illness, and as a result are not being paid, then this is the scenario that the Government is trying to assist with. They have taken away the waiting days before sick pay can be paid and they have clarified that self-isolation qualifies as being sick. We will endeavour to agree a payment plan to pay off any arrears. Some tenants may have a better sick pay regime than the statutory one and may remain on full pay for a period, reducing the reason for arrears.
If a tenant is ill then, of course, how long someone is ill or incapacitated will depend on age and whether or not there are any underlying health conditions.
Clearly this continues to be a fast moving situation. Whilst more of us are able to return to work not everyone is yet in that position and may yet be affected by events, for example if the country ends up in full lockdown again. The Government though may come up with further plans to deal with these issues.
If you think you may have problems keeping completely up to date with mortgage payments we would encourage you to engage with the lender at the earliest opportunity.
As the situation develops new rules may be applied. We would encourage you to plan for a prolonged restriction and be glad if it ends sooner.We will be staying in touch with your tenant and yourself during the situation.
Links to more specific guidance on various issues are available within this guidance.
The initial guidance was first published on Saturday 28 March 2020 at 9.00am. It is important to understand when guidance is published as MHCLG do not ordinarily publish version identifiers.
The new guidance was issued on 13 May 2020
Wishing you all the very best in these difficult times.