It is clear the COVID19 coronavirus pandemic is having a wide impact across the whole economy, with all businesses and individuals experiencing some loss, cost or inconvenience. We are doing what we can to help you minimise any adverse impact on your rental investment.
Since lockdown started in March 2020 we have had many conversations with tenants and landlords understandably expressing concern about how tenancies may be affected. Positively everyone seems to be pulling together, recognising this is a new and extraordinary situation.
Given the need for social distancing and working from home where possible, we thought it may be helpful to update you to address some key questions you may have.
This is the obvious big question, as a wide range of businesses may be affected, which may mean your tenants’ earnings could be affected. It is also the issue that prompted the various Government support schemes. Happily 95% of our tenants are paying their full rent as normal, but we know the situation is fluid.
We asked all tenants to let us know as early as possible if they have any difficulties paying, so we can agree on any steps with you. In the first instance, we check they have explored the various State support schemes and ask whether they can pay anything. Whilst these schemes support most people affected by the pandemic, for most of their rent, some will inevitably be unable to meet any or much of their rent.
The question is what happens then? Given this is an exceptional issue we then explore with you whether you can allow a rent reduction or rent delay/holiday to ensure you retain your tenants for when things get back to normal. Given it is not possible to take court action to evict tenants during the crisis (see ‘Can I evict tenants who don’t pay?’ below), it may be necessary to provide some latitude to tenants, which would provide you with the following benefits:
Positively we know the overwhelming majority of tenants properly pay their rent and let us know about any difficulties. We are confident they will continue to do their best to pay their rent if they can. Sadly for 1% of our tenants the hard fact is they have lost their income and struggle to get paid work until the situation gets back to normal. We hope it is not your tenants!
Obviously we will update you quickly if there is any non-payment of rent, as we know people will be particularly sensitive to any rent problems in the coming weeks.
If you took out legal expenses and rent protection cover under our scheme at the start of a tenancy before the pandemic this should cover unpaid rent in accordance with the policy. The Legal Expenses and Rent Protection cover we provide through One Broker will pay your unpaid rent up to £2,500 per month for up to £25,000 p.a. once normal eviction proceedings can start. This should be more than adequate to protect your rental income for the period of corona virus pandemic.
Provided there were no reference queries when the tenant started, the process would be on the day after the second monthly rent payment is missed we could make a claim which, if accepted, would pay the outstanding rent. Our policy does not have an excess.
However, the insurer would also want to minimise their liability and will seek to evict the tenant (at the insurer’s cost). The emergency legislation on evictions (See ‘Can I evict tenants who don’t pay?’ below) means the insurer will not be able to start eviction proceedings whilst the crisis continues. Given there is a cost to changing a tenant, you may decide to not make a claim.
If you do not have Legal Expenses and Rent Protection cover for an existing tenancy, it normally costs £10 a month. However new policies started since the pandemic cost just £7 but provide just legal expenses cover, not rent cover.
The Government has announced that emergency mortgage holidays of up to three months are available to buy to let mortgages.
This clearly may help if your own cashflow is under pressure. However based on past mortgage holidays such an arrangement may have an impact on your credit score.
In any event, given interest rates are so low, it is unlikely this mortgage holiday would save you the equivalent of the loss of rent.
Therefore it may be prudent to calculate how much you would benefit from such a holiday, so you can decide whether this would be useful.
In the event you need to take a mortgage holiday, we will obviously provide any information we have that may help you.
In normal circumstances, if a tenant had not paid rent for two months, or had a bad payment record, you could start eviction proceedings. Also if the tenancy is no longer in a fixed-term tenancy, you could issue a Section 21 ‘no-fault’ notice to end the tenancy in 2 months’.
However, the emergency legislation prevents any court action for eviction starting before 24 August 2020 – a date which may be extended. It also means if you serve notice it must be at least 3 months. Where a tenant leaves at the end of this period then no court action is needed. However if they don’t you may need to wait to take action to evict them.
However, as shown above (What if my tenants cannot pay their rent?”), it may be cost-effective to retain your current tenant until things get back to normal.
We recognise any unpaid rent may present you with a problem. Hopefully, this will not affect you directly!
Tenants’ legal right to serve notice to end their tenancy is not be affected.
Since property moves have been allowed in mid May 2020 tenants have served notice and we have filled properties in a COVID secure way.
We have reduced the contact between tenants and our team, or the contractors we work with. Government advice is we complete ‘essential’ repairs only; essential being things like no heat, no hot water, no power etc..
We have advised tenants that any works that are not essential will need to wait, to minimise social contact. However, we have asked that they let us know what work is needed, so we can advise you and instruct contractors to start work as soon as they can. Some are content for works to be done, which we are allowing to go ahead where they and the contractor agree it is safe.
Where essential repairs are needed, our contractors will liaise with tenants to clarify whether they are in isolation and agree how to ensure all people are comfortable with how the visit is completed.
There is also the question of periodic safety checks required by Law e.g. gas safety certificates. We continue to try and arrange these. However most are delayed as most tenants refuse to have the work done until things return to normal. Provided we can demonstrate we have attempted to arrange this work, your obligations as a landlord have been properly discharged. Obviously there will be a catch up when things return to normal.
We have also postponed any routine property visits to minimise travel and contact for staff and tenants.
If you’re alone or need help during this extraordinary situation, give us a call. We will see if there is something we can do, even if it is just having a chat!
If you have any thoughts or concerns about the items on this page or other questions we have not covered, then please get in touch on [email protected]
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Very professional organisation that gives good service to both the tenants as well as the landlord. Highly recommended.
All staff at Maxine Lester Residential Lettings are trained to a high standard and I have always found Lisa Gadsby very efficien
Every time we have contacted Maxine Lester everyone has been so helpful. We have always had any issues dealt with promptly and...
Excellent service all round, keeping us informed regularly on our property, always contactable and willing to help with any query.