You will probably have heard that the government plan to suspend evictions during the current COVID-19 situation.
We realise this will cause many landlords concern, with the potential loss of income. Many of you will 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. It is not yet clear if this will be enforced in legislation, like the possession suspension, but time will tell. If it is a voluntary code then the court would be likely to refuse possession during such a recommended suspension.
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.
With tenants, landlords may not be able to seek possession on the basis of rent defaults in the short term but once the moratorium on section 8 notices is lifted then presumably landlords will give the tenants time to pay but a failure to pay may result in section 8 notice seeking possession and/or a Money Claim Online for the arrears
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. This will again reduce any arrears accruing.
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 are 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. Of course self-isolation lasts only a fortnight (although there may be multiple periods of self-isolation if other family members show symptoms or are ill) after which they will presumably be able to return to work and start paying the ongoing rent again. 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 is a fast moving situation and things may yet change which may mean more people unable to work with further consequential problems. For example if the country ends up in full lockdown. The Government though may come up with further plans to deal with these issues.
We acknowledge this will be something of a risk for landlords. You should plan to cover as much of the mortgage payments as you can afford so that if there are rent arrears your debt to the mortgage lender is as small as possible.
At this stage many things are unclear and it may be that rent guarantee policies will cover the rent payments, even if they then seek the money back from the tenant. 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 the new rules may be applied. The government have said a suspension of court possession claims for three months but there is nothing to say that if the problems lasts longer than this that they may not extend the restriction. We would encourage you to plan for a prolonged restriction and be glad if it ends sooner.
We will obviously be staying in touch with your tenant and yourself during the situation.
Wishing you all the very best in these difficult times.