In these unprecedented times, almost anything we write now risks being out of date by the time you get to read it. However, here is a distillation of current government strategies and advice insofar as it affects landlords and their tenants, as well as certain measures being taken by some landlords on their own initiative. It’s worth stating that, so far, the policies trailed have received support from tenants and landlords alike. A joint statement issued by the National Landlords Association and the Residential Landlords Association confirms that the priority of both organisations remains “to ensure that tenants are secure in their homes during this crisis”.
1. Emergency legislation to bar evictions
Unsurprisingly, given the question mark that now hangs over many people’s income as well as the enormous efforts to enforce social distancing, protecting everyone’s right to stay in their home is being seen as crucial. Consequently, the government is introducing emergency legislation to prevent tenants in both the social and private sectors from being evicted while the crisis continues. At the time of writing, final details are yet to be released but it looks as if an initial moratorium on the commencement of new eviction proceedings will last for three months. It’s likely, however, that the legislation will be drafted in such a way as to permit the extension of this time period if needed.
2. Mortgage relief for landlords whose tenants can’t pay the rent
Initial governmental efforts in this area unsurprisingly focused on owner-occupiers. However, the Treasury has now widened the scope of protection to encompass landlords fearing financial difficulties as a result of tenants unable to make their rental payments. A three-month buy-to-let mortgage payment holiday will provide crucial breathing space for affected landlords. Landlords with tenants who have indicated that they are facing financial problems will be able to apply to their lender. Interest will still accumulate and this is likely to result in slightly larger monthly payments once the repayment period ends. However, lenders will not be permitted to charge fees for any pandemic-related payment holiday and borrowers’ credit ratings will not be affected. Moreover, in what is presumably an attempt to ensure that the right relief reaches those who need it quickly, lenders are not supposed to investigate an applicant’s individual circumstances. However, borrowers are already reporting lengthy periods spent on hold when trying to contact their lender. Given the level of demand from borrowers, several major lenders, including NatWest, are working on implementing alternative means of contact. Others, such as Barclays, have suggested that borrowers should not automatically assume that a payment holiday will be their best option. Customer advisors are working with borrowers to explore all available alternatives, which might include switching to interest-only payments for a short while (on the basis that this will ultimately cost the borrower less).
Finally, landlords with a mortgage should bear in mind the potential impact of the Bank of England’s rate slash. Anyone on a tracker rate mortgage - approximately 11 per cent of UK mortgage-holders (figure from the BBC) - is set to benefit from the reduction of the base rate to an historic low of 0.1 per cent. Variable rate borrowers - approximately 16 per cent of UK mortgage-holders - are less likely to see the benefit, although it is not out of the question that more lenders than usual will choose to feed the cut through to borrowers. Similarly, those on fixed rate mortgages who are coming to the end of their current borrowing period may be able to access more competitive deals when remortgaging.
3. Repossessions
As additional reassurance for landlords (as well as owner-occupiers), the City regulator has instructed banks and building societies not to repossess homes while the pandemic crisis continues. This instruction extends to repossessions already underway, up to and including possession orders; this means that even if a lender has already obtained a possession order, it must not enforce it.
4. Sales, purchases and the possible effect on sold property prices
It’s natural to wonder how the housing market may be affected as a result of the pandemic. Although early anecdotal reports suggest a downturn in homes going onto the market and buyer enquiries, it is too early to surmise that this will translate into a slump in sold property prices and still less an outright crash. Indeed, many estate agents are getting inventive in order to ensure that interested purchasers can continue to view properties without putting themselves, the sellers or an agent at additional risk. Reports of an uptick in video tours, already common in the USA and Canada, may end up being a welcome addition to the property sales’ arena, particularly among those with mobility problems or anyone buying at a distance.
A further potential hindrance to the property sales’ process has been highlighted by buyers and sellers some way down the conveyancing process. Although most of the paperwork can be completed online, a certain amount requires hard copies. While the majority of property solicitors and conveyancers have followed government guidance and are currently working from home, many are ensuring the occasional presence of a single staff member in offices to oversee essential hard copy paperwork.
5. Practical steps
Alongside the formation of various community groups to assist those who are self-isolating or otherwise vulnerable, many landlords are already considering how they can help tenants through this difficult period. Reported measures include:
-offering a break in rental payments and flexibility in making the repayments in the future;
-contacting letting agents to highlight the landlord’s wish to be informed immediately should the tenant need a new payment plan, a payment holiday or similar financial assistance;
-drawing up a list of elderly or otherwise vulnerable tenants who might need help with practical tasks, such as shopping and collecting prescriptions, in order to enable them to self-isolate satisfactorily;
-HMO landlords displaying the latest public health advice on posters in their properties and, in particular, providing information on how to self-isolate successfully in a shared home; and
-HMO landlords providing hand gel in communal areas of their properties.
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