It is clear the coronavirus pandemic will have a wide impact across the whole economy, with all businesses and individuals experiencing some loss, cost or inconvenience. We will do what we can to help you minimise any adverse impact on your rental investment.
We have had a number of 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 isolation and working from home, 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 has prompted the various Government support schemes.
We have 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 will be checking they have explored the various State support schemes and asking whether they can pay anything. Whilst these schemes will support most people, 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 a short term issues we would be exploring 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 will not be possible to change tenants during the crisis (see ‘Can I evict tenants who don’t pay?’ below), it may be necessary to provide some support to tenants, which would provide the following benefits:
Whilst each case will need assessing on its merits, this appears to be a situation where there is a likelihood of some people not being able to pay their rent, and that having an impact on some landlords. We hope it is not you!
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 some, the hard fact may be that they may lose their income and have no prospect of getting paid work until the situation gets back to normal. We very much hope this is a minority of people.
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 have rent protection insurance under our scheme 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.. 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 you 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 may 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. Once your tenant starts to pay rent you can tell the insurer you wish to withdraw the claim, thereby preventing eviction if you choose. In such cases, you may not be able to make a further rent claim for that tenant.
These are unprecedented times and we are working with our insurers to keep on top of current events, if we receive any further advice or changes due to the new emergency legislation, we will notify you accordingly.
If you do not have Legal Expenses and Rent Protection cover for an existing tenancy, it can be supplied for just £10 per month, but cover will not commence for 90 days. The availability of this policy may be reviewed at any time by insurers.
The Government has announced that emergency mortgage holidays of up to three months will be available to buy to let mortgages.
This clearly may help if your own cashflow is under pressure. However, we have yet to see the detail. 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 in advance, so you can decide whether this would be useful should it be needed.
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 eviction proceedings starting during the crisis, for any reason. It also means if you serve notice it must be at least 3 months. Obviously dependant on how long the crisis lasts, this may not be a significant change compared with normal arrangements.
The bigger question is whether you would want to evict tenants during the crisis? Current advice is people should only move homes if ‘absolutely unavoidable’. That means if they leave, you may not be able to find a new tenant.
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 should not be affected. However current advice is people should only move homes if ‘absolutely unavoidable’, with the default assumption being people stay in their current home until the crisis is over, which effectively stops any home moves.
Where a tenant wants to serve notice, we are checking they have considered these issues.
We anticipate tenants who have lost their income and have someone they can move in with, may choose to serve notice to reduce any accumulating debt. In this situation, we will have a conversation with you, as it may be preferable for everyone for you to invite them to stay in their home until things return to normal.
We have reduced the contact between tenants and our team, or tenants and the contractors we work with. Government advice is we complete ‘essential’ repairs only e.g. 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.
Where essential repairs are needed, our contractors will liaise with tenants to clarify whether they are in isolation. If so they will ask tenants to keep as far away from them as possible during the visit, or agree to delay the work.
There is also the question of periodic safety checks required by Law e.g. gas safety certificates. We will continue to try and arrange these. However, we anticipate more may be delayed as 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.