Covid-19 and the Lettings Industry
21 Apr 2020
Covid-19 and the Lettings Industry
The global Covid-19 pandemic has already had an unprecedented impact on everyone worldwide, whether that be physically, mentally or financially, everyone has or will be affected. College and County hope that you and your loved ones are keeping well and want to remind you that we are still working hard on behalf of our Landlords and Tenants at this time.
The government has outlined two expectations for landlords during this crisis. Firstly to let people continue to live in their property without the threat of eviction during this difficult time and to ask that landlords show compassion towards tenants who have had their financial circumstances impacted by the Coronavirus.
The UK governments approach to the relief and support provided during this crisis has been to try to support incomes in hope that these will trickle down through to ensure mortgages and rents can continue to be paid. Although this has helped many as seen by the take up of the furlough scheme we appreciate there are quite a few that are not able to benefit from this approach and have been missed in the support provided.
The government has urged the mortgage industry to provide what are called ‘mortgage holidays’ to private landlords with buy to let mortgages whose tenants are in financial distress. This is designed to allow those who cannot afford to keep up with rental payments to delay their payment of rent until a few months later, in a similar fashion to a landlord delaying mortgage costs and then paying a higher amount later. This support does not change the overall rent owed between tenant and landlord and does not change the tenant’s rights to their property. At the end of this period, landlords and tenants are expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.
While at College and County we are encouraging landlords to make such an arrangement available to tenants wherever possible it is important that both parties understand that this may not always be possible for the following reasons… 1. Not all landlords have traditional mortgage loans and commercial loans are not offering the same flexibility. 2. Landlords who rely on the rental income as their main source of income have no other support to fall on to fill the gap this would leave in their monthly finances. 3. The interest owed on the mortgage is still charged during this holiday and would be added onto the balance of the mortgage. 4. It has been widely reported that asking for a mortgage holiday will likely impact the availability of future loans to the individual and products they may be able to access in the future.
Universities around the country are closed and operating remote leaning programs resulting in many student tenants deciding to leave their student rented properties and return to their family homes for lockdown. The National Union for Students (NUS) has released an open letter directed to multiple property associations including the National Landlords Association. The NUS have written five demands which they have asked the above organisations to put in place for tenants. We wanted to highlight two of the demands which are ‘hot topics’ in our agency at the moment, two of the demands are “Every landlord must offer students a no-penalty early release from tenancy contracts for the current and next academic year” and “All renters who are financially impacted by the coronavirus must have their rents subsidised, significantly reduced or waved entirely for 6 months”.
The National Landlords Association (NRLA) has responded to the first point and has stressed that Landlords are being urged to be as flexible as possible in working with tenants to help both parties out as much as possible. With regards to tenancies that have not yet started including those for the upcoming academic year NRLA have commented “all tenants should abide by the terms of their tenancy agreement, although we continue to encourage all tenants and prospective tenants to enter into a dialogue with their landlord to understand their responsibilities and discuss potential options”. The Association has responded to the NUS’ second point about rent reductions with the following “For those students who are financially impacted as a result of the coronavirus outbreak we would support the NUS’ calls for extra support for their finances in much the same way as those who are employed have been offered. However, we see no justification for private landlords to be asked to subsidise the rents of their tenants regardless of their educational or employment status when in many cases the providers of accommodation are as negatively impacted as the rest of society.” They go on to say, “In respect of reducing or waiving rent, again this needs to be left up to the individual landlord according to their own financial position. Some may well be in a position to help in this way whereas others may face difficulties. The vast majority of landlords are ineligible for any of the other business or personal support measures announced by the government, making it extremely difficult to provide direct support to tenants.”
There are currently no plans to alter the contractual arrangements in place around housing provision for either students or professional tenants, the government along with Shelter and many other charities supporting renters continue to recommend rents are paid in line with contractual obligations. It in our view it is unrealistic to apply a blanket approach to a situation as complex as this. Landlords own personal finances differ hugely and no provisions or support have been provided by the government to allow landlords to offer flexibility in contracts without this impacting their own finances.
At College and County we do understand that some tenants may be facing financial difficulties, we would encourage those that are to begin a dialogue through us with their landlords so we can explore what help can be made available. It is however important that tenants also understand that although some landlords might be in a fortunate position of offer rent reductions or deferrals this cannot be assumed as for many this would be impossible without potentially facing hardship themselves.
We are always happy to provide help and advice to all parties and where needed we are working with our Tenants and Landlords to help them come to a mutually agreeable solutions.