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TODAY'S OTHER NEWS

Three quarters of landlords contacted by tenants warning they will fail to pay rent

Three quarters of landlords warn that tenants will not be in a financial position to pay their rent if the coronavirus lockdown continues. 

A survey of 537 landlords carried out by eviction specialist Landlord Action found that since the lockdown was introduced a month ago some 74% of respondents have been contacted by tenants saying they will struggle to pay their rent.

This comes as a number of renters' unions call on the government to suspend future evictions based on rent arrears for the duration of the coronavirus crisis.

But Paul Shamplina, founder of Landlord Action, says that there is no ‘one size fits all’ approach, as landlords also have bills to pay and families to feed.
 
He said: “This is a nightmare scenario for everyone - landlords and tenants alike. It is really important that landlords do what they can to sustain the tenancy if possible, bearing in mind the court system is suspended and if a tenant vacates, there is a worry the property could be empty for a while.  
 
“It is about working together in a practical way, understanding each other’s limits and supporting one another as best we can to get through this. I know of landlords who are in a privileged enough position to hold their tenants’ rent and have done so. 
 
“However, the vast majority of private landlords own one or two properties, many with mortgages, and they too will be facing the same challenges of job losses.”

Landlord Action's research also revealed that 36% of landlords would struggle to pay their mortgage if their tenant did not pay rent this month. 

In addition, seven in 10 landlords said they would hold off serving an eviction notice if their tenant falls into arrears within the next three months. 

Shamplina added: “We’ve been inundated with phone calls from landlords concerned about rent payments and our advice is this: Speak to your tenants. Understand how they are financially impacted; explain how you will be financially impacted. 

“Where possible try and come to an arrangement with them, understand what government support they are asking for. Having something to help cover the mortgage is better than nothing.”

Although tenants cannot currently be evicted from their property, landlords are still permitted to serve them notice to leave. 

Shamplina continued: “Good tenants do not become bad tenants overnight. These are extraordinary circumstances, and everyone is impacted in some way. 

“Those landlords who work with their tenants throughout this difficult time will strengthen their relationship and be far more likely to maintain the tenancy in the long-term.”

Poll: Are you worried that your tenants will default on their rent payments in the coming months?

PLACE YOUR VOTE BELOW

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    Personally to date only had 16 out if 930 ast let’s affected, a few company let’s have got concerns ongoing but I’ve got a way forward with all! I’ve got a large % of working tenants last count 85% so might see some issues down the line but it’s not panic time yet, talk to yr tenants and landlords make sure that you have more to talk about than rents!

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    Why would a survey conducted by an eviction specialist be considered to be objective? Or even true? Surveys should always be conducted by a specialist public opinion company such as Gallup. They are independent, have no vested interest, and know how to make their samples truly representative.

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    Only had one so far, a commercial let, the lady has been an excellent tenant for over 25 yrs, so of course I agreed, but if I get any trying it on then they can rest assured that they will be on the streets in time for next winter.

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    Re: previous person's posting: ".......out on the streets in time for next winter......." - I do hope you don't mean that literally ………, - even if they are 'trying it on' (whatever that means).

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    You don't know what ''trying it on means'' ? you must have lead a very sheltered life!

     
    Paul Barrett

    Why do you believe a LL shouldn't get rid of rent defaulting tenants irrespective of climatic conditions!!!!?

    What has the prevailing climate got to do with whether a LL evicts or not!


    The tenant either pays up or out they go whether 3 foot of snow or otherwise.
    A LL has NO duty of care to any tenant who refuses to pay rent and refuses to voluntarily vacate.
    Private LL are not a FREE Govt service though to many LL it does seem that way at times!
    In any year mostly rent defaulting tenants cost LL £9 billion of losses.
    Why would LL be the slightest bit concerned with the welfare of feckless tenants who won't pay their contractual rent!!!??

     
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    If non paying tenants are evicted....who do we suppose will be able to pay the rent and move in?

     
  • Kristjan Byfield

    74%?!? Not seen this reflected anywhere and this scaremongering helps no one. We have negotiated special payment terms on just 5% of our portfolio. I have heard some agents talk about 20-30% as an extreme example but that's still nowhere near this crazy stat.

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    I don't think they are extreme examples. I have taken a big hit compounded by Government interference, some Tenants are taking advantage.

  • Matthew Payne

    I still think some of these potential arrears can be tackled by education, open dialogue, and avoiding any initial confrontation as I have said in other posts, and I have now had to practice what I preached! There is a load of fake news and misinformation out there, and to be fair to many tenants, once they have heard some it 4th hand from a mate, it can be a long way from the truth.

    So, I had a tenant email me last week asking if I "could help him out with his rent" as he understood the government has suggested this? I started by simply asking him to tell me more about his current financial situation and why he believed that. He came back and simply said his finances were ok, his brother was now living in the flat which helped loads, and he had been told that all landlords had "had their mortgage payments suspended during the crisis" and he thought it might mean he could pay less rent. I sent him back a longer polite and informative note explaining the detail of what happened etc etc. He said ok no probs and paid the rent in full the following day. No conflict, no drama, no arrears, just a lot of nonsense out there that even the nicest tenants may believe or take advantage unless someone diplomatically puts them straight.

  • Paul Barrett

    What I find bizarre with all this situation is that tenants seem to believe they can adjust their rent payments depending on what they perceive the LL does with the rent.


    IT IS NONE OF THE BUSINESS OF TENANTS WHAT LL DO WITH RENT PAYMENTS.

    Some LL may choose to use rent payments to service mortgage debts or other related property debts.
    Some may choose to spend the rent on wine women and song and then waste the rest.

    It is nothing to do with the tenant what a LL does with the rent.
    The rent is a contractually agreed payment amount for services provided.

    What a service provider does with the payments for the service provided is NONE of the business of those who are using and paying for those services.

    There appears to be a bizarre presumption that depending on what a tenant believes their rent is being used for gives them the right not to meet their contractual rental obligations whether or not Govt assists LL.
    Govt is arranging for many to receive income sufficient for many tenants to meet their contractual rental obligations in FULL!!!

    Why tenants believe they should have the right to stick their big noses into a LL private financial affairs beats me!!

    If a tenant refuses to pay me rent I will get rid of them.
    If tenants weren't so feckless then they would have adequate savings to ensure they can maintain their living costs for at least 1 year without any other income being received.

    Why TENANTS seem to believe that LL should be a FREE overdraft facility when they can't for WHATEVER reason pay their rent etc beats me.

    Since when was it determined that LL should be responsible for supporting the FECKLESS lifestyles of tenants.

    I say to tenants ensure that you have sufficient financial reserves such that you are able to meet all the costs of a rental property.
    All that comes before food and other expenses for self-gratification purposes.
    That means for most a boring lifestyle.
    So be it!
    Tenants should stop being so feckless and understand that if they desire domestic stability then they need to ensure they have sufficient financial resilience such that they do not need to rely on the goodwill of LL to support their feckless lifestyle.

    Govt is effectively supporting such tenant fecklessness by preventing LL from evicting.
    Simply outrageous!!

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    current govt is clueless

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    anyone with uc tenants should be unaffected?

    Paul Barrett

    Yep it is a good point about UC tenants.
    But really that only applies when a LL charges LHA rates.
    Not many LL do that in the SE.
    LHA is less than half what my market rents are.
    But I suppose anyone forced onto UC should mean the LL gets something.
    But I do wonder how many UC claimants would pass on their UC HB to the LL.
    Remember the UC HB element could be as little as £0 50 per week!!!

    So UC is not such a dead cert as many consider

     
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    It would be nice if my tenant would reply to my very supportive and polite requests for a conversation. To date no contact has been made (other than an initial email to say he was struggling financially) and he now owes 2 month's rent. Unfortunately we had issued a Section 21 a month before this all kicked off due to various issues. That notice expires tomorrow but nothing we can do.

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    These kind of tenants tend to go quite and sweep things under the carpet, but when evicted we are the rouges, for the sake of £60 issue a money claim online, easy to do, he will ignore it, doubt you will get your money, but you will have the satisfaction in knowing he has earned himself a CCJ and with that on his record few landlords will even consider him as a tenant, revenge is sweet.

     
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    Thanks Andrew. I will speak to our solicitor on Monday and take it from there. I think we will start proceedings, knowing that the court will just sit on the papers for at least two months.
    I hadn't considered an online money claim. Would it be worth waiting until after so we can be seen by the court as supportive during this difficult time? I don't want them to have any excuse to reject our Section 21. Also the amount will no doubt increase so might be worth waiting and claiming a larger sum? Or can multiple applications be made?

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    Personally I think I would do the money claim now, you don't need a solicitor for that, never know it might just wake the guy up, you don't need solicitors for sec 21 or sec 8 either, plenty of help online, I 'm a member of Eastern Landlords in Norwich £70 per year, tax deductible and worth every penny, they have always been there for me with sound advice and help, don't know where you are in the country but I expect there is a good landlord assoc somewhere near, don't bother with the big nationals they are about as much use as a chocolate teapot .

     
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    Ok thanks, I appreciate your help. I'll have a look for something similar near us. I've been a landlord for 12 years but have been very lucky until now so this is all very new.

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    Sheriff's office also very helpful find them online they have imfo online that you can down load free

     
    Daniela Provvedi

    Hi Amy, I agree with going down the CCJ route too, but may I just be devil's advocate for a minute.... How do you know your tenant is just not replying back because he's ill and/or in hospital? How sure are you that he's taking the P?

     
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    Hi Daniela, thanks I will definitely look into it. We have had contact from the tenant regarding other matters just silence when we ask to discuss ways to support him in meeting his rent obligations.

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    Tenants have not paid and have gone silent. I am willing to be friendly, flexible and reasonable but tenants have to be reasonable too.

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    If we evict the tenants who don’t pay, who will we find to replace them that are able to pay! lol

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    The rental market broadly is finished.

    Unless renters are key workers or very financially stable they won’t be able to pay any or all of the rents. They can’t all be evicted and who will take their places?

    Likewise. Landlords will still be liable for any mortgages, upkeep and the safety of premises and housing, but without any receiving the income. Surely this makes owning a rental property a liability? lol

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    Why can't they all be evicted Steven ? better an empty property than one with a non paying tenant in it.

     
  • Paul Barrett

    @stevenmills

    Who cares?
    The point is rent defaulting tenants need to be removed.
    This then gives the LL a chance to source new rent paying tenants.

    Of course no guarantee that any will be found.

    That is a business risk LL are fully aware of.

    Govt is preventing LL from operating their businesses.
    Simply outrageous!

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    Oh not prevented from operating their business. LL still has to comply with all the laws and pay any costs associated with the lease....

    What would the Government do with millions of homeless tenants? What will landlords do with millions of empty properties? lol

    Bubble....burst!! Buy to let liabilities not assets. A big correction on the horizon?

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    I want to sell. I'm an accidental landlord who is now suffering significant losses with no help from the government. But I can't sell. I have to allow the tenant to live in the property, free of charge.

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    You can sell Amy with the tenant still there , the new landlord may not be as nice as you.

     
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    Unfortunately the house needs lots of work but we can't get in to sort as the tenant is ignoring us. Plus I doubt anyone would want a property with a non-paying tenant.

     
  • Paul Barrett

    @stevenmills

    There will not be millions of homeless tenants.

    It will take at least 2 years to evict.

    During that time HB will be claimed.
    Many LL could survive on LHA rent.

    It will take a long time for LL to be able to repossess.
    By then quite a few tenants will have been able to catch up on arrears etc to the point that many LL will cancel the repossession process.

    I'm afraid your delight that things might be calamitous for LL is just rubbish.
    There will be no reset etc.
    Property prices will continue to increase.
    Property is still the best investment even in turbulent times.
    Anyone investing has a long term view.
    20 years or more.
    This is a short term blip.
    Nothing in the overall scheme of things.
    The simple facts are that there is still too much demand for the limited available stock.

    So no bubbles bursting anytime soon.
    Govt cannot afford a property crash.
    Property is what politically gives the semblance of a successful economy.

    Govt won't wish to compromise this market.
    So IR will remain low for decades.
    What pragmatic LL will do though is to reduce their exposure to leverage or substantially reduce it to become far more resilient to feckless rent defaulting tenants.
    But there will not be instant evictions.
    This is the vile propaganda disseminated by the likes of Shelter and GR who refuse to state actually how long it takes to achieve repossession of a rental property.

    What will happen though is LL will start to reduce the numbers of properties they have so that they can afford rent defaulting tenants.

    HB should always be achievable though.
    Many tenants will have to move to cheaper areas.
    But the rental sector will still prosper as there will be tenants who can afford market rents.

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    Cripes!
    That is gloomy.......

    :-(

     
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