In reality the UK government could never do enough to satisfy demands from various groups in both society and business. The fact that landlords seem to yet again to be last on the list is no real surprise. However, now the government has come charging towards the private rental sector on a rescue mission, what does this mean for private landlords going forward?
This is probably a situation for bullet points because as ever the devil is in the detail once you scratch below the surface and take apart recent announcements.
When it comes to funding issues these are the bullet points:-
• Lenders have agreed to a maximum three month payment holiday for residential and commercial properties but only for those directly impacted by the coronavirus
• This is not a waiving of mortgage payments but simply a deferral which will increase the cost and potential term of mortgage agreements
• Only those up-to-date with their mortgage payments will be eligible for the payment holiday
• All payment holiday savings should be passed on to tenants – if their rent is £1000 a month and the landlord saves £700 on the payment holiday then the tenant is only due £300 with the balance deferred
• How do landlords fill funding shortfalls where tenants are unable to pay anything towards their rent but cannot be evicted?
• Landlords should check with their mortgage provider to see the level of assistance available
• Ensure that payment holidays are marked as just that, and not missed payments as these can impact credit ratings
There is specific mention of the way in which landlords should address tenants in crisis:-
• Tenants need to advise their landlords/letting agents if they are unable to pay their rent – this is not an automatic opt out
• This is not a waiving of rent as arrears will be repaid in due course
• Students sent home by the universities still have a legal obligation to pay rent to their landlord
• The authorities have placed a three month embargo on repossessions but individual cases will be considered when the embargo is lifted
• Landlords will likely require confirmation that difficulties paying rent are a direct consequence of the coronavirus such as self-isolation, forced time off work or redundancy
• Deferral of rent prior to an agreement with the landlord will likely to result in adverse credit rating markers
Legal and practical anomalies
While more information will be released in due course there are a number of issues which are as yet unclear:-
• There is a deferral of ALL property repossessions yet landlords can only apply for payment holidays as a consequence of the coronavirus
• At the moment these payment holidays are at the ultimate discretion of each lender even though this is a government directive
• By what methods will landlords be able to pursue rent deferrals when the crisis is over?
• Landlords risk repossession of their properties if unable to pay back deferred mortgage payments while pursuing debt owed by tenants
• There is confusion regarding credit ratings for landlords with some lenders suggesting no changes while others intend to mark payment holidays as missed payments
• What happens to buy to let landlords who are behind with their mortgage payments and experience further financial challenges as a consequence of the coronavirus?
It is private landlords who are yet again on the block to cover deferred payments even though these are as a consequence of tenant financial difficulties. Refusal or an inability to repay deferred mortgage payments going forward will likely see properties repossessed. It is unclear how private landlords will economically and speedily be able to reclaim outstanding rent from tenants. There is also confusion regarding credit ratings and whether deferred mortgage payments will impact the long-term ability of landlords to borrow money.
While this is progress, yet again there are many questions left unanswered creating concerning and confusion for landlords. It is also worth saying that this is an extremely difficult period for tenants many of whom pay their rent regularly and on time. Hopefully we will receive further detail going forward.