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TODAY'S OTHER NEWS

Government must do ‘whatever it takes’ to protect tenants during corona outbreak

The government’s decision to bring forward emergency legislation to protect private renters from eviction has been warmly welcomed by ARLA Propertymark. 

Many tenants were concerned that they might not be able to pay rents if they fell ill, lost pay or had to self-isolate, forcing the government to act now to protect tenants affected by coronavirus.

It is not yet clear how long the evictions ban for tenants affected by the virus will last, but Labour wants to see the law changed so that landlords are barred from seizing possession of a rented property if people fall behind on payments due to coronavirus between 1 March and 1 September, with an option to extend the timeframe.

It would cover more than 8.5 million households, including private renters and those living in council housing or housing association properties, who may face financial hardship if forced to self isolate.

ARLA Propertymark’s chief executive, David Cox, said: “We agree that the government must do “whatever it takes” to safeguard tenants in these unprecedented times. 

“We of course have to support tenants as they face uncertainty over the coming months, while as the Prime Minister has said, ensuring we don’t simply pass on the problem to other actors in the economy.”

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    Make up all rent shortfalls to landlords. That is all it takes. Up to HMG to recover arrears if it can. Why bankrupt landlords?

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    Very sensible idea, but of course it will never happen.

     
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    Looks to me like the tenants are being offered up to a 6 month rent reduced/free period. So why are landlords only being offered a 3 month payment holiday by lenders? The mortgage debt will not go away and the period will only be extended. The debt my not increase but it will not reduce. This should be clarified to tenants that it is only a possible delay in making rent payments and not a rent free period as a time when nothing is due to be paid. At the end of this rent reduced/free period the debt is still due for any rent unpaid.

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    I will expect any unpaid rent to be repaid once the tenant goes back to work, and I will take court action if need be, this is not a rent free period, it's just deferred payment.

     
  • Matthew Payne

    It also demonstrates that it is either a cheap gimic to catch headlines for the government as Labour backed them into a corner, or once more they have no understanding whatsoever about the cost involved in being a PRS landlord especially after they now force them to pay tax on turnover as well as profit.

    With interest rates as low as they are the mortgage is only one small part of a landlords costs, so giving them a potential 3 month holiday (we have yet to see lenders agree to this and what conditions may be attached) is tinkering at the edges. What about a holiday from services charges that are now as expensive if not sometimes more expenseive than the mortgage? Ground Rent, sinking fund contributions that block managers will still expect paid each month, insurance, tax, maintenance? Will tenants still expect everything to be fixed if they choose not to pay their rent?

    The government talks about protecting people when they lose their incomes. Many older landlords use this rent as their income, and all the government is doing is greasing the wheels for them to lose it whilst still leaving them burdened with at least 60% of the costs.

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    I never fail to be amused by all those anti-Private landlord Housing Sector Groups happen to be so generous with my money with no input whatsoever of their own hard cash.
    The chickens were coming home to roost anyhow already without Coronavirus with the Building of Thousands of Subsidized Flats clearly not required, how many times have I repeated that. Where are the people or where are they living now, forget about waiting lists, they all want to be on the Council to use tax payers money to live off, even Camden Council alone has 6'000 on the waiting list, surely they are not all on the Street and that just one Borough of 32, same old story why buy the Cow when the milk is free.

     
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    Hi

    I’ve just been asked by a tenant to reduce. Or waive the rent for March, suspect if we continue in this pandemic it will be April , May , June etc.

    This particular tenant has a guarantor who is her father , can I ask her to consider request ring the guarantor to lay the rent ? Is this legal .

    Also I was told by a friend that tenants we are really in difficulty should produce their pay slip for that month and a copy of their bank statement to confirm that they have not earnt income this month , is this somthing I can ask for ?

    Also as they’ve asked for a discount would a 20% discount be better than offering them a deferment of the rent for that particular month?

    Any advice on the above would be highly appreciated.

    Thank you !

    Daniela Provvedi

    Hi Faris, please go to the NLRA website (NLRA.org.uk) and all your questions will be answered. Also, (if you don't already do so), listen to LBC radio and read the news on their website - this is updated daily / hourly. Clive Bull (LBC) had a property specialist on his talk show this evening, and he confirmed everything which you will read on the NLRA website.
    So basically, I'll try and answer as best I can. As a LL you are expected to give your tenants a 3 month rent holiday if they ask (as per the latest government announcement). And you, in tern, will be allowed to take a 3 months mortgage holiday.
    If your tenant's father is her guarantor, then I expect you to have a Tenancy Agreement signed by him? In that case, yes, you have a legal right to ask him to pay the rent, but as mentioned above, our government has given our tenants permission to have a rent holiday, so unfortunately he is allowed to decline to pay you for the next 3 months.
    As far as I understand, tenants don't have to produce any proof that they can't pay your rent. If they tell you they won't pay you, you are obliged to give them a 1 to 3 month rent holiday this government said they're allowed to have.
    A discount of 20%? At the end of the day, they are staying in your property and have to pay you your rent - if you'd like to be helpful and kind, then of course, give them a discount. However, don't get caught in a situation where you give them a 20% discount (to entice them to pay your rent), but then they realise that they have permission to take up to 3 months rent holiday.
    At the end of the 3 months, Faris, you will still need to get your rent from them, as this is just a rent holiday, not a 3 month rent discount. (And it works the same for a 3 month mortgage holiday - at the end of the 3 months, you'll still need to pay for the previous 3 months).
    I hope this helps. I wish you all the best, we are going through hard times and we all need to help each other, if possible.

     
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    guarantor

    or benefits

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    Hi terry

    Sorry , didn’t understand your intervention , can you Elaborate ?

     
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    Hi Daniela

    Thank you so much for this insight, I have a guarantor letter from the father not a contract, contract is signed by the tenant.


    Can I still ask her to request the guarantor to cover the rent for months she can’t afford to ? Or do I need to contact him myself if I decide to go down that route? Thank you

  • Daniela Provvedi

    Hi Faris, I'm no lawyer nor professional in this field. I'm just a mere LL managing my own properties and have done so for approx. 20 years. So I can only say what I would do......
    I see no harm in you asking your tenant to request the guarantor cover the rent for the months she can't afford, but as mentioned before, tenants have been given the permission to have a 3 month rent holiday. Just don't be disappointed if they come back to you and say they won't pay you for the next 3 months - because they are allowed to not pay you for the next 3 months. And the worst part of it all is that you aren't allowed to evict them either.

  • Matthew Payne

    Just to clarify, the government hasnt issued requests or permission for tenants to be allowed a rent holiday. These calls have come from Shelter, Acorn and the like the and government has said that it planned to introduce emergency legislation (still not passed) that prevents tenants from being evicted in the next three months. At the same time they have announced that the 3 month mortgage payment holiday will be extended to landlords where their tenants are experiencing difficulty in paying their rent due to the CV, but that again is not a requested or sanctioned rent holiday by HMG. We are yet to see what conditions are attached by lenders to these holidays and they may well want proof from a LL that their tenants have not paid their rent or has been affected by CV.

    Whilst you may choose to do so, or it may be appropriate to do so, the government hasnt actually officially commented on a rent holiday for tenants and I assume they are deliberately not doing so, as there are no doubt some legal implications of doing so ie: encouraging unilateral breaching of contractual obligations. They are due very soon to publish some guidance for landlords which is due to set out how landlords could be compassionate to tenants who are affected by CV. I guess it will encourage some mutual agreement to be reached between LLs & TTs to avoid a breach and be in a fluffy language that avoids that specific sanction once again.

    So there is an implication of a rent holiday for tenants who are affected CV, ie you cant evict them even if they dont pay their rent, but the government has not said that tenants are able to request a rent holiday, or that landlords have to agree to one, and their guidance comments have been aimed at those directly affected by CV, so again by implication it could be perfectly reasonable to expect them to have demostrate how they have been affected to qualify, as those unaffected by CV are not entitled to any such compassion or changes.

    Whlist many tenants may simply choose to stop paying their rent as there is no fear of eviction in the next 3 months whether they have LL consent or not, there are clearly implcations for tenants who do so as they may face a section 21 later in the summer or their credit rating will also be affected, so it is not the case that LLs are over a barrel and have to just accept whatever a tenant chooses to do. Ergo, I think it would be perfectly reasonable for a LL to ask for proof, as these measures are designed only for those affected by CV, not for wider PRS tenants, most of whom will remain unaffected.

    Daniela Provvedi

    I'm afraid, Matthew, you are wrong. The following has been copied and pasted from the GOV.UK website, dated 18th March 2020:-

    The government has announced a radical package of measures to protect renters and landlords affected by coronavirus. As a result, no renter in either social or private accommodation will be forced out of their home during this difficult time.

    Emergency legislation will be taken forward as an urgent priority so that landlords will not be able to start proceedings to evict tenants for at least a 3 month period. As a result of these measures, no renters in private or social accommodation needs to be concerned about the threat of eviction.

    Recognising the additional pressures the virus may put on landlords, we have confirmed that the 3 month mortgage payment holiday announced yesterday will be extended to landlords whose tenants are experiencing financial difficulties due to coronavirus. This will alleviate the pressure on landlords, who will be concerned about meeting mortgage payments themselves, and will mean no unnecessary pressure is put on their tenants as a result.

     
    Daniela Provvedi

    As stated this was directly copied from GOV.UK - Rented Housing Sector.

     
  • Matthew Payne

    That just confirms what I have commented, no fear of eviction for tenants and a mortgage payment holiday for landlords if needed. Where does it say the government is requesting or expecting a rent holiday for tenants and if asked one needs to be provided?

    Daniela Provvedi

    There's much more on that website for me to copy and paste on here.
    I've given you the details, Matthew, go and read for yourself.

     
    Daniela Provvedi

    And in addition to that, if you're a member of the RLA like I am, then you can phone their Advice Line for free for further information.

     
  • Matthew Payne

    It was more a Q for you, I am well read on the subject, but I am not trying to score points here, I just want to make sure everyone understands what they are obliged to do or not. The government has not condoned or even mentioned rent holidays anywhere, they cant be seen to be getting involved and making recommendations that ultimately breach a contractual commitment, the banks would have kittens, and ultimately thats what we are talking about, so instead they have simply said in a press release, whatever happens in the next 3 months you cannot be evicted, releasing pressure etc. However, interestingly, the government press release only talks about starting proceedings by landlords, whatever that means. Is serving S21 notice starting proceedings or is that a Court matter only? I was expecting something more specific on landlords serving notice or no fault evictions, so it will be interesting to see the detail of whether they mean Section 21 or Section 8 especially in context of a lenders right to repossess, they wont be able to stop that from happening unless they are prepared to spend a load more money reintroduding legal aid so a tenant can take on Barclays or whoever in the Courts. It may just be as usual, the government has no idea, in this case about how tenancies end.

    If the RLA are advising landlords they must give rent holidays when asked, they have misinterpreted what has been said. Even the template letter I have seen circulated by the lobby groups doesnt say that, its says, please Mr/s Landlord, will you please consider a rent holiday. Consent is the key to all of this which is why HMG is being very careful in how it articulates its message. Much more to follow on this when we get some flesh on the bones.

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    What more can they do to destroy us not much left and I was wondering when this one would come along. They taken our Deposits in 2007 based on a pack of lies. Taken our 10% Wear & Tear, made us immigration Officers, How to Rent , Right to Rent, De-Regulation Act, Every kind of license burden for every part of a property and requirements. HM0's, Mandatory, Selective, Additional all involve huge costs that we are suppose to absorb like a miracle, not one penny out of Councils pocket but making a packet out of it, plus the fines they can keep that they issued & more coming, Article 4, Section 24, Section 21 depleted to a remnant and they still wants the residue of whats left, not much more to give of take really only Free Rent I was expecting that. I suppose they could require us to pay them to live in our property that would be a good one but we are subsidizing them already or do a John McDonnell on us give them the Deeds.

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    • 26 March 2020 15:40 PM

    Hmm!!
    Many LL will be seriously considering their position once this CV19 thing has finished.
    Does it make any financial sense to be a leveraged LL anymore!?
    Great when there are rent paying tenants.
    But under normal conditions 2 missed mortgage payments normally means a lender starts repossession proceedings.
    Of course we all understand the benefits of being a leveraged LL ;that is why many of us are.
    But then you have a situation like this come along it must call into question the very viability of the leveraged LL.
    Perhaps the investment capital should be used for just one property?
    Maybe even buying outright.
    Then no real financial stress.
    This is what I hope to do.
    The benefits of the leveraged LL are now tenuous to say the least!

    The globalised world has thrown into sharp relief how free movement is a threat to nation state economies and the world economy as a whole.


    Does anyone seriously believe that there won't be a similar thing as CV19 crop up again.
    It is air travel that is responsible for infecting the world with this virulent virus.
    Can you imagine if Ebola had got out of Africa?

    I'm afraid many LL will have to review their business models and severely de-risk them.
    It is pointless being a leveraged LL if all it takes is 3 months of rent default to destroy viability.
    Not many LL could support 5 property mortgage payments for 3 months in the absence of rent.

    Yet it seems to be presumed by many feckless tenants that it is LL that should take the financial hit for their fecklessness in not having made provision to pay rent if they lost their job etc.

    Surely it should be for the tenant to make such provision!?
    Why should the service provider be expected to subsidise the lifestyle of tenants just because they can't pay the rent.
    Tenants should offer to vacate to at least give the LL a chance to find rent paying tenants.

    It is outrageous that the Govt is effectively forcing LL to provide free accommodation.
    The cheeky buggers have even got the nerve to carry on with their bonkers S24 tax policy.
    So as well as free accommodation LL are still expected to pay tax on fictitious income with fictitious rental income!!!
    When will Govt realise that this S24 turnover tax is simply ludicrous made even more so by latest events.

    I simply cannot see many LL surviving this debacle.
    This must result in many more homeless tenants along with a much reduced PRS along with a massive reduction in BTL mortgage loans.

    The business proposition simply doesn't stack anymore.
    There can be no return to the relative normality of pre-CV19.
    There has to be a massive contraction of the PRS.
    That doesn't mean LL will be worse off.
    They will achieve the same net income from far fewer properties with considerably less leverage.

    Sort of what the Communist Tory Party has been trying to achieve!




  • Matthew Payne

    A final point on this rent holiday confusion. The government was asked directly in the Lords yesterday whether there were plans to introduce a rent holiday for tenants, recognising of course that one had not been introduced up to now. Their reply was “As such, the Government does not believe a ‘rent holiday’ is necessary at this stage.”

    So as per the updated guidance, there are no advocated rent holidays, it is an urban myth and it appears that nearly all BTL lenders are not offering a payment holiday either. Government advice is for all tenants to continue to pay their rent and honour their other responsibilites, but where there is a genuine case where a tenant has been directly financially impeded by CV they should speak to their LL immediately and try and come to a mutually agreeable solution for both parties. The guidance does not demand, but implies that LLs should be sympathetic to these requests on the basis they should be getting a payment holiday from their lender, but it appears to be discretionary. Obviously it would be appropriate in many cases to provide the tenant some form of holiday to be compassionate, maintain the relationship which in most cases would have been good up to this point, and to avoid racking up huge arrears, this is for each LL to decide.

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    I have already given a commercial tenant a rent holiday as the lady has had to close for now, she has been my tenant for more than 25 yrs and has always paid her rent in full, so I am happy to do so even though I don't have to, as yet I have not had a residential tenant approach me for one, if a tenant does ask for one I will consider a compromise depending on the circumstances .

     
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