An online letting agent is calling on landlords to pass on their savings from a mortgage holiday to their tenants. The real estate agent says landlords should not expect cash-strapped tenants to pay off their rent arrears and they should be willing to offer rent cuts during the Covid-19 crisis.
The agent says many tenants will want to move once the restrictions have been lifted but rent arrears will make it impossible for them to do so, thus trapping them in a vicious cycle of debt.
“Unless preventative action is taken, once the eviction moratorium is lifted, the courts will be flooded with cases and proceedings will take years to succeed, if they are successful at all. In the middle of a crisis, getting new tenants with clean credit records may prove difficult, making it hard for the landlord to meet their mortgage payments in the meantime,” says Boris Drappier from Bristol-based letting agency, Rent Happily.
Waive Rent Arrears
Drappier is urging landlords to waive rent arrears, even though landlords who do take a mortgage holiday are only deferring their payments rather than cancelling them. He says some of the landlords on his books have offered their tenants a three-month rent holiday because they are confident the tenants will honour their debt once the crisis passes. He describes the policy as “good business sense” because landlords might face even more costs trying to find new tenants once the old ones have been evicted for non-payment of rent. However, not all landlords agree with his sentiments.
Critics say the suggestion that it will be hard to find good tenants with a pristine payment record is rubbish. Allowing a tenant to fall into arrears and not asking them to pay off their debt should be a last resort, as it’s not good business sense. In addition, if a landlord is using a letting agent to manage their properties, the letting agent will still be demanding their fee, so with no rent coming in, a landlord may not be able to afford the their services anymore.
Covid-19 Is Not An Excuse to Stop Paying the Rent says NRLA
Whilst some landlords can afford to be charitable and let their tenants ride out the coronavirus storm without paying rent, most cannot. The National Residential Landlords Association has said if a tenant is in dire financial straits then landlords should try and reach a sensible agreement on the rent, but tenants must not assume the current crisis is an excuse to stop paying the rent.
Many landlords who rely on their buy to let income are being placed in a difficult position, even if they can take a mortgage holiday. They still have to pay council tax and maintenance costs.
Speak to Your Mortgage Lender
If your tenants have stopped paying the rent, speak to your mortgage lender and organise a payment holiday. Do not, under any circumstances, cancel your direct debit without the lender’s permission. This will damage your credit rating and make it very difficult to secure mortgage funding in the future.
Have your tenants fallen into rent arrears? Reach out on social media and tell us more about your experiences.
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