Landlords might have it tough during Covid-19. Many tenants cannot pay rent, and many ask for a deferred payment system while others might say that they’ve lost their job. Hence they can no longer afford the rent. As per the guidelines of the Coronavirus Act 2020, which was started by the UK government, landlords will not be able to start possession proceedings without giving their tenants a six months’ notice period. Whether you’ve got properties in central London or Cheltenham properties, the problem for landlords all over the UK, actually, all over the world, remains the same. After speaking to various estate agents, be it estate agents in Cheltenham or London, government agencies, landlords and financial experts, here is some much-needed advice for landlords during Covid-19.
Only believe official sources
Do not believe hearsay and word of mouth information. Your friend or even your real estate agent might tell you some new rules or regulations that are going to be the norm, but you must not believe anything until you can verify it from an official source. Get your information from local authorities, government websites and trusted news channels. A lot of information, and misinformation, has been spread during this pandemic, so it is best to trust only official sources.
Find common ground
When your tenant says that they can no longer pay the high price of rent every month, choose negotiation instead of litigation. Say the rent is £ 100 per month (obviously, this is just an example), then ask your tenant to meet you halfway. Maybe they can pay only £70 or £ 50, or even £ 20. Instead of filing a case or opting for repossession, create a deferred payment plan with the tenant. Of course, this might need to be overseen by your lawyers, real estate agents, and you will need an expert to draft the payment schedule. From temporary rent reduction to long-term payment plans, there are multiple ways for you to find common ground with your tenant.
Think about reducing the rent
You have two options when tenants can no longer afford high rentals – you can either look for new tenants who could take days, weeks or even months, especially amidst a pandemic, or you could think about reducing the rent a little bit. Not a significant reduction which might burn a hole in your pocket, just a slight decrease so that your tenant feels that the new rental is slightly more comfortable to pay. It is better to have a property that is earning slightly lesser rent than its potential as opposed to an empty property that has no tenant. The choice is yours, but make sure you choose the more logical option.
Be open, be honest
Speak to your tenant and be open with them. Tell them if you’re having money problems. Tell them how much rent you need every month to make your ends meet. Listen to your tenant when they tell you about their financial troubles or uncertain job status. Together, you can both come up with a solution that will be beneficial to you and the tenant. Being transparent and honest in your communication is very important. And, it helps you build long-term relationships which in turn can lead to long-term rentals.
Verify what your tenant is saying
If your tenant is saying that they are unable to pay rent because of salary cuts, verify what they are saying. Has your tenant got a cut in their salary? Has the tenant lost the job? Does he or she have the means to pay rent? Before getting into any kind of discussion regarding repossession, a change in rent or a deferred payment system, make sure that you verify the information your tenant has provided. Based on that, you can take a call on what the best step of action will be in this case.
Know the rules and regulations
Every government and every state has different rules and regulations. Make sure that you are well aware of the rules and regulations regarding Covid-19 in your area. Do you need to give your tenant a 6-month notice before repossession? Can you legally sign a contract for a deferred payment system between you and your tenant? Is there a certain percentage of the rental that the tenant is obliged to give you? Do your research and be up to date on all these regulations.
Some tenants are having financial problems, and some landlords are going through similar issues. You can consider speaking to your lender about an increase in your loan amount or lower monthly payments so that you are not burdened by any financial troubles. In this case, make sure to speak to a financial expert whom you trust before making any decision.