Can landlord claim back a COVID rent discount?

by Readers Question

13:58 PM, 31st March 2021
About 2 weeks ago

Can landlord claim back a COVID rent discount?

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Can landlord claim back a COVID rent discount?

I’d appreciate any thoughts and experiences on this matter, but I think it might take a binding court case to settle the question, and then some! I’m hearing of landlords who gave their tenants rent discounts during the first lockdown, without specifying whether the difference was to be paid back and in one or two cases not even stating how long the arrangement would last.

When the landlords tried to recover the rent now the tenants’ circumstances have improved, they are finding the tenants won’t pay saying they were not told the discount was only a loan, not a grant! One landlord tried to get around it by using Section 13 to increase the rent only for the tenants to serve notice and move out.

It boils down to this, and opinion seems to be divided between:

1) The rent specified in the tenancy agreement still stands and is payable in full unless the landlord categorically agrees otherwise (so if the landlord reduces the rent from £1000 to £500, but the terms are vague once the condition that gave rise to the discount is resolved, the full rent plus the discount is payable).

2) The terms of a rent discount will override the tenancy agreement, so if the landlord doesn’t state whether the discount is repayable, the landlord is not entitled to recover the discount.

While I agree a tenancy agreement could set the terms for a rent concession, most agreements were not drafted with COVID in mind so don’t include this.

Many thanks,
Mandy

Comments

Paul Maguire

8:11 AM, 1st April 2021
About 2 weeks ago

I gave a 40% discount for 4 months to some who were struggling [zero hour contracts] so that both of us could survive. Some was better than none and no future payback was demanded. Can't say I regret it as overheads were covered and all I lost was some profit.

Smartermind

8:19 AM, 1st April 2021
About 2 weeks ago

A court case won't settle this as each landlord will have agreed to different terms for the discount. It will be even worse if landlords haven't specified it in writing and just used wishy washy words to offer the discount.

Unless the landlord has specifically stated it in writing then trying to claim back any discount will be difficult.

The terms of the tenancy agreement are still binding and once the Covid emergency is over, the normal rent should apply. With my son's tenancy, which I manage for him, we stated in writing that the tenants could have a 10% discount for the duration of the term of the tenancy. We also allowed the rent to be deferred for the duration of the first lockdown with the stipulation (in writing) that once the first lockdown ended the deferred rent would need to be paid in monthly instalments over the remaining term of the tenancy. The tenants paid the deferred rent without any issues.

If a landlord tries to increase the rent to recover their loss, the tenant is free to go.

What it boils down to is how water-tight was the agreement for any discounts or concessions. Each landlord will have to resolve it for themselves. One over-reaching court case won't settle this but the government could legislate that landlords can't recover covid discounts.

Any tenant is free to serve notice to quit once their AST term is over and no court can prevent them from doing that.

Graham Bowcock

8:34 AM, 1st April 2021
About 2 weeks ago

The post highlights the casualness of many landlrods, and quite a lot of agents.

Any chnage in rent should be documented in writing and, as highlighted, should specify if the change is temporary and also wheteher a reduction is a simply a deferral.

Personally I made a few discounts for those tenants who were up against it. I wrote to them and told them it would be a temporay rent reduction and that they would not be expected to make it up in the future.

I can't see the point of any landlord pursuing a tenant if the terms were not made clear.

Mandy Thomson

8:47 AM, 1st April 2021
About 2 weeks ago

Thanks for the comments to date. Yes, where my own tenants are concerned I was careful to stipulate the exact terms of the concessions I was giving (using the NRLA COVID rent concession template helped) however, it seems many landlords have acted first then only considered the legal niceties afterwards, once they realise their tenants aren't in any hurry to pay back the discount...

Darlington Landlord

21:40 PM, 1st April 2021
About 2 weeks ago

if its termed a discount it would be reasonable to expect its not something to be paid back. how long the discount lasts is another issue. if the rent is just deferred/ payment plan for lower rent now catch up later than thats different

Paul Maguire

22:49 PM, 1st April 2021
About 2 weeks ago

Reply to the comment left by Darlington Landlord at 01/04/2021 - 21:40
Good summation.

DSR

8:42 AM, 2nd April 2021
About 2 weeks ago

I had an email conversation with the tenant (so it was 'written' and agreed) that he could have a reduction for the first furlough period but that this MUST be paid back when he went back to work etc. He gave notice to leave shortly after but an agreement was struck that he would leave earlier instead of paying back the rent reduction. He got to move quicker as he wanted and I recouped it from the deposit instead. (luckily no damage or it would have been more complicated...)

TrevL

23:01 PM, 2nd April 2021
About 2 weeks ago

Reply to the comment left by Darlington Landlord at 01/04/2021 - 21:40
Yep, agreed with Darlington Landlord, the term discount pretty much suggest no expected repayment, one might even think the term discount was used, then the Landlords changed their mind after the fact.

Udai Patel

7:54 AM, 3rd April 2021
About 2 weeks ago

I run an agency and we had to deal with lots of cases.

Did you put it in writing? Everything should be in writing. Make the call, it is much nicer to hear a voice and better to express yourself and allow them to express them selves. Then follow up with email your agreement.

As someone above stated. Discount means discount.

With our tenants we Gave part discount part deferred, and or a combo. With a limited time and said we will review at situation Every 1- 3 months depending.

This may be useful for anyone still in this situation.

Good luck all

Judith Wordsworth

8:58 AM, 3rd April 2021
About 2 weeks ago

A discount is a reduction in the rental figure.
If not told the tenants how long this would be for, or not agreed mutually, then I would have presumed that this would be for a long as the Covid pandemic was still that and would take the discount period would end when furlough is removed.
It would be a complete waste of money to take this to court as there would be no breach if the tenancy I would have thought.
It is always necessary to be absolutely clear re rent and to put it in writing

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