Insurance firm CIA Landlord is offering advice to landlords on how to prepare for five likely problems to appear this winter because of Coronavirus.
The firm’s operations manager, Richard Wayman, says that while landlords are being urged to give their tenants leeway, tenants are still required to pay rent or at least as much as they can manage.
His tips are:
1. Consider rent deferment: “One way a landlord can work with tenants who can’t afford to pay their full rent is through a process called rent deferment. This means the tenant is allowed not to pay rent for a certain period but then to pay the amount that has been deferred by equal monthly instalments over a specified period, by means of additional rent” explains Wayman. “When choosing to defer or reduce rent for a tenant for a set period to avoid tenant insolvency, it is important to leave clear documentation of this, to avoid issues further down the line.”
2. Consider rent abatement: “Rent abatement is an agreement between a landlord and tenant that provides a period of free rent for the tenant and often lasts a period of few months. Rent abatement differs to rent deferment as while the tenant is also not obliged to pay any rent during the period, there is no obligation for the tenant to pay the rent at a later date. This is a temporary adjustment to the lease and although a tenant paying no rent is an inconvenience, paying service charges, bills and other outgoings or whatever rent they can afford it is better than an empty house during the crisis.”
3. Dealing with a defaulting tenant: Wayman believes that even if a tenant is defaulting a landlord should continue to perform under the lease. He says: ”It’s important to record in writing all interactions they have with the tenant and be able to show how they have tried to help the situation. Although landlords’ rights are deferred, they are not taken away. Courts have equitable powers that they can use at their discretion So when a landlord is seen to be attempting to make reasonable accommodations for a tenant and the tenant refuses to make any concessions to the landlord this can mean the landlord succeeds in a future legal action.”
4. Identify other opportunities: “Tenants that were in financial trouble prior to the Covid-19 pandemic are unlikely to improve significantly over the coming months, which makes landlords more liable to cover their debts. While it may not be the best time for finding a replacement tenant, removing a tenant that is problematic can give you time to fix any existing issues in the property and spruce up the space.” He suggests landlords could undertake DIY work to increase the home’s value by thousands and make it more desirable to potential tenants.
5. Communicate with tenants to resolve Issues: “While a wide range of private tenants have faced furlough or job loss, and paying rent has becoming a daunting prospect, ensuring there is clear communication between landlords and tenants during these unprecedented times can avoid any hostility between both parties and improve your chances of preventing a vacant property or avoiding legal action.”