Covid-19 will crash my student BTL business?

by Readers Question

10:07 AM, 17th March 2020
About 8 months ago

Covid-19 will crash my student BTL business?

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Covid-19 will crash my student BTL business?

The majority of my BTL portfolio is offered to students. Following the recent switch to online teaching and exams by some universities, I assume that most will soon be instructed to close until after the virus peak, estimated at three to four months.

I would be hopeful that things will be back to normal close to the beginning of the next academic year, starting in September/October.

Here in Scotland students may provide 30 days notice to end their tenancies. Therefore, if the country goes into lockdown similarly with Italy or Spain, I’m assuming the majority of students will hand in notice and move home.

What I’m wondering is where does this leave me with respect to various governmental measures that have been called for e.g. rental holidays or, particularly as in Italy, suspension of mortgage payments.

Does anyone know if the Italian situation includes a suspension of mortgage payments for BTL landlords?

Can anyone speculate as to the impact on landlords of rental suspensions i.e. will we be able to defer mortgage payments on the same terms?

And specifically to the student market situation, if all my student tenants vacate for up to six months while we ride this out, what do you think I, as their now empty handed ex-landlord, can expect in way of government help? I have all properties in my own name so not a business (please keep on topic).

My only thoughts are: war chest to ride out the storm and applying to each lender for a mortgage holiday as official help seems remote.

Appreciate this will also apply to many more BLT markets such as holiday lets; any helpful thoughts very welcome.

Student Landlord


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Comments

Rob Crawford

11:16 AM, 17th March 2020
About 8 months ago

Boris implied he would include some direction on this later this week. I doubt it will be specific to students though.

Whiteskifreak Surrey

11:12 AM, 18th March 2020
About 8 months ago

We are in the same situation... Our AST is fixed until end of July, but I think we will be forced to at least lower the rent until summer. Any advice / comments gratefully received. Thank you.

Tony Hodge

11:15 AM, 18th March 2020
About 8 months ago

I am also have a student portfolio and I rely heavily on foreign students. My concern is that foreign students decide to pospone their UK degree for a year and don't book up for 2020-21.

Luke P

11:25 AM, 18th March 2020
About 8 months ago

But, as the OP states, it's worse for Scotland due to the 30 days notice AT ANY TIME rules.

Mike W

11:57 AM, 18th March 2020
About 8 months ago

Yes, I'm afraid the numpties, who drafted the Scottish law, did not take this sort of event into account. Those in England with fixed-term contacts will have some leverage. In Scotland, there will be a 5-month void unless there is a need to maintain accommodation for work reasons. Interestingly, some Scottish student unions argued that students ought to have fixed-term contracts.
The universities will have to take care. If students can study and take exams online, what is the point of spending a lot of money on accommodation in order to go to university?

What bothers me more is not the seriousness of the outbreak but the manner in which it is reported, which creates panic. There is no comparison of the numbers with, for example, annual road deaths or annual seasonal flu deaths. And some self-appointed experts, without access to all the information, are given air time to question whether the Government action is correct. True some people need to be pushed to follow instructions for the benefit of all but clearing out supermarket shelves? Do people not know and understand there is a war on?

Freda Blogs

12:11 PM, 18th March 2020
About 8 months ago

I think Scotland is a difficult case as a 30 day notice can be given, but I assume that, just as in England, tenancies with more than one tenant are held jointly and severally, so everyone would have to agree to give notice and leave? If not all the tenants do that, the tenancy would continue.

In England (I don’t know about Wales), a student tenancy is joint and several on a fixed term, in my case until mid August. I believe the point about rent reductions and cessation in this Coronavirus world are for those who are suffering financially due to job losses etc. not just as a matter of course (unless, heaven forbid, the government makes that the case).

My current thinking assumes that university grants will still be paid, therefore no financial hardship in most cases, and therefore full rent will continue to be payable, whether the tenants are residing in the property or not – that is their choice as, unless the tenants surrender the tenancy (which must be with my agreement), I cannot relet the property and the tenants remain fully entitled to possession until the end of the term.

Luke P

12:13 PM, 18th March 2020
About 8 months ago

Reply to the comment left by Freda Blogs at 18/03/2020 - 12:11
Even in England, joint and several does not require all tenants to agree outside of the fixed term. There is no fixed term in Scotland...

Paul Shears

15:49 PM, 18th March 2020
About 8 months ago

Reply to the comment left by Mike W at 18/03/2020 - 11:57
They're utterly incapable of knowing.
The idiots buying up complete daily stocks of non essentials at 03.00 from Tesco and 08.00 from Waitrose will cause a heavy discount sale of the same products in a few months time.
This must be a complete nightmare for any supplier.

Jon Williams

2:58 AM, 27th March 2020
About 8 months ago

I am a small portfolio Landlord specialising in HMOs for the student rental market in Wales. Can the community comment on the position with existing AST contracts (to end June 20 in my case) and the new ASTs all signed up for the forthcoming academic year(from (01 Sep 20). Many students will have returned home as their University has been closed to lectures and exams are cancelled. I understand that 'Force Majeure' is not applicable to ASTs so is it the case that both Landlord and tenant are in a legally binding (watertight) contract? Oh and all tenancies have Guarantors (usually parents). Students will be continuing to receive their loans (for tuition & accommodation) in most cases and given that the Gov't has underwritten most PAYE &Self Employed folks I cannot see that the vast majority will have much of a case for non-payment (even a compassionate case). Clearly we as responsible Landlords may have to look at each case on its merits. It'll be interesting to see what happens when monthly rents are due on 1st April- I'd be surprised if I didn't get some challenge! Views please, especially on where we stand from a legal perspective?

Grumpy Doug

12:50 PM, 27th March 2020
About 8 months ago

Jon - like you, this is my business here in Bournemouth. I have a house that has been troublesome all year so far and I'm currently negotiating with them for the balance of the year. This suits me as I want to replace both bathrooms and fully decorate so having early access to the house takes the pressure of me in the summer.

For all inquiries, I'm pointing them in the direction of the Student Loan Company who are paying loans as usual, plus this student focused site that lays out their obligations quite clearly.

https://www.savethestudent.org/save-money/lifestyle/coronavirus-advice-university.html#rent

https://www.gov.uk/government/news/slc-coronavirus-covid-19-update--2

Hope that helps

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