Categories: Landlord Insurance

Helpful Fact Sheet for Landlords

Mark Harrington, our managing director wrote this article. He has nearly 30 years industry experience from running his own letting agency. He wanted to share his thoughts on a few trends that have occurred recently. These include tenants not paying their rent. Wanting to break their contract. What you can and cannot do. There seems to be a minefield of misinformation from various sources currently, so it is important that you understand the law. That is why we have put together this helpful guide on trying to resolve issues with your tenants.

Communication

Communication is absolutely key when dealing with any tenant. You should not sit and wait for your tenants to contact you. If the rent due date passes and you do not receive any payment contact them. Communicate with them as a matter of urgency. We will always suggest by way of email. You want to make sure that you record anything for the future. The worst-case scenario happens and that you must take the matter to court. It is important that you show that you have been compassionate. Try to be understanding and help the tenant. The fundamental guidelines from the Government are that rent is still due legally. Contact your tenants the day after the rent is due. Ask why it has not been paid. When they propose to pay it. Keeping in touch during these difficult times is absolutely critical.

What can I ask for from my tenant?

It is reasonable to ask a tenant for their full financial position. Just saying that they cannot pay the rent is not acceptable. They must tell you that they are in actual financial hardship. Ask for the reasons why. We would suggest that you politely request full financial details. How they propose to pay the rent. What income they have coming in. There is a huge amount of help out there which we will outline later. If they can give you the full details of their financial situation. You can look at exactly what they can pay. What they can and cannot afford. If they refuse to give you this information then it would be unreasonable. It shows that they feel they do not have to make payment.

Should I point out that the rent is still due?

Yes, you should point out that the rent is still due under the terms of the contract. This has not changed, despite the difficult situation we are all in. They have a legal duty to ensure they make payment.

What schemes are out there to help tenants?

There are numerous schemes for individuals that tenants may be able to apply for. We have found over the last few weeks that a lot of tenants are not aware of the help. We outline some examples as follows.

Universal Credit

Some tenants will be entitled to Universal Credit, but it does depend on each individual’s circumstances. They could also request a crisis loan from the local authority to help. The loan is repayable, but it would help.

Furlough

The most recent government scheme includes directors too. If your tenant has their own business and pays themselves with dividends and a personal allowance on PAYE. They are entitled to Furlough themselves and just do organisational working items. This would allow them to make a claim to pay 80% of the PAYE that they usually receive. We have found that many tenants are not aware that they can do this.

Self-Employment

This is more difficult as self-employed people will not be getting any help from the Government until June. This is a long time but it doesn’t exclude them from applying for Universal Credit in the meantime. From June, there will be assistance available which will help alleviate the pressure from any qualifying self-employed tenants.

Students, are they still required to pay their rent?

We have had many students come to us regarding their rent. Some students have had a tendency to think that as they are self-isolating elsewhere they don’t have to pay their rent. This, unfortunately, is not the case. It is down to the individual landlord to communicate with the tenant on whether they wish to give them a rent reduction. If they want to terminate their tenancy early.

However, under the terms of the contract the rent it still payable. Students are in a better position than most as they are receiving their maintenance loans. They should therefore be able to pay their rent. You would need to point out their responsibility. We find it helps to ask for full details of the maintenance loan and when it is payable.

Local Jobs

Tenants can still apply for local jobs. We have had many tenants not realise that there is work out there for them and there are local jobs available. There are companies such as Reed, Indeed and local recruitment companies that are still able to supply work for people.

Shop Owners/Business

If they have a business and have a shop then they are entitled to a grant from the government which will be automatically paid to them. They need to apply themselves. This can be anywhere between £10,000 – £25,000. This is a non-repayable grant so should enable them to pay their rent.

How do I communicate this with my tenant?

We will list out at the end of this article links to the Government website. So you can copy and paste from Google any relating to local jobs. It shows that you are trying to help your tenant as much as is possible. Show that you do understand their financial position.

Do I need to disclose my financial position to tenants?

No you do not, however, it is always best to communicate both ways. If you feel it would be helpful to the situation then you may wish to disclose it. We have found with many tenants that they think landlords have “holidays” with their mortgage payment. This is not the case. All it is, is a deferral of the payment.

It will still need to be paid in 3 months’ time or a plan put together to make payment. We have found that many tenants believe that landlords don’t have to make mortgage payments and so the tenants don’t think that they should have to make payment. You need to get across to them it is not a “holiday”. It is not a holiday payment made but a deferral. Explain this to the tenants we often find that their attitude changes quite dramatically.

Should I enter into a payment plan on rental?

It is up to you if you enter a deferred payment plan or a rent reduction for a period. Each individual landlord must look at their own financial situation. What they wish to do and help with the tenant. A reduction would mean that you would not receive the rent later. You cannot go back on this once agreed in future. You also may have legal issues if you wish to change the contract later. If it is a deferral you need to make this very clear. If you defer any form of rent, make sure they agree some form of payment plan.

This does not guarantee that the tenants will pay the rent. At least you have a plan set out with payment dates. If they are not adhered to then you can always cancel the payment plan. Then ask for the full rent. It is always worth setting the scene on exactly what you expect from the payment plan. How it will work. We would suggest that any deferral of rent does not exceed the amount of the deposit. We will come on to deposit later but as an example. If the rent was £1200 and the tenant wanted to defer £400 for 3 months then the deposit covers the deferred amount in the event that the tenant didn’t pay it.

Guarantors

We have always taken guarantors with all our tenants and have done this for many years. Whilst it does restrict the finding of a tenant in the market it always gives you a guarantee. It ensures that you are going to get your rent paid. If you do have a guarantor then try to communicate with them. Find out what their financial position is so that you can help them to help the tenants. We have already stated above that communication is absolutely key when dealing with all parties. The same applies to guarantors.

Should I defer or reduce the rent long term?

Nobody knows when the situation is going to change and people will be able to go back to work. It is totally a matter for you and what you wish to do with your individual tenants. This will relate to your own financial situation and whether you feel you are able to help them.

Tenancy? Can they just leave?

No, a fixed term tenant means they have a commitment for a fixed term and so the tenants are not entitled to just return the keys. Even if they move out, they are liable for the rent until the end of the term. Obviously, if you hold a deposit and no guarantor then it would not be in your interest to pursue the tenant for unpaid rent. This depends on whether you think they have the financial means to pay the rent. To cancel an Assured Shorthold tenancy there must be mutual consent with the tenants and landlord. Tenants cannot just walk away. We often find that they are not aware of this. It needs to be pointed out to them so that they understand their liability.

Should I use the deposit?

It is always difficult to suggest use of the deposit, especially if you do not have a guarantor. What if they leave the property in a state? Obviously not all tenants are the same. Some are totally respectful but there is the odd one that may cause a problem. You would need to consider this very seriously before releasing it. There are alternative schemes where the tenant can take an insurance policy out that covers the deposit. They pay a premium to cover the deposit and then this could be released back to you to pay the rent. This would cover you in future.

I have exhausted all avenues with my tenant, but they are still not paying the rent. Can I serve them with notice?

Tenants may believe that you are not entitled to serve them with a notice to leave the property. There have been temporary changes made by the government during this COVID period. But you can still serve notice. You are still entitled to serve notice on tenants either under a Section 8 or Section 21 notice.

The new law states that you now must serve the notice 3 months in advance. There is currently a suspension in the courts for position hearings for 90 days from the 27th March 2020. However, if you wish to serve the notice on the tenant to leave for not paying their rent then you can do so. It is extremely important that this notice is correct and you must not get it wrong. You can also issue claims against the tenant, although the court won’t hear your case until the end of the 90 days.

Mari Knowles of Commonhold and Leasehold Experts (www.commonholdandleaseholdexperts.co.uk) is currently running free webinars for landlords who would like advice on the temporary changes to possession claims, rent arrears collection, securing possession, and what will happen to possession claims already started. If you would like to join one of her sessions, please email Mari on advice@commonlease.co.uk.

Do I still have to carry out repairs to the property?

Yes, absolutely, your obligations have not changed what so ever and it is important that you still carry out all repairing obligations. It is dependent on the terms of your contract whether the tenants can withhold rent because works not being carried out. The new law under the Unfit for Human Habitation Act requires landlords to carry out works within a reasonable period.

If you cannot find a contractor that is willing to carry out the work and you have exhausted as many contractors as you can then it would be reasonable to except this. Once the lockdown is over, work would need to be carried out almost immediately. We find that there are still contractors out there who are able to obtain materials and carry out works.

Gas Safeties, are these still required?

Yes, absolutely. There has been no relaxation on anything in relation to gas safeties. It is absolutely imperative to carry these out before the due date. Not only do you need to carry these out, but you must serve them on the tenant and have them acknowledge them within 30 days.

It is your responsibility to ensure that you find a plumber who is able to do this for you and then get the tenant to sign it. Social distancing must take place and you need to ensure that the plumber is aware of this. Also that you liaise direct with the tenant and plumber to ensure that everybody’s health and welfare is taken into account. For instance the plumber can knock on the door then stand 2 meters away, the tenant can open it then go to a room away from the plumber. The plumber goes into the room where the boiler is, carries out the work, wipes it down after then confirms to the tenant that they are done. The government has given specific advice to landlords on these requirements so we would suggest that you take a look at, and follow, their guidance too.

Are EICR’s still required?

The Government has not relaxed the rules on EICRs that are due to renew from the 1st July for new contracts and for renewal April 2021. So you still have time to do these in any event.

Summary

It is important that you communicate direct with your tenant and find out what their position is. Communication is

iInsure365

Recent Posts

Do you have a commercial property that could now be turned in to residential?

Commercial Property. The new housing minister Robert Jenrick made an announcement last September that they…

7 days ago

Tax Day

What does it mean for inheritance tax, holiday homes, self-assessment and more? The government has…

2 weeks ago

Want to know what is happening in the property industry?

We have given a round up here of the latest news on the property industry…

3 weeks ago

Government extends ban on eviction and notice period.

A statement yesterday from the government has now put landlords and investors at further risk.…

4 weeks ago

What did the 2021 March budget bring for landlords?

March Budget The chancellor Rishi Sunak today made some announcements regarding the budget and what…

1 month ago

Want to know what is happening in the property industry?

We have given a round up here of the latest news on the property industry…

1 month ago