12 out of 13 tenants asked for “Rent-Free Holiday”?

Reply to the comment left by Prakash Tanna at 14/04/2020 - 12:05
I mentioned this on another thread, but in example for myself I would be around £200-250 worse off if furloughed. That the loss of income minus the savings from travelling costs.

I don't eat out, have nights out, drink coffee, no pubs or restaurants. Heck I even cancelled my only unnecessary outgoing which was my Netflix subscription. So there was no saving to be had there. For people like me, being furloughed would cause a problem.

I had a couple of tenants enquire about taking advantage of a 3 month rent holiday, because we were "getting a 3 month mortgage holiday". I immediately wrote to all my tenants as a preemptive measure because I saw that there was a gross misunderstanding about these 'mortgage holidays' we were supposedly getting, and I wanted to get out in front of it. It was also a good opportunity for a bit of positive PR. Something like this might help you too as it explains the true situation and also empathises with your tenants. It explains that this isn't some kind of freebie and any unpaid rent or mortgage payments must be paid later. Almost as important is the fact that it gives them something in writing to take with them to show to whoever is giving them such bad advice!

Feel free to use any or all of my letter that you wish if you think it might help you. I sent mine by email headed 'A message from your landlords' and BCC'd all of my tenants, so it wasn't too labour intensive and maintained privacy for each email address.

"Hi all,

I thought I’d write to you with regard to our current difficult situation. We are all doing our very best to look after our own and our family’s health and following government guidelines. For many of us who are deemed non-essential workers that will mean we are staying home and not working for possibly as long as 3 months. If you are lucky you will be on 80% of your regular wages. Others who are self-employed will have to manage until they can claim some of the government funds available to support you while you are unable to work. Inevitably this will put some of you under financial pressure and difficulty making ends meet. I want you to know that we are all in this together and we will do our best to work with you during this time to make sure you get through it.

If you are struggling please try not to worry unduly. If you have gas, electricity or council tax bills which you are unable to pay in full, please phone your supplier and explain your position. Tell them how they can support you to manage your restricted finances. If you can pay a particular amount each pay day, then do that. They will be flexible because they understand that this is an extraordinary state of affairs.

Equally if you are unable to pay your rent in full, then pay what you can, or pay it in weekly amounts if that makes it easier to budget. Whilst there has been talk of 3 month ‘mortgage holidays’ for landlords that doesn’t translate in the way that it may sound. Each lender has taken a different view on it and it is certainly not happening automatically. Some have yet to decide on a policy, whilst some will only agree if the tenant in the property is in arrears. Yet others will only agree if you write to them stating you are in financial hardship and unable to make your payments. This involves providing bank statements and other evidence. In all cases the late payments must be made up once this situation ends via increased payments later. This flexibility is obviously welcome in cases where money for the mortgage is simply not there, but it is not some kind of bonus, and really nor should it be.

I would ask that you just keep me informed if you are in the position of being unable to pay all of your rent, or to pay it on time. We will not put added pressure on you. If you end up with some arrears we can discuss a repayment plan once the world returns to normal. Obviously it will make things easier for you in the long term if you pay as much as you can as it comes due, but I don’t want you to feel stressed or anxious about something you cannot control.

We hope that you, and your loved ones stay safe.

Best wishes etc"

Whilst I know you've had discussions about eviction etc already, I would hold back on any further discussion in that vein. You need to get your tenants on-side and mitigate your losses. If you can persuade enough tenants to pay to keep you afloat and take advantage of any mortgage holidays where needed yourself you may be best to keep on good terms with those who don't pay and pretend that you believe they are not paying because they cannot pay and simply instigate the recommended policy of deferring the debt, but issuing notice. Explain that you understand that they are currently unable to pay due to the lockdown, however as the rent is now building up in arrears you need to issue this notice as a precaution in the unlikely event that the tenant is unable to make up the arrears through regular overpayments once the lockdown ends. I hope that you can work this out with your tenants and that once they properly understand that there are no free rides here for landlords or tenants they will pay their rent.

Reply to the comment left by dismayed landlord at 14/04/2020 - 10:50
Depends on the rent guarantee insurer. Reputable insurers Alan Boswell, Hamilton Frazer may not be the cheapest but from what I hear they are paying out. Cheaper insurers, Direct Line are not.

Reply to the comment left by Ian Narbeth at 14/04/2020 - 11:51
Interesting book Ian, but by the time the OP has negotiated a "that's right" deal with 12 out of 13 tenants, he'll be bankrupt.

A sleeping partner is one thing, but Yank negotiators are in a f*****g coma.
-Harold Shand.

Re. Rent guarantee I have RGI with Direct Line and had an email from them a few weeks ago confirming they would NOT be paying out as being able to effect an eviction process forms part of the policy. I don't understand why some others are paying when they are all operating under the same conditions?

In terms of how we are handling the current issue is on a case by case basis. It seems that the way the Government have thrown the PRS under the bus will further diminish the sector.

I for one will be selling our privately rented houses when the market resumes, another 18 houses removed from the PRS, enough is enough and it concerns me what is next.

Reply to the comment left by Hardworking Landlord at 14/04/2020 - 11:40
Yes you can issue anytime .. judge should issue an order based on the contract and liability

To all those thinking of initiating a County Court demand for rent arrears please be aware that there is a month long pre action protocol needed before you can take action in the courts. For anyone interested I have prepared a complete set of paperwork which I will send to anyone who contacts me through property 118.

Reply to the comment left by David Price at 15/04/2020 - 09:46
Does this apply to MCOL too?

Reply to the comment left by Monty Bodkin at 14/04/2020 - 23:08
Hi Monty, what's the alternative to negotiation? The legal route, slow and precarious at the best of times especially if you use s21, is closed off for the next few months and will be slow after that while a backlog of cases clears and HMG won't be quick to prioritise landlords' claims. How would you advise Simon?

You should send your tenants the link to the official advice (and cut and paste the relevant section into your email):

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876500/Consolidated_Landlord_and_Tenant_Guidance_COVID_and_the_PRS_v4.2.pdf

The overwhelming majority of my tenants are working from home and paying as normal but I have agreed one temporary rent reduction (not deferral) with one tenant who is newly self-employed because I think that's better than risking them giving notice at a time when re-letting the room would be difficult.