A property industry accreditation service is asking whether it’s now time for the government to offer grants to help landlords through the Coronavirus crisis.
Safeagent says that one option for some landlords hit by reduced income and other virus-related problems is to seek a mortgage holiday - in reality, just a deferral of mortgage payments.
The Financial Conduct Authority has updated its guidance to lenders on this issue, urging them to allow landlords and other customers to extend ongoing payment deferrals after March 31 next year, to cover payments up to and including July.
In addition, the FCA wants lenders to ensure that those landlords and others who take advantage of the scheme do not suffer any worsening of their credit file.
Isobel Thomson, safeagent’s chief executive, describes the FCA move as positive but wonders if it’s really enough.
”While buy to let landlords impacted by tenants’ rent arrears clearly need support, we question if deferral of mortgage payments is the answer, or if it pushes the problem further down the track” she says.
“While lenders will be adhering to the guidance which provides up to six months deferral, we know it may take badly affected tenants much longer to get back on their feet, meaning landlords could be building up debt and struggling to meet mortgage payments for many months to come.
“We know the good work that agents and landlords are doing to sustain tenancies where tenants are in financial difficulties. But it’s vital that if we are going to keep landlords in the PRS, their financial viability is also maintained, ensuring no unnecessary reductions in the supply of rented housing and helping prevent homelessness.”
Thomson says there is more that could be done, specifically for landlords building up debt because they are unable to pay entirely or are only partially paying what is due on their mortgage due to a shortfall in their tenant’s Universal Credit.
She says they should be eligible for a grant from the government, similar to the Coronavirus small business grant.
“This would recompense them for the shortfall on their mortgage and any additional interest over the period. This is particularly important for landlords with a small number of buy to let properties, who rely heavily on this income” she believes.
“Safeagent is also calling on lenders to commit to no exclusions terms in new or existing buy to let products that prevent lettings to tenants who are claiming benefits. This is important to ensure tenants on benefits can continue to access the private rental sector now and in the future.”