Government must give clear statement on rental payments

by Property 118

8:51 AM, 6th April 2020
About 6 months ago

Government must give clear statement on rental payments

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Government must give clear statement on rental payments

The NRLA are calling for a clear statement from government in response to campaigners’ calls for rent payments to be stopped during the coronavirus crisis.

More and more landlords are contacting the National Residential Landlords Association saying their tenants are under the impression they no longer have to pay rent as a result of the pandemic.

The association is now asking government to clarify its guidance; that rents should continue to be paid where possible.

Some tenants believe that because lenders have provided the option of a three month mortgage payment holiday to landlords, they should not pay rent for this period.

Groups including the National Union of Students are also campaigning for rent breaks for tenants.

While the NRLA believes flexibility is necessary during these unprecedented times, it is calling on the Government to better publicise its guidance that tenants must still meet their legal and contractual obligations where they can – including paying rent – to dispel any myths.

Speaking for the NRLA, its Chief Executive, Ben Beadle, said:

“The mortgage repayment holiday is only available for landlords who are struggling to make their payments because their tenants are unable to pay part or all of their rent as a direct result of the coronavirus and through no fault of their own. It is not an automatic payment holiday and landlords who successfully apply still have to make these payments later on. It is not a grant.

“What it does allow is that where a tenant is having genuine difficulty in meeting their rent payment because of a loss of income, landlords have much greater flexibility to agree a mutually acceptable plan with the tenant to defer the rent due.

“This is not a green light to tenants everywhere to stop paying their rent.”

Given that 94% of private landlords rent property out as individuals and 39% have reported a gross non-rental income of less than £20,000, many depend on the extra rental income for their livelihood. Without this rent many would be unable to continue letting property, leading to a housing supply crisis when the epidemic eases, particularly for students returning to university.

Tenants are able to make use of assistance provided by the Government to replace lost income if need be including through the Job Retention Scheme, increased housing support through the benefit system and maintenance loans which continue to be paid to students.

The NRLA has called on landlords to show as much flexibility with tenants as they are able to within their means and has been heartened by the many stories showing tenants and landlords pulling together at this difficult time. This has included landlords offering properties rent free for NHS workers where they afford to do so.


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Comments

Liz Buckland

10:34 AM, 6th April 2020
About 6 months ago

I sent a copy of the 21 page ' Consolidate guide to landlords and tenants Covid19' the Govt document issued last week, and which was published on your daily missives, to my tenant. This clearly states that tenants should continue paying rent. She was very grateful to see it as it also addresses what could be a potentially difficult conversation, and offers advice to tenants on 3rd party resources.

NigelH

10:43 AM, 6th April 2020
About 6 months ago

The Ministry of Housing, Communities & Local Government publication seems to be quite clear on this, if someone renting can pay, then they should pay:
Consolidated_Landlord_and_Tenant_Guidance_COVID_and_the_PRS_v4.2

Bill irvine

10:54 AM, 6th April 2020
About 6 months ago

Reply to the comment left by at 06/04/2020 - 10:43
Hi,
Totally agree with Liz & Nigel. The Guidance is quite clear about the importance of continuing to pay; landlords & tenants having a dialogue when there's a potential problem, due to loss of income etc. and the various sources of help available.

See extract:
"1.1 As a tenant, should I stop paying rent during the outbreak?

• Tenants should continue to pay rent and abide by all other terms of their tenancy agreement to the best of their ability. The government has a strong package of financial support available to tenants, and where they can pay the rent as normal, they should do.
Tenants who are unable to do so should speak to their landlord at
the earliest opportunity.
• In many, if not most cases, the COVID-19 outbreak will not affect tenants’ ability to pay rent. If your ability to pay will be affected, it’s important to have an early conversation with your landlord. Rent levels agreed in your tenancy agreement remain legally due and you should discuss with your landlord if you are in difficulty.

I've also posted a number of bulletins in the Private sector of my website, one of which, points to the various sources of assistance
https://universalcreditadvice.com/articles/coronavirus-landlords-and-agents-helping-tenants-claim-assistance-with-rental-costs/

So, there's loads of information out there you can share with your tenants, especially those experiencing financial difficulty.

Bill

Dr Rosalind Beck

11:13 AM, 6th April 2020
About 6 months ago

The Government created this confusion and must clear it up immediately. It has created havoc, will lead to unnecessary financial hardship, stress and litigation, and is detrimental to landlord-tenant relations.

It must also look to undo some of the other damage it has done - particularly the problems its blanket ban on evictions is causing. As it has legislated to force landlords to continue to house non-paying tenants, indefinitely in effect, it must fund the landlords to do so. There is currently no justice for landlords who should not be expected to continue housing anti-social and/or non-paying tenants and it is also not fair for neighbours and housemates to have to put up with them. There is no thought for what it is like during a pandemic to have to put up with rogue tenants - many of whom will now be ecstatic to realise they can't be evicted, despite their behaviour. As they have shown they are willing to cross the lines of acceptable behaviour, they are also more likely to behave recklessly in terms of potentially spreading the virus.

It should also repeal Section 24, which is any case an outrageous policy. It was not predicted to bring in much tax anyway - certainly not in the context of the billions now being spent by Government. Repealing it would at least help some landlords who are facing having to pay tax on no profit or even on a loss, because of this absurd policy.

Finally, the Government should re-define private landlords as self-employed workers. We should not have to continually defend the work we do to provide essential housing to a fifth of the population and have this falsely represented as 'hands off' investment. We all know that is a lie for portfolio landlords especially. Re-defining it would enable some landlords to benefit from the Government's financial package of support.

If the Government does not take these kinds of measures the sector will inevitably shrink. This will mean more homelessness and it will damage efforts to rebuild the economy as many landlords have simply had enough of this continual onslaught and will not provide the homes mobile workers need.

In sum, the risks of being a landlord are becoming too numerous and onerous and something has to give.

SM

11:34 AM, 6th April 2020
About 6 months ago

Ben says a lot and the Government just ignores him every time. New organisation but the same response, nothing.

Beaver

11:58 AM, 6th April 2020
About 6 months ago

Reply to the comment left by Bill irvine at 06/04/2020 - 10:54
"In many, if not most cases, the COVID-19 outbreak will not affect tenants’ ability to pay rent."

This is correct. Those who cannot pay because they don't have jobs any more or won't qualify for support for the self-employed when that comes along in June have universal credit. So the government needs to make sure that UC works properly and that the self-employed don't fall through the support net.

Some people will have short-term cash flow problems and the goverment needs to relax bank lending criteria to allow for that.

Telling people not to pay their landlords would just create a different crisis.

Paul Essex

12:03 PM, 6th April 2020
About 6 months ago

Iritatingly everyone keeps claiming that help is available to landlords - NOT TRUE if there is no mortgage, please stop suggesting that we are all getting help!

Beaver

12:52 PM, 6th April 2020
About 6 months ago

Reply to the comment left by Paul Essex at 06/04/2020 - 12:03
It is quite correct to say that we are not all getting help. These are the government figures for business population as of 2019.

https://www.gov.uk/government/publications/business-population-estimates-2019/business-population-estimates-for-the-uk-and-regions-2019-statistical-release-html

99.9% of the business population are SMEs. There are 5.9 million UK private sector businesses. Historically SMEs have employed the most people and also created the greatest *growth* in employment. Small businesses are the engine of the economy.

However, 1.4 million of these businesses have employees, and 4.5 million have no employees. I.e. they are self-employed. The self-employed have been told they might get some help from June. They are not getting any help at the moment.

At the moment small businesses are having difficulty getting "business interruption loans". The banks are offering them their own loans instead - although I think that was how it was set up - you were supposed to be able to get a business-interruption loan, but only if you were not eligible to borrow.

Anyone who was running a small business at the time of the last financial crisis will recall that the government bailed out the banks (except Barclays who sought funding elsewhere). The banks then trousered the money and carried on as normal; the banks did not lend. Now, even if you got a "business interruption loan" it would probably not be enough. You'd still have to borrow and for most people the source of borrowing would have to be either their Principle Private Residence, or a BTL if they had one (most BTL landlords have 1-2 properties, not a big portfolio). As I recall bank-lending criteria are that you have to have an average of £25K turnover per annum for the last three years. But if your turnover just collapsed because the government shut down the economy that just gave you an extra headache. It's even worse if you started a small self-employed business in the last twelve months because you won't even have the proposed help that is supposed to be coming the way of the self-employed in June.

Just as small businesses are the greatest source of employment, the greatest source of growth in employment and are the engine of the economy, the value of the UK housing stock is the rock on which this is based. So if the government destroys the value of UK housing stock as a consequence of what it perceives it has to do to respond to COVID19 the government will create a recession that is not just very deep, but very long-lasting and very painful.

Telling tenants they don't have to pay their rent will just create another, bigger crisis.

Matarredonda

13:49 PM, 6th April 2020
About 6 months ago

Reply to the comment left by Paul Essex at 06/04/2020 - 12:03
100% correst Paul as am also in that position.

Beaver

14:00 PM, 6th April 2020
About 6 months ago

Reply to the comment left by Matarredonda at 06/04/2020 - 13:49
It's not just about mortgages. As a landlord you have lots of other costs and responsibilities besides making the mortgage payments and successive governments have made all these things harder for you.

Most BTL landlords do not have big portfolios. They have 1-2 properties that they bought to supplement their income, as a retirement fund, or both. A few weeks ago I saw a press release saying that for the first time the value of UK pensions have increased beyond the value of UK housing stock. That's probably just switched because so many pension funds are invested in the stock market and the stock market just crashed. Most BTL landlords have a small portfolio that they rely on to supplement their income or for their retirement.

If the government permits the tenants-good-landlords-bad rhetoric to hold sway they will be allowing a left-wing element to attack the economy and in the end that will probably kill more people indirectly than Covid19 does this year. For the most part they will be attacking small businesses and people who worked very hard to get where they are today. Many of those people are not eligible for the support now being provided to the *minority*. Because the available support is support being provided to the minority.

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