The present situation has brought about unprecedented changes for us all and financial hardship for many individuals and businesses. Many people are struggling to pay their rent and other household bills which has left many landlords in a difficult situation and unsure how manage their obligations.
The government has provided guidance for landlords on the provisions in the Coronavirus Act 2020. In the first of our series of advice for landlords, Kally Singh summarises this information and outlines common questions landlords are asking at this time:
What can I do if my tenant can’t pay their rent?
As part of the national effort to respond to the COVID-19 outbreak it’s important that landlords offer support and understanding to tenants who may start to see their income fluctuate.
It is advised for landlords and tenants to have an early conversation to agree a plan if tenants are struggling to pay their rent. This can include reaching a temporary agreement not to seek possession action for a period of time and instead accept a lower level of rent or agree a plan to pay off arrears at a later date.
Alternatively, if a tenant is unable to pay their rent and the landlord has a mortgage, the landlord should discuss this with their lender. Mortgage lenders have agreed to offer payment holidays of up to three months where this is needed due to Coronavirus-related hardship, including for buy-to-let mortgages.
If a landlord becomes aware of tenants worried about or unable to pay their rent, they can direct the tenant to advice from specialist providers such as Shelter, Citizens Advice, The Money Advice Service. New funding to provide support for tenants has also been made available by Local Authorities.
Where a landlord does choose to serve notice seeking possession for rent arrears or has done so already, the notice period and any further action will be affected by legislation lengthening the notice period and/or the suspension of possession claims.
The Coronavirus Act 2020 means that landlords who do issue notices seeking possession will not be able to progress any further before the expiry of the notice. All notices for both the private and social rented sector tenancies are for three months.
Regardless of this legislation, where tenants have difficulty paying rent over this period, the government asks that landlords do not issue a notice seeking possession, particularly given that the tenant may be sick or facing other hardship due to COVID-19.
During the current period, the Lord Chief Justice has said that applications to suspend warrants of possession should be prioritised, and that judges dealing with any possession claim must have in mind the public health guidance and should not make an order that risks impacting on public health.
If a landlord and tenant agree a plan to pay off arrears at a later date, it is important they both stick to this plan, and that tenants talk to their landlord immediately if they are unable to do so.