It’s more or less a given that as letting agents some, if not all of you, will over the next few weeks and months, be getting calls from tenants who are unable to pay their rent due to the ‘fall out’ from Coronavirus (Covid-19).
Inevitably, jobs will be lost through business closure, reduction in working hours and temporary ‘lay offs’ will result in a cut or even a total loss of wages.
With or without Coronavirus we know that there are people who will seize any opportunity to not pay their rent. We also know that they are very much in the minority because if they weren’t, then letting agents would have gone out of business long ago. The reality is that the vast majority of tenants are honest, hardworking people – like you and me. Keeping a roof over the heads of their families and themselves is and will always be their main priority.
So, what should you do when the call comes in from one of your tenants?
First be very aware that your tenant will have been dreading making the call to you.
Get all the facts
What’s happened? – Has the tenant’s employer ceased trading? Have their hours been reduced? Have they been laid off temporarily or asked to take unpaid leave? Are they self-employed and unable to continue trading?
Ask the tenants to provide proof that they are experiencing financial difficulties due to the current pandemic. Proof can be provided as follows:
• Sick note obtainable via 111.nhs.uk/covid-19 – tenants are advised not to contact their doctor or visit their hospital except in emergencies
• Comparable wage slips showing a decrease income or SSP payments.
• Bank statements for comparison showing the same decrease in income.
• Letter from their employer showing reduced hours/lay off.
• Letter from their accountant confirming a reduction in income
• Copy of a benefits claim or proof that this has been submitted.
What’s the tenant’s current financial position? – How long are they able to carry on paying their rent in full? Are they able to pay some rent? Are they unable to pay any rent?
What are they doing? – Is the tenant aware that they can make a claim for benefit immediately? Have they contacted their local council? Have they looked on the Government Housing Benefit website www.gov.uk/benefits-calculators and www.gov.uk/housing-benefit/how-to-claim. If the tenant has life/illness insurance cover, they should contact their insurer to see if there are necessary provisions for interruption of work within the policy.
Communicate….. Make sure you have the tenant’s current mobile and email address and encourage them to stay in touch and keep you updated of their situation. It is important that you work as closely with the tenants as possible and communicate well to minimise the impact this pandemic may have.
Give basic advice….. Tenants may have heard about ‘payment holidays’ for landlords on their mortgages. Make it clear to your tenants that this simply defers the payments into the future and that their landlords will have to make up the missed payments at a later date.
In the same way, rent is still due and will accrue even if it is deferred temporarily, so anything the tenant can do to minimise the debt will help in the long term. With that in mind can the tenant put forward a payment plan that can be taken to the landlord?
Eviction proceedings through the courts have been suspended for three months to allow tenants time to agree a payment plan with their landlord to bring the rent up to date.
It has not been made clear by the government what happens if tenants are in arrears still after that initial 3 month period, so we can only hope that the situation will be resolved by this point or the government rolls out further financial support.
There is further advice and guidance on getting financial support available on the government website: www.gov.uk/coronavirus
Moving on to landlords….. You will get calls from landlords asking “What about my rent if the tenant can’t pay?” – Tell them that if this happens you will call them immediately and let them know exactly what the situation is.
Once you’ve spoken to the tenant don’t leave the landlord in the dark. Call and tell them what’s happened and what steps you have advised the tenant to take. Only send an email to the landlord once you’ve spoken to them.
The Financial Conduct Authority (FCA) have issued new guidance with regards to ‘payment holidays’ and interest: www.fca.org.uk/consumers/mortgages-coronavirus-consumers