The buy-to-let market has been put under pressure with the financial implications making it difficult for tenants to pay their rent. But how can you navigate your way through this crisis?
If your tenant has lost their job, they may struggle to pay their rent. You may be confused as to what your obligations are to your tenants during the pandemic and what financial support they can claim to stop their income from halting.
Here are some of your obligations during this time:
Your repair obligations have not changed – as long as you practice social distancing works can still be carried out. You may have difficulty in finding contractors to do the work required, which could make it difficult to ensure your property meets the legal requirements. If you can’t resolve any issues due to the pandemic keep a record of the issue and what you have tried to do to solve it. Government advice states that you should take a pragmatic approach to any non-urgent issues and if you have taken appropriate steps, you won’t be in breach of your duties.
Tenants have been informed that they should continue to pay rent and abide by all other terms in the agreement if possible. If they have lost their job, there are support systems available such as Universal Credit and help for the self-employed. Benefits payments may not be enough and so property owners could take a mortgage payment holiday and agree a schedule for the repayment of rent that has been suspended.
The Government has said that tenants can still be evicted but the notice period has been extended. The courts have also suspended hearing repossession cases for 90 days.
Help for landlords
Landlords do not count as ‘self-employed’ and cannot get help from the government rescue package for the self-employed. Landlords can make use of an interest-free loan from the Government if they struggle to bring in rent during the pandemic and to be classified as self-employed would depend on the involvement they have with the management of their properties.
A self-employed landlord would need to be operating multiple properties and generating enough income from this for it to be considered a business.
If you are a landlord and struggling financially you can defer the payment for your self-assessment tax return from July to January 2021. In addition, you can look to take a mortgage holiday – this shouldn’t hurt your credit score, but mortgage companies may look at this when you take out another mortgage in the future, and they could consider this in any offer they make.
Some landlord insurance policies will cover any rental payment defaults, but your policy may only pay out once they have been in arrears for a certain period of time and notice has been served. Tenants failing to pay their rent during this time cannot be evicted for at least three months and you could be faced with delays on your claim.
If you have an empty property it can still be marketed to let, and it can be viewed via video call. If a lease has been signed your tenant may choose to delay the move in date so talk to prospective tenants to come to a solution. If the property is empty you will still need to pay council tax.
If you would like further advice on your obligations as a landlord throughout this pandemic, talk to Newton Letting today.