We want to help – Recovering deferred rent?

by Readers Question

15:05 PM, 24th March 2020
About 8 months ago

We want to help – Recovering deferred rent?

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We want to help – Recovering deferred rent?

We want to help our tenants in difficulty by giving them initially, a 3-month deferment of their rent. Not a gift or free ride – just no rent to be paid for 3 months, but then (assuming/hoping) things get back to normal, they make up the arrears along with their normal monthly rent payment.

My concerns are:
• The rent is £1500 per month so after a 3-month deferment they will owe £4500
• After these 3 months there will only be 4 months left of their tenancy agreement so how can I ensure that they don’t just disappear at the end, having only paid some or even none of the arrears?
• Is there an enforceable agreement available somewhere which I can use and that says they promise to pay back the arrears in return for being given a 3-month rent deferment?
• If it came to it, can I ask for their deposit to be released to me to help cover the arrears? It would be counter-logical for me to be owed rent while they get their deposit back and disappear

Many thanks

Jonathan


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Comments

Monty Bodkin

21:08 PM, 24th March 2020
About 8 months ago

We want to help our tenants in difficulty
So do we all, but an automatic 3 month deferment helps no one.
That's not being a good landlord.

BTL INVESTOR SCOTLAND

9:33 AM, 25th March 2020
About 8 months ago

Most renters who suffer financial loss should be getting some financial support from the package of measures announced by Government. So there should be no need to give them a three month rent holiday. They should be in a position to pay something towards the rent each month.

Jonathan

9:34 AM, 25th March 2020
About 8 months ago

Who said anything about an automatic 3 month deferment? Read the original post

If eviction is not an option for at least 3 months, surely it's better to take the heat out of the situation by giving previously good tenants some breathing space at a time when no-one knows all the answers. And as I said, this wouldn't be a gift or free ride in which case, the query is simply how best to work with them so they can pay back the arrears in return for being given a 3-month rent deferment?

How is that being a bad landlord?

Paul Anderton

9:56 AM, 25th March 2020
About 8 months ago

Hi Jonathan your post does give the impression that you are thinking of offering a 3 month deferment when it may not be required i am sure that your tenants will ask for your help when needed and at that point you will have to assess those needs. good luck we are all going to need it and once the virus is over the financial crisis could be just as bad and last longer.

Graham Bowcock

9:58 AM, 25th March 2020
About 8 months ago

I think you need to speak with the tenants about their position and what is affordable and/or practical. In the ideal world you want them to pay something, even if they can't meet the full rent.

Just be wary that if you "gift" the rent free period, you may still be taxed on it, so speak to your accountant about how best to document this.

It's so difficult to know what to advise at the moment.

Monty Bodkin

10:00 AM, 25th March 2020
About 8 months ago

Reply to the comment left by Jonathan at 25/03/2020 - 09:34
Who said anything about an automatic 3 month deferment?

"We want to help our tenants in difficulty by giving them initially, a 3-month deferment of their rent."

Kay Landlord

10:00 AM, 25th March 2020
About 8 months ago

I’ve had some contact me already-
One wanted a 50% reduction until he’s back in full time work and the other I’ve just negotiated 75% of the full rent. I just couldn't afford to give any of them a 3 month Rental holiday to some of my tenants —- I can’t see my lenders being flexible on our semi commercial loans. I politely explained to them that any money will have to be paid back later anyway

Anyone spoken with our lenders ?

Jonathan

10:05 AM, 25th March 2020
About 8 months ago

Thanks for your comments
One of the reasons I mentioned 3 months in the beginning is that one of the tenants got the message from the NHS saying that as she has an immune deficiency she mustn't go out - even for walks - for 12 weeks and her partner, while not suffering from the same condition, is effectively quarantined too as she can't run the risk he brings the virus back and infects her. One is self-employed and the other doesn't know yet if she'll get the 80% furloughed worker deal so better now to just try and give them peace of mind but it is not a gift. Hope this explains better.

If I knew that in worst case scenario I would at least be able to have the deposit of £1730 released to me it would lessen the blow of them not paying anything back

Smartermind

11:20 AM, 25th March 2020
About 8 months ago

If anybody thinks that things are going to get back to "normal" after 3 months then they are a bigger fool than Boris Johnson. The effects of this shutdown will be around for a lot longer.

So landlords need to stop thinking of their bottom line and start long term planning. I manage my son's property and I have advised him to give his tenants a 25% reduction in rent for the next 3 months and allow them to defer this month's rent. Then next month we will see what the situation is. As the tenants are overseas students they probably won't have recourse to government help.

These are difficult times and we are not in the situation when the tenants signed the lease. This is an emergency and everyone needs to adjust to that fact accordingly. It is difficult for Landlords and it is even more difficult for tenants.

So well done to Jonathan for giving his tenants a breather for three months. But be prepared for the tenants not being able to make repayments after three months.

Monty Bodkin

11:58 AM, 25th March 2020
About 8 months ago

Reply to the comment left by Smartermind at 25/03/2020 - 11:20
As the tenants are overseas students they probably won't have recourse to government help.

Why do they need government help if they are students?
Or landlord help for that matter.

The effects of this shutdown will be around for a lot longer.

All the more reason to give help only to those who need it.

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